Gelfand & Arpe, P. A.

April 2000

MEMORANDUM TO CLIENTS

COVENANT ENFORCEMENT:

HOMEOWNERS= ASSOCIATIONS FINES BARE TEETH OF LIENS

Do fines really deter bad conduct? From highway speeds it would appear that fines of hundreds of dollars do not deter traffic violations. So, the question is why should a $25 or $50 fine deter community rule violations?

Many homeowners= associations have taken up the authority to levy fines provided by the Homeowners= Association Laws. If a homeowner=s association=s Agoverning documents@ provide, then a homeowner=s association may institute procedures to fine for violations of use restrictions. Florida courts have ruled that condominium and cooperative associations cannot lien except for common expenses. By definition fines are not common expenses because the fine is not common to all owners. Thus, there was a doubt as to whether homeowners= associations could lien for fines. Further, there was a question of whether a homestead could be foreclosed for a fine.

Recently, Florida=s Third District Court of Appeal answered the question of what can a homeowners= association do if an owner refuses to pay the fine. In Zerquera v. Centennial Homeowners= Ass=n, Inc., 25 Fla. L. Weekly D409 (Fla. 3d DCA, February 16, 2000), the appellate court upheld the Homeowners= Association=s right to lien and foreclose for nonpayment of a fine. Furthermore, the Court held that the Association could amend its Declaration of Covenants and lien and foreclose on a home which was purchased before the Afining amendment@ was effective.

The situation began in 1989, when Mr. Zerquera bought property at Centennial. The Declaration of Covenants, Conditions and Restrictions in effect at the time of the purchase allowed the Association to record a lien and foreclose for unpaid assessments and to amend the Declaration. The Declaration was silent concerning the ability to levy fines.

In 1991, the Association amended the Declaration to add fining authority. The amendment provided that fines would be treated as assessments. The Association could record a lien and then foreclose the lien if the fine was unpaid.

In 1995, Mr. Zerquera was fined $200 for allegedly keeping a boat and parking a truck on his property, both of which were prohibited. The amendment was held to be enforceable. Centennial was granted a final judgment of foreclosure for $31,000. The trial court set a date for the sale of his home.

The appellate court affirmed the Final Judgment of Foreclosure. The court noted that when a homeowner buys property with notice of a declaration which provided for the potential for liens against the property, then the lien may be foreclosed even if the property is homestead. The rationale of the decision is the same allowing associations to foreclose for unpaid assessments if authority is granted in a declaration.

Note how the original $200 fine resulted in a judgment, including attorneys= fees. of more than $31,000! Homeowners= associations who have considered a fining amendment, or associations who find that owners refuse to pay fines, should take note of this case.

WATER: IT ALL FLOWS DOWNHILL.

Remember the flooding during last year's hurricane season? The South Florida Water Management District seeks to provide associations with flood control information before the next hurricane season. On Thursday, April 20, 2000, the District is holding a seminar designed to explain the operation of neighborhood drainage systems. The seminar is scheduled for 8:00 a.m. at the District's West Palm Beach offices.

Reservations are required. Please contact District representative Sharon Gabriel at 1-800-432-2045, extension 6844 for reservations. The District has stated that attending managers are entitled to receive continuing education credits. Please do not contact the firm for information because we have no control over that seminar.

E-LAW: LEGAL EAGLES ON THE INTERNET

Two websites are of special note this month. First, the firm proudly announces its redesigned website. As one of the first law firms utilizing the Internet, the firm boldly moves into the second generation of websites. We are still at www.gelfandarpe.com. Com[e] and visit!

Second, the American Bar Association has designed a website to assist consumers jumping into the pool of web commerce. The A.B.A. seeks to provide answers to many legal and practical concerns raised by consumers shopping on the Internet at www. Safeshopping.org.

 

This information is provided for public information purposes only and is provided without obligation or fee. It is distributed to the firm's association clients to provide a general notice of recent legal changes. This information is not to be considered as legal advice. The changes in the law may not have been reviewed by Florida courts and may be subject to further challenge. Before taking any action you are urged to consult with counsel to ensure that your legal rights are protected.

F8 2000 by Gelfand & Arpe, P.A.