February 2001

MEMORANDUM TO CLIENTS

TAXATION: JUSTICE FOR ATAXPAYERS FOR FAIRNESS, INC.@

Association mailboxes across the State should be filling with welcome news. The mailing resulted from Leon County Circuit Court Judge Smith=s January 2001 entry of an AOrder of Dismissal@. A text copy of the Order is posted at the firm=s website www.gelfandarpe.com for ease of reference. While the Order does not automatically end the litigation, the Order provides a measure of vindication to many associations and other purchasers of property at Clerk of Courts= foreclosure sales.

Many associations were introduced to the interestingly named ATaxpayers for Fairness, Inc.@ in the firm=s December, 2000 Memorandum to Clients. As a brief recap, ATaxpayers@ was a recently formed Afor-profit@ corporation. The corporation sued 850 defendants, many of them community associations. The suit was filed purportedly pursuant to a law allowing private citizens to make claims on behalf of the State of Florida. Nevertheless, the lawsuit was not approved by the State of Florida.

The lawsuit asserted that foreclosure sale purchasers did not pay the correct amount of documentary stamp taxes on the sales. It was alleged that documentary stamps had to be paid not only on the price paid at the sale, but also the total amount of any mortgages encumbering the property at the sale. Before the lawsuit was served, many community associations received letters demanding payments, some letters demanding $5,000.00 or more!

The response of community associations around the State has been swift and direct. First, it is understood that very few associations paid the amount demanded. Second, many association defendants hired Tallahassee counsel to fight this apparent for-profit effort. Simultaneously, the Florida Bar=s Real Property, Probate and Trust Law section has assisted many attorneys and is working with the Legislature to clarify the law to avoid this type of claim from reoccurring.

The litigation defense efforts appeared to be successful after the first test. The trial court upon review of the file dismissed the Complaint. Judge Smith ruled that the Complaint did not comply with the Florida Rules of Civil Procedure and did not state a proper legal basis to proceed. Among the specific matters which the Court found the ATaxpayers Complaint@ to fail was:

1. Not stating what false record or statement was made by each named Defendant.

2. Not defining the Acertificate of title@ for taxation determination.

3. Not identifying the full amount of consideration including the alleged mortgage indebtedness.

4. Not stating the Plaintiff=s claim against each of the 850 defendants.

The Plaintiff has an opportunity to amend the Complaint; however, the Court ruled that ATaxpayers@ must serve a copy of the Order of Dismissal on each of the 850 defendants.

An amendment, if any, must be filed within twenty days of the Order. If your community receives a summons or demand, then do not ignore the papers. Generally a response must be made! Contact your community association counsel.

ARBITRATION: MORE LINE DRAWING

Sometimes events do not unfold as intended. A case in point concerns condominium and cooperative association dispute arbitration. In 1992 the Florida Legislature adopted '718.1225, Fla. Stat. requiring that most condominium disputes be first heard in arbitration. Thereafter, '719.1255 Fla. Stat. was adopted concerning cooperative associations. There were a number exclusions, most notably concerning foreclosures.

A recent decision questions the extent to which the law requires parties to arbitrate disputes. In Florida Tower Cd=m, Inc. v. Mindes, 777 So. 2d 210, 25 Fla. L. Weekly D2556 (Fla. 3^rd DCA, October 18, 2000), the dispute was over the title use of parking spaces. The Court held that such a dispute is excluded from the arbitration processes. It was noted that there were numerous contrary decisions from the Division of Land Sales; however, those decisions were not persuasive to the District Court of Appeals.

This decision carves out a substantial area not subject to arbitration. Within the area controlled by the Fourth District Court of Appeals, matters in which tenants are involved generally will not be heard pursuant to the decision in Ruffing v. Kingswald E Cd=m Ass=n., Inc., 719 So.2d 951 (Fla. 4^th DCA 1998). Before an arbitration claim is filed, carefully review the arbitration statute=s enabling provisions.

FIRM NEWS

Mr. Gelfand will be presenting ARecent Florida Judicial Decisions@ at the Palm Beach County Bar Association=s Annual Community Association Law Seminar. Call the Bar Association offices for tickets at 561-687-2800.

Kudos to Tanique Lee for passing the Southern District of Florida Examination and her admission to the District=s Federal Trial Bar.

We hope that the new year began well for all. Please note that in observance of President=s Day, the firm will be closed, Monday February 19, 2001.

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.

8 2001 by Gelfand & Arpe, P.A.