Memorandum To Clients

FORECLOSURES: WRITTEN AGREEMENTS CANNOT BE CHANGED WITHOUT CONSIDERATION

Has an owner tried to negotiate changes to his or her assessment obligations with an association? Has an association allowed a verbal modification to an owner= s assessment obligations? If the association has, then a simple discussion may not lead to a valid modification.

In a situation that does not involve an association, but by analogy likely will impact Florida association governance, a Florida appellate court recently ruled that a property owner= s reliance on an alleged oral modification of a written agreement was not sufficient consideration to support the modification. In Davidpur v. Counne, 32 Fla. L. Weekly D2470 (Fla. 3rd DCA, October 17, 2007), a property owner alleged that her mortgage lender told her that she could hold off on monthly payments on her mortgage and instead pay the lender when the property was sold. Nevertheless, the lender sought to accelerate the payments under the mortgage. The trial court held that the property owner was excused from making payments because of the alleged oral modification of the note.

The appellate court disagreed with the trial court= s decision that the alleged oral modification was valid. The court explained that a promise to extend the time for payments must be accompanied by consideration. Consideration is defined as something of value. Consideration is often money but may also be a promise to do something that a party is not already obligated to do. The appellate court stated that a promise to make a payment at a later date is insufficient consideration to modify a contract where the party is already legally obligated to make the payments.

A Even if [the lender] had agreed to extend the time for payment [the property owner] presented no evidence at trial of any additional action she promised to do as consideration for the modification which she was not already bound to do,@ the court stated. A Since [the property owner] has not demonstrated sufficient evidence of equitable consideration or estoppel, other than that which she was obligated to do in the first instance under the contract, we reverse the final judgment in favor of [the property owner] in the foreclosure action.@

Although the decision does not directly address community association issues, there are clear implications for Florida associations. Occasionally, an owner may claim that a board member has permitted assessment payments to be made over a longer period of time than originally was required. This decision is important because it shows that an alleged oral modification of an owner= s obligation may not be enforceable unless the proposed modification is in writing and supported by consideration.

Of course, as with everything there are exceptions. Oral modifications made without consideration may be enforceable against an association if the owner changes his or her position to the owner= s detriment in reliance on the Association= s assertions. An example of detrimental reliance may include an owner starting construction based upon verbal approval by the Association.

TORTS: WHAT HAPPENS WHEN PEOPLE OVERSTAY THEIR WELCOME?

Is an association liable for all injuries which occur on the association= s property? It may depend on whether the injured person was the guest of an owner, a worker or a trespasser.

In another situation, circumstances not involving an association will likely impact Florida community association governance. In Byers v. The Radiant Group, L.L.C., 32 Fla. L. Weekly D2502 (Fla. 2nd DCA, October 19, 2007), a group of friends stopped at a convenience store to buy food. As the group was pulling out of their parking space, they became involved in an argument with another group pulling into the parking lot. The argument resulted in one member of the first group being killed and another person seriously injured.

The estate of the killed customer along with the injured customer filed a negligence action against the store. In granting judgment for the store, the trial court ruled that the members of the first group changed their actions from customers to A instigators of violence.@ In other words, according to the trial court, they lost their protected status as invitees and became trespassers.

The appellate court reversed the trial court= s decision. The court pointed out that an owner= s duty of care owed to a visitor depends on whether the visitor is an invitee, a licensee or a trespasser. The court further stated, A a store patron [does not] loose his status as an invitee and become an uninvited licensee or trespasser merely because he or she engages in a violent act or acts against other customers on the store= s premises.@ The court concluded that the issue of whether the group= s behavior in the parking lot caused them to lose their status as invitees was a question of fact to be resolved at trial.

This decision is important to Associations because of the high volume of people that enter upon an Association= s property, including unit owners, guests, service people and employees. Even if someone= s business on the property appears to be completed at the time an injury occurs, the Association may still face liability. If the Association believes an altercation is imminent, then law enforcement should be called.

HAPPY HOLIDAYS!

Firm News

In observance of national holidays, the firm= s offices will be closed Monday, December 24, 2007 and Tuesday, December 25, 2007. The firm= s offices will also be closed the afternoon of December 14, 2007.

We wish all a very happy and safe holiday season.