Do you have a duty to stop payment on a check that you have written to someone else? The answer may surprise you. In some cases, if you do not stop payment on the check, then you may find yourself liable to someone else who claims that the funds actually belong to them.

In a decision that can impact associations, especially associations with employees whose wages may be garnished, a Florida appellate court recently held that an attorney who is holding a client=s funds in his trust account has a duty to stop payment on a check upon receiving a writ of garnishment. In First American Holdings, Inc. v. Preclude, Inc., 32 Fla. L. Weekly D1256 (Fla. 2^nd DCA, May 11, 2007), the facts indicated that the Bank sought to collect on a $26,000 judgment it obtained against Preclude. In an unrelated lawsuit, Preclude had obtained a $50,000 settlement. The settlement funds were to be deposited into Preclude=s attorney=s trust account.

Four days after the law firm issued a settlement check to Preclude, but before the check cleared the law firm=s account, the Bank served a writ of garnishment on the law firm. The law firm responded by denying it was in possession of any funds even though the check written to Preclude had not yet been cashed.

The bank sued the law firm to hold the law firm responsible for issuing the check to Preclude. The Bank claimed the law firm=s answer to its writ of garnishment was not truthful. Because the check had not yet cleared, the Bank argued the funds were still in the law firm=s trust account at the time of the service of the second writ. The Bank maintained that the law firm had a duty to issue a stop payment order for the check.

The trial court found that the law firm did not have possession or control of the check because the check had been issued and presented to Preclude. The trial court entered judgment for the law firm. The Florida appellate court disagreed and reversed the decision of the trial court.

The appellate court pointed out that Florida=s garnishment statute requires that a person who is served with a writ of garnishment must answer stating whether that person is indebted to the defendant and what sum is in the person=s possession or control at the time the writ was served. Funds held by an attorney may be subject to garnishment, even if held in an attorney=s trust account.

Although this issue has not yet been addressed by the Florida courts, the appellate court concluded that Florida law imposes on both bank and nonbank garnishees the duty to retain funds held by the garnishee even after a check on those funds has been issued. In other words, the garnishee has the duty to stop payment on a previously delivered check so long as the check has not yet cleared the bank.

In these economic times, associations should anticipate receiving garnishment writs. This case points out the importance of carefully determining your response to a writ of garnishment. If you have any questions, then you may want to consult with your association=s counsel.

ZONING: ARC CANNOT STOP HIGH RISE IN HISTORIC DISTRICT

What happens if someone wants to build a high rise building in the middle of an historic district where the buildings are all much smaller? Can the City prevent the building from being constructed if the City=s own zoning requirements allow for the tall building in the historic district? Maybe not.

Associations with potential zoning concerns and associaitons with building restrictions will be interested in a Florida appellate court which ruled that the City of Tampa violated its own laws when it denied a builder=s request to construct a high rise condominium in an historic district. In City of Tampa v. City National Bank of Florida, 32 Fla. L. Weekly D1319 (Fla. 2^nd DCA, May 23, 2007), Citivest proposed to build a 24 story residential condominium at the southern end of an historic district in Tampa.

The City=s Architectural Review Commission and the City Counsel denied the request to build the condominium even though the lots were zoned to permit a high rise multifamily structure. The ARC and City denied the request because the proposed building violated the historic district guidelines. In other words, the building was too tall for the historic district location. 

The trial court found the City erred when the City concluded that the historic district guidelines Atrumped@ the zoning requirements. The Florida appellate court agreed and denied the City=s petition for review of the order reversing its denial of the certificate of appropriateness, thereby allowing Citivest to proceed with its high rise building. 

The appellate court explained that the zoning administrator and not the ARC has the final word on height and Aany other item not dealing specifically with the procedure and review criteria for obtaining@ a certificate of appropriateness. The appellate court noted that the City could have solved the issue by rezoning the property or carving the land out of the historic district but it did not. 

This case points out the importance of knowing what is in restrictive building guidelines. Legislation just signed into law by the Governor limits homeowners= associations architectural control to those matters that are specifically stated or reasonably inferred in the declaration of covenants or other published guidelines and standards authorized by the declaration.

The Governor has signed all the legislation directly impacting the Florida Condominium Act and the Florida Homeowners= Association Act. As outlined in the firm=s June 2007 Memorandum to Clients, much of the new legislation affecting Florida community associations was effective on or before July 1, 2007.

Associations who have not taken steps to implement the legislative changes, need to do so now and without delay. As a brief recap, homeowners= associations appear to face the most changes. The changes include significant restrictions on the ability to enforce architectural limitations, budgets including reserves; and, extending the time that owners must be provided before assessments may be the subject of a lien and extending the time before which an assessment lien may be the subject of a foreclosure action.

Condominium associations are also subject to many changes. Some changes effect how mortgage holders may affect the amendment process. The bill that took the Governor the longest to consider provides an easier process for condominiums to be terminated. Another law simplifies condominium associations cooperating when funding insurance pools.

As always, a relatively small amount of preparation now undoubtedly will save your communities significant resources, time and money in the future.

This information is provided for general information purposes only, may no be relied upon and is provided without obligation or fee. It is distributed to the firm's association clients to provide a general comment of recent legal changes. This information is not legal advice, representation counsel or opinion. 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 2007 by Gelfand & Arpe, P.A.