278 So.3d 714
Fla. Dist. Ct. App.2019Background
- Valencia Reserve is a single-family community whose HOA was governed by a recorded Declaration and Chapter 720. The Developer controlled the HOA until turnover to members.
- The Declaration required homebuyers to pay a one-time "Working Fund Contribution" equal to three months’ share of annual, non-abated operating expenses under the initial budget, due at conveyance.
- The Declaration expressly permitted the Working Fund Contribution to be used for initial startup, unforeseen expenditures, acquiring equipment/services, and to "offset Operating Expenses, both during the Guarantee Period . . . and thereafter."
- The Developer elected to be excused from paying assessments on lots it owned by agreeing to guaranty any deficit incurred during the statutory guarantee period; before turnover the Developer used Working Fund Contributions to satisfy the deficit.
- The HOA sued, arguing Chapter 720 (particularly Section 720.308) barred use of Working Fund Contributions to offset the Developer’s deficit. The trial court granted partial summary judgment for the Developer; the parties stipulated there were no material fact disputes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Developer may use Working Fund Contributions to offset its statutory deficit/guaranty obligation under Chapter 720 | HOA: Chapter 720 forbids treating Working Fund Contributions as regular periodic assessments to reduce the Developer’s guaranty; such use conflicts with statutory limits on what assessments may fund | Developer: Declaration clearly authorized use of Working Fund Contributions to pay or offset operating expenses and to reduce deficits; such use is consistent with Chapter 720 and the Working Fund qualifies as a regular periodic assessment for guaranty calculation | Court: Affirmed — declaration’s grant was valid, Working Fund Contributions are not barred by Chapter 720, are not designated capital contributions, and qualify as regular periodic assessments for calculating the Developer’s obligation |
Key Cases Cited
- Klinow v. Island Court at Boca W. Prop. Owners’ Ass’n, Inc., 64 So. 3d 177 (Fla. 4th DCA 2011) (de novo review of HOA declaration interpretation)
- Waverly 1 & 2, LLC v. Waverly at Las Olas Condo. Ass’n, Inc., 242 So. 3d 425 (Fla. 4th DCA 2018) (governing documents between members and association are contractual)
- MacKenzie v. Centex Homes, 208 So. 3d 790 (Fla. 5th DCA 2016) (statutory and contract interpretation reviewed de novo)
- A.R. Douglass, Inc. v. McRainey, 137 So. 157 (Fla. 1931) (plain statutory language controls when unambiguous)
- Am. Bankers Life Assur. Co. of Fla. v. Williams, 212 So. 2d 777 (Fla. 1st DCA 1968) (courts may not rewrite clear statutes)
- Hidden Harbour Ests., Inc. v. Basso, 393 So. 2d 637 (Fla. 4th DCA 1981) (recorded declaration receives strong presumption of validity)
- Palm Bay Towers Corp. v. Brooks, 466 So. 2d 1071 (Fla. 3d DCA 1984) (declaration provisions conflicting with statute are invalid)
- Giamberini v. Dep’t of Fin. Servs., 162 So. 3d 1133 (Fla. 4th DCA 2015) (statutes must be read to give effect to all parts)