NEWS

New Decision: What is an appurtenance (Silver Beach Towers v. Silver Beach Inv.)
October 31, 2017

When is an appurtenance not an appurtenance? That was the issue in last week’s decision in Silver Beach Towers POA, Inc. v. Silver Beach Inv. of Destin, LC, Case No.: 1D16-4555 (Fla. 1st DCA, October 18, 2017), involving whether a club membership defined by a developer as an “appurtenance” was an appurtenance that the Condominium Act prohibited from being separated from a unit.

Silver Beach Investments developed condominiums with two condominium Associations and the POA serving as the “Master Association.” The Master Association declaration provided that the condominium Associations were the Master Association’s members. Individual unit owners were defined as “Owners.”

The dispute focused upon the Club at Silver Shell’s which was located approximately a mile from the community. The Master Declaration provided that owners were non-equity members in the Club, that members could not terminate club membership except as part of a transfer to another owner and that “member in the Club shall be pertinent to the Unit upon which is based.”

Nevertheless, the Club’s facilities could be “available to the general public.” The Club was authorized to terminate an owner’s membership without notice, and in its discretion could unilaterally change Club dues and fees which were required to be collected by the Master Association.

In 2008 “turnover” was “completed” including transfer of title to common properties for the Master Association. In 2010 the Master Association’s Board of Directors amended the Declaration deleting the Club mandatory membership and fees and due provisions. In 2012 the developer and Club sued the Master and two condominium Association’s seeking to recover the unpaid dues and fees as well as declaring the Amendment invalid. The trail court granted the developer and Club’s Motion for Summary Judgement declaring that as appurtenances to the condominium units §718.110(4) prohibited the amendments as materially modifying or affecting appurtenances to a unit without the votes of all unit owners and reserving jurisdiction to determine issues of amounts due.

The appellate court first focused on what is an appurtenance. “A thing may be ‘appurtenance’ or annexed as something else, without qualifying as an ‘appurtenance to the unit’,” citing to Thiess the Island House Ass’n., Inc., 311 So. 2d 142, n.1 (Fla 2nd DCA, 1975). But, here the Club membership was:

  • Non-equity
  • Not exclusively for the unit owners
  • Terminable solely by the Club
  • Not common elements or condominium property

“The lack of any indica of ownership by Club members for…” appears fatal to the developers’ effort to not just label but treat Club membership as a Condominium Act defined “appurtenance” to a unit.

Second, the appellate court held that the Condominium Act does completely prohibit separating appurtenances without unanimous unit owner consent. The court quoted §718.110(4)’s preface “Unless otherwise provided in the declaration as originally recorded….” The Master Declaration did provide for amendment by the Members. Thus, the members being the condominiums’ Associations could proceed. The court also swiftly disposed of the developers’ assertion that it was entitled to personal notice of the Board of Directors meeting as the By-Laws only required personal notice to the Directors, and that posting was sufficient to provide notice to others.

The remand to the trial court included directions for a determination of damages to the Club for fees and dues accruing before the amendments affective date.

There are many lessons from this decision:

This decision re-enforces the need to look beyond labels. While “appurtenances” may seem sacrosanct, whether the label meets statutory pre-requisites may have to be considered.

Note also that statutory protections for appurtenances is subject to the declaration’s original amendment provisions. Note in particular in homeowners’ association communities many declarations do not have an express prohibition on changes to voting rights or assessment percentages; thus the “unless otherwise provided in the governing documents…” text in §720.306(1)(b-c), may allow the members to undertake significant changes. Developer counsel, consider this when drafting your next set of governing documents.

When reviewing the Club (or developer!) retained rights concerning Club membership shown by the above bullet points, there may be a lesson to developers regarding what could colloquially be referred to as “over-writing” covenants. How many times have we seen a contract or covenant that is so over-reaching that the terms become unenforceable. Remember the saying “pigs get fat and hogs get slaughtered!”

The decision does not address whether the developer declared the Master Association to be subject to the Condominium Act. It is interesting that the developer invoked the condominium act, usually a fate worse than death for developers, to defend its treatment the Club memberships as an appurtenance. If the project was marketed as a condominium and the prospectus was reviewed by the Division of Condominiums, it would be interesting to know whether the Division issued a deficiency notice concerning the retention of Club rights and effort to label memberships as an appurtenance.

Michael J. Gelfand

Past Chair

Real Property, Probate and Trust Law Section

of The Florida Bar

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Note: This article is not legal advice. Statements and comments made are not those of The Florida Bar or the RPPTL Section

© 2017 Michael J. Gelfand

Michael J. Gelfand

Florida Bar Board Certified Real Estate Attorney

Florida Supreme Court Certified Mediator:

Civil Circuit Court & Civil County Court

Fellow, American College of Real Estate Attorneys

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