By Ryan D. Poliakoff / Published October 2019
Can a condominium association demand payment of $6,750 (18 months of assessments in advance) to be submitted along with an application, prior to their approval procedures, and then continue to hold onto our money, not approve us, and not allow us to work on the property even after we have closed on the unit?
We entered into a contract to purchase a unit in the summer of 2018, with a closing date of June 24, 2018. The condominium association received our completed application on June 9, 2018. After the original closing date, we extended the contract to purchase because the association had not yet responded to our application. On July 18, 2018, we received notice of denial, claiming a failure to provide information—but the association would not specify what information was not provided. We spoke with management, who provided another updated application to be filled out, which we completed and promptly hand delivered the next day along with a money order for $6,750 (as they demanded), with the fees to be held by the association prior to consideration of application for approval. On September 8, 2018, we received a notification of denial, again without any explanation as to the reasons for the denial. The association is still holding onto our $6,750.
The condominium documents clearly state if they disapprove of a sale, they must provide a substitute purchaser; and that if they do not comply, we can close on the property. Therefore, on November 9, 2018, we closed on the property.
Since our closing, we have tried to renovate the property; however, management continues to force us off of our own property with the threat of being arrested for trespassing. We have paid all required monthly dues since purchase, and they have cashed the checks that have been sent along with our $6,750 and the initial application fee. We believe this practice is totally illegal.
From what you describe, you are being abused by an association that is entirely out of control but that knows there are very few avenues for recourse against it, short of filing a lawsuit. At this point, I think that is exactly what is required.
First, it sounds as if the condominium declaration provided (as is typical) for an approval procedure concomitant with a right of first refusal. That is, if the association denies your application, they are obligated to provide a substitute purchaser. They did not do so, and so you rightly closed on your unit—and they are now denying you your rights as unit owners.
Further, they have demanded, and kept, a very large sum of money without any clear explanation as to why it was not refunded (or, at least, applied to your account as a pre-payment of assessments). My experience says that this association originally denied your application based on your credit. That is ordinarily why they would demand that you provide them with advance assessments—to prove your ability to pay. They likely had no legal authority to make such a demand, but often, in the face of a denial, a condominium will negotiate payment of an advance assessment in exchange for approving a purchase by a risky buyer. Here, instead of amicably negotiating such a result, it sounds as if they unilaterally imposed that requirement on you—and you complied. Note further that a condominium association, pursuant to Section 718.112, Fla. Stat., is prohibited from making any charge in connection with the sale of a unit unless they are required to approve such transfer and the fee is provided for in the governing documents; and in any event, the fee may not be greater than $100. On that basis alone, it may be argued that the $6,750 constituted an illegal fee pursuant to this provision (the association will argue, in contrast, that the amounts were not a fee charged in connection with the approval of a transfer but were instead a prepayment of assessments as a condition for approval—I am not aware of any cases that have considered this distinction). Today, the association is holding your money (without any clear purpose or recourse) and is attempting to forcibly evict you from your unit. You are not going to resolve this issue without going to court. Because this is variably a fee dispute, or a title dispute, I doubt that this would be considered a matter that would be subject to arbitration. If I were representing a client in a similar situation, I would start by sending a civil theft demand letter. Under Florida law, Section 722.11, Fla. Stat., a person who has a cause of action for theft (outside and above any possible criminal penalties) may be entitled to threefold actual damages as well as recovery of reasonable attorney’s fees and court costs. To recover under this statute, you must first send a written demand and give the association 30 days to comply with the demand.
When you file an action for civil theft, you would include claims for unlawful detainer (as the association arguably has unlawfully detained your personal property in the unit by preventing you from accessing the building) and also claim damages for a wrongful eviction. Furthermore, you would ask the judge for a declaratory judgment, declaring you the rightful owner of the unit.
You would have an excellent case, but, of course, it is going to require an investment of legal fees. Based on the information you have provided, yours is a situation where I really think you have no choice but to hire a lawyer and pursue the association for these apparently wrongful acts.
Ryan D. Poliakoff
Partner, Backer Aboud Poliakoff & Foelster
Ryan D. Poliakoff is a partner of Backer Aboud Poliakoff & Foelster and serves as general counsel to condominiums, homeowners associations, and country clubs throughout South Florida. He is the co-author of New Neighborhoods —The Consumer’s Guide to Condominium, Co-Op, and HOA Living. In addition to representing associations, he is a frequent contributor at seminars and workshops for attorneys and board members, and he has written hundreds of articles for magazines and newspapers throughout the United States. He can be reached at firstname.lastname@example.org. For more information about his firm, visit www.bapflaw.com.