By Kristen Ferrer / Published December 2020
Condo hotels are more common in Florida than many would think. Although the details of how condo hotels are structured varies, one common theme applies: they are subject to certain laws which govern condominiums (the Condominium Act). For owners of condo hotel units, it is important to understand the difference between shared facilities and common elements and who controls them. Recently, the Third District Court of Appeal issued an opinion on the matter of whether the governing documents for a condo hotel can reclassify certain amenities and/or common elements as “shared facilities.”1
Unlike common elements, which are certain portions of the condominium property that are subject to the association’s control and maintained by funds collected from unit owners via monthly assessments, shared facilities are typically controlled by the hotel operator rather than the association. In many instances, the hotel operator then charges assessments to the unit owners (in a manner similar to the condominium association) to fund the maintenance, repair, and replacement of these shared facilities. Unlike condominium assessments, which are determined based upon the association’s annual budget, the creation and approval of which is governed by certain guidelines established in the Condominium Act, the hotel operator assessments charged in IconBrickell arose from a budget which was not submitted to the unit owners and allegedly provided for no oversight from the association. In challenging the hotel operator’s authority, unit owners in IconBrickell alleged that the hotel operator’s assessments were not being charged against unit owners in proportion to their ownership interest in the common elements—a requirement that associations must abide by when assessing unit owners for the expenses related to the common elements.
Accordingly, in IconBrickell the unit owners challenged the provisions of the association’s governing documents which reclassified certain items that are typically considered common elements, such as the property and installations required for the furnishing of utilities to more than one unit, as shared facilities. Under the Condominium Act, associations are ultimately responsible for the operation of the common elements; however, the unit owners in IconBrickell argued that the reclassification of certain common elements as shared facilities ran afoul of this requirement. The Court in IconBrickell issued a narrow ruling which prohibits the reclassification of common elements defined in §718.108, Fla. Stat., as shared facilities. The Court did not say that the transfer of control and ownership of all amenities traditionally designated as common elements was not permitted. Instead, the Court focused solely on those common elements expressly provided for in §718.108, Fla. Stat.
What does this mean for other condo hotels? Well, it is not entirely clear. While common elements listed in §718.108, Fla. Stat., may not be designated as shared facilities and, accordingly, the ownership and control of same transferred to a hotel operator, the IconBrickell decision does not prohibit governing documents from reclassifying other common elements not listed in §718.108, Fla. Stat., as shared facilities. Moreover, the opinion does not provide clear guidance for current condo hotels whose governing documents may reclassify the §718.108, Fla. Stat., common elements as shared facilities. Is termination of the condominium warranted? Should the governing documents be redrafted entirely? Probably not. Perhaps an amendment to the governing documents to correct the improper reclassifications would suffice.
Importantly, the decision in IconBrickell is not yet considered final, as the parties still have an opportunity to seek re-hearing or certify the issue to the Florida Supreme Court for consideration. In the meantime, many condo hotels in Florida are left wondering if the IconBrickell decision means their governing documents violate the Condominium Act, and if so, what they should do about it. In circumstances such as these, where the answer to both of these questions is unclear, condominium associations and their members should seek out guidance from legal counsel who can evaluate the specific circumstances of their situation to determine how best to proceed.
1 IconBrickell Condo. No. Three Ass’n, Inc. v. New Media Consulting, LLC, Case No.: 3D19-0521 (Fla. 3d DCA, October 7, 2020).
Associate, Haber Law
Kristen Ferrer is an associate at Haber Law. Her practice focuses on representation of community associations, real estate law, and commercial litigation. In representing condominium and homeowner associations, Ms. Ferrer counsels her clients on all aspects of community association matters. Ms. Ferrer can be reached at email@example.com.