By Michael J. Gelfand, Esq. / Published April 2019
It is not uncommon for Florida homeowners to maintain several homes. An owner may travel “up north” for the summer. An association may be aware of an owner renting out their property, even when there are leasing prohibitions. What happens when an association files a lawsuit against an owner and then does not exhaust all known addresses when attempting to serve the owner with the new lawsuit papers? The new court decision discussed below provides a special incentive to associations to properly maintain owner addresses and communicate complete address information to counsel.
The association is not just stymied if an owner “skips town” and cannot be found. Florida law provides a special method of providing notice to an owner who cannot be found. That special method is formally called “substitute service.” It is a substitute for hand delivery of papers, and in foreclosures usually involves publishing a Clerk of Court issued notice in a newspaper of general circulation. You have certainly seen the “Legal Notice” columns in the newspaper but, ironically, likely have paid little attention to the fine print notices.
Though very helpful to associations seeking to foreclose an assessment lien, the pitfalls of substitute service, including a void judgment and the unwinding of a lien foreclosure action, were highlighted in Benavente v. Ocean Village Property Owners Association, Inc., 43 Fla. L. Weekly D 2635 (Fla. 4th DCA, November 28, 2018). The association sued the homeowners to foreclose a lien for unpaid assessments. The association provided statutory notice of intent to lien and notice of intent to foreclose to the homeowners at three addresses, one being the property in Fort Pierce and the other two addresses being in Key Biscayne. The homeowners signed a Certified Mail receipt at one of the Key Biscayne properties.
Despite having three addresses, the association tried to serve the foreclosure suit papers on the owners at the Fort Pierce address. The association sent the process server not a few times but seven times; but never did it try to serve the owners at either of the Key Biscayne properties!
Having failed to serve the owners at the Fort Pierce address, the association filed an affidavit for substitute service by publication alleging the following:
4. That Affiant has made a diligent search, an honest and conscientious effort and inquiry and good faith efforts on information available to locate [the Homeowners] by use of:
a. Process servers/investigators,
b. Computerized legal research and people trackers,
c. Skip traces, and
d. DBPR license searches.
5. That the residences of [the Homeowners] is unknown and attempts to track down [the Homeowners] at other known addresses reasonably available to Plaintiff have been unsuccessful.
When there was no response to the published notice, a default final judgment of foreclosure was entered. That was followed by a clerk’s foreclosure sale and eventually a certificate of title being issued to a third-party high bidder at the foreclosure sale.
After all of this, the owners began filing papers in the foreclosure action, seeking to have the judgment and the certificate of title vacated, and to quash service. The owners claimed that a diligent search was not conducted. The owners asserted that the association knew their primary address was in Key Biscayne and that the Fort Pierce address was a rental property. Furthermore, the owners claimed that the association had their email address. The trial court denied the motion to quash service and vacate the sale.
The Florida appellate court reversed the decision of the trial court, finding that the foreclosure was not just able to be challenged but was void as a matter of law for two reasons. First, the court stated that the Affidavit for Service by Publication was facially defective because of the lack of disclosure of the known addresses. Second, the court stated the association did not conduct a diligent search because the association had a Certified Mail receipt showing that the owners received mail at one of the Key Biscayne properties as well as an email address. The court declared, “while the association made some effort to search for and serve the homeowners, it failed to uncover an easily accessible address.”
This case is a reminder of the need for associations to utilize addresses that are known to the association. This usually requires an association to dig into its files, paper or electronic, for all known addresses. This is part of what is referred to as a “proper diligent search” before resorting to substitute service by publication. Addresses to be evaluated as part of the substitute service include alternative physical addresses as well as email addresses.
This process may seem to be time consuming, but in the “long run” the effort to uncover alternative addresses frequently is to an association’s benefit. As the goal is almost always to have assessments paid, not to foreclose, physically delivering foreclosure papers into an owner’s hands many times impacts an owner, and the owner seeks to pay!
Is a personal trainer in a fitness center like a “call girl” sitting at a clubhouse bar? This was how a Florida trial court described a dispute between a resident and a homeowners association regarding the resident’s use of a personal trainer in the association’s fitness center.
The facts in Charterhouse Associates v. Valencia Reserve Homeowners Association, Inc., 43 Fla. L. Weekly D 2645 (Fla. 4th DCA, November 28, 2018), indicate that Charterhouse, which owned property within the association, authorized the Brownes to live at the property and assume the ownership rights of Charterhouse in Charterhouse’s lot. The community included a fitness center which pursuant to a “Declaration” parcel owners and their invitees were granted access to for the use of owners, family members, guests, invitees, and tenants.
The Brownes paid and authorized their personal trainer to accompany them to the fitness center. The association thereafter contracted with a third-party vendor to be the exclusive provider of fitness services in the fitness center. In light of this exclusive contract, the association enacted a new rule prohibiting private trainers from working in the fitness center.
The Brownes and Charterhouse sued the association, claiming the association exceeded its powers and interfered with access rights by excluding their personal trainer from the fitness center. The trial court granted partial summary judgment in favor of the association.
The Florida appellate court agreed with the Brownes. The association exceeded the scope of its authority by enacting the rule which excluded personal trainers from the fitness center. The court stated, “When a homeowner exercises in the association’s fitness center and invites a third party along, whether for companionship or personalized guidance, they are using the property for a recreational purpose.” The Browne’s personal trainer was not seeking business from other residents nor was he at the fitness center without the Brownes. In other words, the personal trainer was more like the invitee’s “girlfriend” at a clubhouse instead of the uninvited licensee “call girl.”
This case highlights the problem with Florida community associations entering into “exclusive” contracts, especially those which claim to bar an owner’s vendor from using association property. If you have any questions about similar provisions in contracts, do not hesitate to consult with your association’s counsel.
Michael J. Gelfand, Esq.
Senior Partner of Gelfand & Arpe, P.A.
Michael J. Gelfand, Esq., the Senior Partner of Gelfand & Arpe, P.A., emphasizes a community association law practice, counseling associations and owners how to set legitimate goals and effectively achieve those goals. Gelfand is a dual Florida Bar Board-Certified lawyer in Condominium and Planned Development Law and in Real Estate Law, Certified Circuit and County Civil Court Mediator, Homeowners Association Mediator, an Arbitrator, and Parliamentarian. He is a past Chair of the Real Property Division of the Florida Bar’s Real Property, Probate & Trust Law Section, and a Fellow of the American College of Real Estate Lawyers. Contact him at firstname.lastname@example.org or (561) 655-6224.