Special Assessments: There’s no Avoiding Them

A case recently issued by the 3rd District Court of Appeal confirms unit owner obligations to pay validly adopted assessments. The Court in Coral Way Condominium Investments, Inc. v. 21/22 Condominium Association, Inc., recited two important statements, one of which was made by the Florida Supreme Court in 1994 in the Ocean Trail Unit Association, Inc. v. Mead, case. Unit owners must understand the following pronouncements:  

Avoidance of the payment of a valid assessment, however, is not a remedy available to unit owners to cure unauthorized acts by officers or directors of an association.

A unit owner’s duty to pay assessments is conditional solely on whether the unit owner holds title to the condominium unit and whether the assessment conforms to the Declaration of Condominium and By-Laws of the Association, which are authorized by Chapter 718, Florida Statutes.

Coral Way owned several condominium units in the 21/22 Condominium. It challenged both the need and the validity of a special assessment levied by the Board of Directors. Coral Way claimed that it had evidence that the association paid for items that were not common expenses. It alleged that the association paid legal fees that were not incurred by the association. It also contended that the financial records did not reflect a lump sum payment made to the association in connection with a roof top lease. This unit owner took the position that a special assessment would not have been necessary and the association would have had the funds to accomplish the repairs identified if it accounted for the income associated with the rooftop lease or spent money for non-association expenses.

This issue comes up quite often. I mentioned in the Can Complaints about Association Operations Become a Defense Against Foreclosure post that owners often refuse to pay assessments when they feel the association neglects the property, manages ineffectively or wastes association funds. The case mentioned in that post concerned a set-off. While the facts that support a claim for set-off may be exactly the same as those in a claim for a Breach of Fiduciary Duty, the legal issues are quite different. The 4th District of Appeal made it perfectly clear that even if the Board of Directors breached their fiduciary duties, Coral Way still had to pay legally adopted assessments. Since the association followed the proper procedures and the assessment was to pay for a legitimate repair, Coral Way could not avoid its obligation to pay, even if it was later entitled to reimbursement as a result of wrongful use of association funds or accounting irregularities.

The bottom line result here is very important for unit owners to understand. The association’s obligation to maintain the property and otherwise fulfill its fiduciary duties is completely separate and independent of your obligation to pay validly adopted assessments (pursuant to a budget or a special assessment, as the case may be).

3 Comments

  1. One way to mitigate against special assessments is for home owners to purchase home owners’ insurance. This is no longer obligatory, however always a good idea, and under new provisions, this insurance will now include coverage against special assessments. Worth thinking about if you’re buying a condo…

  2. Our society is a bit too litigant-happy. I’ve owned plenty of condos, I don’t always agree with how the HOA is managed but clearly have a responsibility to contribute (via normal HOA fees and special assessments). Anyway, great information, I’ll actually retweet it and send it to a couple of clients.

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