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Can Condo Set Minimum Rent for Units?

Can Condo Set Minimum Rent for Units?

The Florida Legislature states that the purpose of establishing a condominium is “To establish procedures for the creation, sale, and operation of condominiums.”[i]Nothing in this section literally grants the board the right to set a minimum rental fee required to be charged by unit owners. Palm Beach Hotel Condominium Ass'n v. Rogers,605 So.2d 143, 145 (Fla. 4th DCA 1992) (confirming that a declaration of condominium must be strictly construed); Brickell Bay Club Condominium Ass'n, Inc. v. Hernstadt,512 So.2d 994, 996 (Fla. 3d DCA 1987) (a statutorily required declaration of condominium governs the relationships between condominium unit owners and the condominium association; it is more than a mere contract spelling out mutual rights and obligations of the parties thereto; and it must be strictly construed).[ii]

“Association property” is that which does not include the units owned in fee simple by each condominium owner.[iii]The association does not have any proprietary right to any unit. The association can levy assessments. A “special assessment” is one that is not agreed upon and “adopted annually”[iv]. Each unit owner enjoys “exclusive ownership” with all the rights, title, and interest that accompanies ownership of property in Florida.[v]Pursuant to this section of the law the association has no authority to set a minimum rental fee to be charged by unit owners. 

The “declaration” is what creates the condominium association.[vi](a) It must submit the property to condominium ownership, (b) state the name of the condominium,  (c) describe the area of land, (d) identify each unit uniquely, (e) contain a survey, (f) state each owner’s undivided share of the common elements, and (g) fractional liability for common expenses.[vii]Pursuant to this section of the law the association has no authority to set a minimum rental fee to be charged by unit owners.

The law in Florida prohibits the association from limiting the right of tenants to use the association property and the common elements.[viii]Pursuant to this section of the law the association has no authority to set a minimum rental fee to be charged by unit owners.

The officers and directors of the association have a fiduciary relationship to the unit owners.[ix]This duty does not grant the officers and directors the right to set a minimum rental fee to be charged by owners. Furthermore, since the “unit owner does not have any authority to act for the association by reason of being an owner”[x]a fortiori, the officers and directors do not have the right to act on behalf of the unit owner by setting a minimum rental fee to be charged by owners. This is especially so since the officers and directors are not a party to the rental agreement, nor are they or the other members third party beneficiaries of the contract. 

The powers and other duties of the association cannot be enlarged when expressly limited and restricted by law.[xi]The association has the power to manage the building, has the power to litigate on behalf of unit owners, “concerning matters of common interest to most or all unit owners”. Those which are enumerated in the law pertain to the common elements. This suggests that the association does not have authority over the affairs of unit owners regarding their right to contract and agree upon the amount of the adequate consideration which supports the agreement. The association specifically has the right to enter the owner’s unit, during reasonable hours to maintain the common elements, or prevent damage to the common elements.[xii]These limited property rights of the association mitigate against any argument that the association has the right to set a minimum rental fee to be charged by unit owner.

 

The right of the association to acquire title to a unit is strictly limited by law.[xiii]The association may have the right to purchase unites but the price is not fixed by statute and must be agreeable to the unit owner. Given this limitation it seems obvious that the association does not have the power to rent a unit, nor set a price to rent the unit, nor set a minimum rental fee to be charged by the unit owner. 

The Bylaws of the association are permitted to grant authority to the governing body. Required are a form of administration, voting requirements and no charge shall be made associated with a lease of a unit unless the association is “required to approve”; and the fee is stated in the declaration, articles, or bylaws. “Any such fee may be preset, but in no event may such fee exceed $100 per applicant other than husband/wife or parent/dependent child, which are considered one applicant.” The association may if provided for in the declaration or bylaws, require that the lessee place a security deposit in escrow with the association of not more than one month’s rent.[xiv]

Powers granted to the association include contracting to provide enjoyment, recreation, or other use of benefit to the unit owner, and must be fully disclosed in the declaration, or subsequently agreed upon by a majority of voting interests or as authorized in the declaration. As for owners who acquired title before the association amended the declaration to set a minimum rental rate per bedroom, the rent limitation would not apply. F.S. 718.110(13) Any amendment restricting unit owners’ rights relating to the rental of units applies only to unit owners who consent to the amendment and unit owners who purchase their units after the effective date of that amendment.Setting a minimum rental rate by the association would constitute an amendment restricting the unit owner’s freedom to contract with a new tenant and therefore such action would violate Florida law. 

The court decisions regarding the right of an association to change the rental policy pertain to the term of the lease and the number of leases permitted within a prescribed period of time. While I could find no Florida cases which prohibit an association from setting a minimum rental fee to be charged by the unit owner, an owner’s right to lease includes not only the term of the lease and the number of leases per period of time, but the right to lease also includes the consideration to be agreed upon between the owner and the tenant. The Florida legislature clearly prohibits the association from applying to current owners who do not consent to the amendment, “any amendment restricting unit owners’ rights relating to the rental of units”. The “statute specifically prohibits the enforcement of amendments to the declaration that diminish the right to rent set out in the documents as against non-consenting owners.”

[i]F.S. 718.102

[ii]Edlund v. Seagull Townhomes Condominium, 928 So.2d 405 (Fla. App., 2006) at 407

[iii]F.S.718.103(3) and F.S.718103(8)

[iv]F.S. 718.103(24)

[v]F.S. 718.103(27)

[vi]F.S. 718.103(15)

[vii]F.S. 718.104(a) through (g)

[viii]F.S. 718.106(e)(4)

[ix]F.S. 718.111(a)

[x]F.S. 718.111(c)

[xi]F.S. 718.111(2); see also chapter 607 and 617

[xii]F.S. 718.111(5)

[xiii]F.S. 718.111(9)

[xiv]F.S. 718.111(2)(i)