Is Your Association’s Declaration Stuck in the Past?
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Florida’s community associations are largely governed by two main sources of authority: (1) the Florida Condominium Act (for condo associations) and the Florida HOA Act (for homeowners’ associations); and (2) the association’s governing documents. While court opinions, State of Florida arbitration decisions and the Florida Administrative Code also govern community associations, these sources largely rely on the Florida Statutes, association governing documents, or both, for any given issue. Concerning the hierarchy of this authority, the Florida Condominium Act and the Florida HOA Act (collectively referred to as the “Acts”) will trump community association documents (i.e., declarations, bylaws, articles of incorporation and rules and regulations). Stated another way, the Acts ultimately have the final say if the governing documents are silent or contradict the Acts on any issue. Because association documents are subordinate to the Acts, an association’s declaration that does not contain Kaufman Language is stuck in the past.
What some may not realize is that an association’s governing documents will adopt the Acts as they existed at the time the association was developed and its declaration was recorded. For example, a condominium association developed in 1999 will adopt the Florida Condominium Act as it existed in 1999, and a homeowners’ association developed in 2005 will adopt the Florida HOA Act as it existed in 2005. This is significant because the Contracts Clause of both the U.S. and Florida Constitutions prohibit the State from passing substantive laws that impair existing contract rights. Community association documents are contracts, containing rights and covenants running with the land, that owners (members) become bound by when obtaining the deed to their properties.
To clarify, there is a distinction between procedural statutes and substantive statutes. Procedural statutes are those that provide the correct procedure for getting something accomplished, such as the procedure for filing an arbitration complaint. Substantive statutes, on the other hand, are those that affect a person’s economic and property rights and the ability to regulate those rights.
The Contracts Clause precludes the enforcement of amendments to substantive statutes to previously existing contracts. Amendments to procedural statutes are not impacted by the Contracts Clause and will apply to all community associations no matter when they came into existence. For example, an amendment that changes the procedural process for filing an arbitration complaint applies to all associations. Conversely, amendments which affect substantive statutes and rights generally will not apply to existing associations or its members—that is, unless an association’s declaration contains Kaufman Language.
Kaufman Language, named after the 1977 case of Kaufman v. Shere, is language contained within a declaration that expressly incorporates subsequently-enacted amendments to the Florida Statutes into the association’s governing documents. An example of Kaufman Language is a clause that states “this Declaration is governed by the Florida Condominium Act, Chapter 718, Florida Statutes, as it exists on the date hereof and as it may be amended from time to time.” (Emphasis added.) The emphasized portion—“and as it may be amended from time to time”—is the Kaufman Language, which effectively incorporates all future statutory amendments into the declaration. Without that phrase, or similar language qualifying as Kaufman Language, an association is subject to substantive Florida law as it existed at the time of the association’s development. If this applies to your association, then it is, effectively, stuck in the past.
There have been many favorable statutory amendments to the Acts over the past decade to help associations on substantive issues involving the collection of assessments, suspending use rights to amenities for rules violations, and other areas. Without Kaufman Language, associations developed prior to these favorable amendments cannot take advantage of these beneficial changes to Florida law. While many of the Acts’ amendments have been very favorable to associations, it is important to note that Kaufman Language is a sword that cuts both ways, and that its inclusion in association’s governing documents will incorporate all future statutory amendments—even if it is an amendment the association may not want. It is therefore worth it to have an experienced association attorney review your association’s governing documents to determine whether Kaufman Language exists. If it does not, then the question of whether it would be beneficial to amend the governing documents to include Kaufman Language is worth exploring so that your association may take advantage of all statutory amendments.