Is Your Master Community Association Actually a Condominium Association Under Florida Law?
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The evolution of planned development communities within the State of Florida has been quite fascinating. Nowadays, the development of massive communities with abundant and extravagant amenities, numerous planned phases and multiple overlapping associations is common. Some communities have multi-condominium associations; some have a combination of townhomes, single family HOAs and condominiums; some include mixed use condominiums; and nearly all are now developed with a governing master association. The multiple associations governing these developments often have overlapping duties and authority, with ultimate control delegated to a master association.
Master association declarations are often nebulous concerning the type of association it is and which chapter of the Florida Statutes controls. Master associations are nearly always established as non-profit corporations and are, therefore, governed by Chapter 617, Florida Statutes (the Florida Not For Profit Corporation Act). But is your master association also an HOA governed by Chapter 720, Florida Statutes (the Homeowners Association Act) or a condominium association governed by Chapter 718, Florida Statutes (the Condominium Act)? The distinction not only drastically affects governing law but also the association’s authority and the rights of the members. If your master declaration is silent on the master association’s form and structure, this blog post will help you determine whether your master community association is actually operating as a condominium association under Florida law.
The Florida Supreme Court has held that when a master association governs both condominium units and single-family lots, and the condominium units are also governed by their own condominium sub-association, then the master association “is not the corporate entity responsible for the operation of the condominium.” Raines v. Palm Beach Leisureville Community Ass’n, Inc., 413 So.2d 30, 32 (1982). Rather, the sub-association is the entity responsible for the operation of the condominium and the master association shall not be considered a condominium association if its declaration does not expressly subject it to Chapter 718. Id. In this scenario, the master association will either be considered an HOA governed by Chapter 720 or simply a non-profit corporation only governed by Chapter 617.
A Florida Fifth District Court of Appeal case discussed the “constituency test,” which analyzes a master association based on whether its “membership is comprised of only condominium unit owners, and only condominium unit owners have rights in the property administered by the association.” Downey v. Jungle Den Villas Recreation Ass’n, Inc., 525 So.2d 438, 440 (Fla. 5th DCA 1988). The court held that if a master association is entirely owned and controlled by condominium unit owners and the property subject to the master association is for the use and benefit of condominium unit owners exclusively, then the master association is considered a condominium association governed by Chapter 718. Id. The reasoning is that, in this scenario, the master association exists solely to serve condominium property and unit owners. Id.
The Downey case also discussed the “function test,” which is whether a master association’s “functions and actions, in substance, are those of a condominium association under Chapter 718.” Id. at 441. In other words, if a master association’s only functions and actions are exactly those of a condominium association, then it is considered governed by Chapter 718. The court explained the legislative intent of Chapter 718 “should not be vulnerable to circumvention by the simple act of setting up an ostensibly independent corporation empowered to perform some of the functions of a condominium association but without the unit owner protections provided by Chapter 718.” Id.
Florida’s First District Court of Appeal has its own test. See Heron at Destin West Beach & Bay Resort Condominium Ass’n, Inc., v. Osprey at Destin West Beach, 94 So.3d 623, 630 (Fla. 1st DCA 2012). It states a master association will meet the definition of a condominium association “if it is primarily responsible for the operation of real property or facilities that are not common elements of an individual condominium or property of a condominium association and:
- condominium unit owners have user rights in the master association’s property;
- voting membership is exclusively condominium unit owners (or their agents or representatives);
- membership, either directly by a condominium unit owner or indirectly through an agent or representative, is a required condition of unit ownership; and
- the master association is authorized to assess its members or affected owners for the payment of shared expenses, and any unpaid assessment may ultimately become a lien on a condominium parcel or on common elements of a condominium.” Id.
In sum, if a master association governs single family homes or other non-condominium properties or if its membership might eventually be partially comprised of non-condominium dwellers then it is not considered a condominium association under Florida law. See Downey 525 So.2d at 441. Absent that, an analysis should be taken of the master association under the “constituency test,” the “function test,” and Florida’s First District Court of Appeal test to determine whether it should be considered a condominium association or not. If you find your association involved in such a dispute, it is strongly recommended that the association consult with an experienced community association attorney.