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Article by Gary Mars in Today’s Daily Business Review: “Questions Revealed by Ruling Over W Hotel Amenities Require Legislative Fix”

GaryMars-200x300An article authored by the firm’s Gary M. Mars was featured as the “Board of Contributors” expert guest commentary column in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is titled “Questions Revealed by Ruling Over W Hotel Amenities Require Legislative Fix,” focuses on a recent ruling by the state’s Third District Court of Appeal that calls into question the legal framework for many Florida condo-hotels.  The appellate panel ruled in favor of an Icon Brickell condominium owner’s claim that the property’s declaration broke state law by giving ownership and control of shared facilities to the owner of the W Miami Hotel.  Gary writes that the decision signals the need for Florida’s lawmakers to consider legislative amendments to the state’s condominium laws specifically addressing the authority over common elements at condo-hotel properties.  His article reads:

. . . The 50-story Icon Brickell Tower 3 includes the 148-room W Miami, formerly the Viceroy Hotel, in addition to 372 condominium residences. New Media Consulting LLC, the owner of one of the units in the building, filed suit in Miami-Dade Circuit Court in 2018 against the building’s condo association alleging the property’s declaration of condominium gave the owner of the W Miami Hotel too much authority in violation of the Florida Condominium Act.

dbr-logo-300x57The plaintiff prevailed in the trial court via a summary judgment, which concurred that parts of the property’s declaration broke state law by giving ownership and control of the shared facilities to the hotel owner. The ruling essentially ordered the association to amend its declaration in accordance with state law, notwithstanding the fact that changing condominiums’ governing documents typically requires prior approval by a daunting super majority (usually 2/3 or more) of associations’ entire voting membership.

In the subsequent appeal, the Third District Court of Appeal panel focused on the declaration’s treatment of the common elements and shared facilities, including the hotel and lobbies. The governing document designates that all the building’s elements required to provide for utilities and other services to more than one unit or to the common elements are considered shared facilities that are owned and controlled by the hotel owner. This includes the residential lobbies and elevators as well as all wires, conduits, pipes, ducts, transformers, and cables.

Furthermore, the declaration places the obligation on the condominium owners for all expenses incurred by the hotel owner for the maintenance, repair, replacement, improvement, management, and operation of these shared facilities.

“This recharacterization, and the resultant expropriation of undivided common ownership, indubitably contravenes the edict of the act,” concluded the Third DCA’s unanimous opinion, noting that Florida law grants unit owners an undivided share in all common elements.

With the popularity of condominium-hotel towers that feature both a full-service hotel and condominium residences, this recent appellate ruling presents serious issues that reveal the need for legislative attention.

For starters, the owner of the W Hotel, which could reasonably be considered an indispensable party in this action, was not involved as a party in the case between the unit owner and association.

The ruling also directs the association to change its governing documents, as if its statutorily required vote of the entire membership were a perfunctory matter, without acknowledging the fact that it may be unable to do so pending the results of its vote.

It also does not appear to address important questions involving the 10-year statute of limitations on such an action for a property that recorded its declaration of condominium in February 2009.

Finally, and perhaps most importantly, the opinion calls into question the validity and reasoning behind such provisions granting hotel operators the authority over shared facilities and amenities in condominium-hotel properties. Many condo-hotels are structured in such a fashion to enable the hotel operator to maintain the property to its own standards in order to maximize bookings and revenues, which benefits the unit owners whose residences are part of the hotel’s rental pool. All unit owners are made aware of these provisions before they buy at such properties, and many may be unwilling to change them because of a perceived negative impact on their ROI. . .

Gary concludes his article by noting that the state legislature should take a close look at the specific questions raised by the this ruling surrounding shared facilities and amenities at condo-hotel properties. He suggests that the Florida lawmakers should consider amending the state’s condominium laws to clarify the exact authority of associations and hotel owner/operators for condo-hotel properties over their common elements. Otherwise, he warns that this and other similar rulings will continue to pose problematic legal questions and remedies for many Florida condo-hotels.

Our firm salutes Gary for sharing his insights into the potential repercussions of this ruling and how the Florida legislature should respond with the readers of the Daily Business ReviewClick here to read the complete article in the newspaper’s website (registration required).

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