Tuesday, April 12, 2011

Will the Demand For Rent Statute Withstand a Grand Challenge?

The "sky is falling" mentality is probably too extreme in the aftermath of the recent Cohn v. Grand decision. Still, passing the Pomponio balancing test (assuming it will be applied in subsequent court challenges) is no easy feat.

The Florida Supreme Court explicitly affirmed the 3rd DCA's decision in Grand and the 3rd DCA did explicitly apply the Pomponio test to the statute at issue. What does this all mean? Let's take a look at the change made last year to the common interest ownership statutes allowing associations to collect rent from tenants in delinquent properties and see if such statutory change could withstand the Pomponio test as cited by the 3rd DCA in the Grand case.

The first question posed by Pomponio is: "Was the law enacted to deal with a broad, generalized economic or social problem?"

If the Demand for Rent statute was being scrutinized, I would say the answer to this question is Yes. The Demand for Rent language was added to address the distressed financial situations of associations with absentee owners that don't pay their assessments but generate revenue from renters.

The second question posed by Pomponio is: "Does the law operate in an area which was already subject to state regulation at the time the parties' contractual obligations were originally undertaken or does it invade an area never before subject to regulation by the State?"

The answer to this question if the Demand for Rent language is being scrutinized is probably No because the relationship between investor owner/tenant was not subject to significant regulation prior to the enactment of the demand for rent language in 2010.

The third question posed by Pomponio is: "Does the law effect a temporary alteration of the contractual relationships of those within its coverage, or does it work a severe, permanent and immediate change in tohse relationships irrevocably and retroactively?"

I think the answer to Question #3 can be argued both ways. You can argue that the impairment is temporary (i.e. the impairment will end when the owner catches up on the delinquency) or you can argue that the impairment is immediate and severe.

If I were the trier of fact in a case where a delinquent owner was challenging his or her association's right to collect rent from the tenant where the documents did not contain "as amended" language, I would uphold the application of the statute but it would be a very close call!

You be the Judge! Run through the many legislative changes made to Chapter 718 over the last decade and see which you would uphold applying the test set forth above.

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.

1 comment:

  1. I think it'll be considered as a challenge. Thanks for sharing that valuable information.

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