Financial Screening of Purchasers: How Far Is Too Far?

A few months back a case came before the county court in the 20th Judicial Circuit for Collier County, wherein a prospective buyer challenged the validity of a board-adopted rule which required that all prospective buyers provide two years of tax returns with their application for ownership approval. This requirement was in addition to the background check and credit check that were also required. While this is only a county court case and, therefore, has no precedential value other than to the parties themselves, there are principles addressed of which associations and managers should be aware; even though many learned attorneys would opine that the conclusions of the court are legally flawed under the facts of the case and, if appealed, would likely be overturned. Nevertheless, there are still nuggets of knowledge that can be gleaned from this case.

In this case, Mech v. Crescent Beach Condominium Association, Inc., Case No. 19-SC-3498, decided June 2020, the purchaser, who was the plaintiff, was seeking to buy a unit at Crescent Beach Condominium for $400,000, which was to be paid in cash. The purchaser purportedly had a clean background and a credit score of 800. Nonetheless, the board required that, like all other prospective purchasers at the condominium, this purchaser needed to produce his tax returns in order for the association to approve the transfer. The purchaser refused to provide his tax returns and cited his good credit score and clean background as evidence enough for approval. Eventually, an impasse was reached, and the purchaser canceled the contract. Then he brought the county court lawsuit challenging the requirement. (Generally speaking, typically under current Florida law, the purchaser would not have legal standing to even bring the claim against the association; but it does not appear that this legal infirmity was raised by the association, which allowed the case to proceed.)

The purchaser challenged the rule, arguing that the rule was not within the scope of the association’s authority to adopt, nor did it reflect reasoned decision-making. (It is noteworthy to point out that, after…

Governing Documents Amendments in Light of Covid-19

Rembaum’s Association Roundup | Governing Documents Amendments in Light of Covid-19: Making Lemonade Out Of Lemons

As a result of the unexpected COVID-19 crisis and its ramifications on Florida’s community associations, there are lessons that can be learned. Early on, an unexpected issue many community associations faced was whether the board could rely on the emergency powers set out in the Florida Statutes to help protect both residents and property alike during this time of uncertainty (the “emergency power legislation”). The Condominium, Cooperative, and Homeowners’ Association Acts each provide that the board of directors is granted certain emergency powers in response to damage caused by an event for which a state of emergency is declared by the Governor. While local governments at the city and county level may similarly declare a state of emergency, the emergency powers only spring into existence upon the Governor’s issuance of an executive order declaring a state of emergency in response damage caused by event.

These emergency powers include, just to name a few, the ability to cancel and reschedule meetings, conduct such meetings with…