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Valencia Reserve Homeowners Association, Inc. v. Boynton Beach Associates, XIX, LLLP

Florida Court of Appeals, Fourth District

August 28, 2019

VALENCIA RESERVE HOMEOWNERS ASSOCIATION, INC., Appellant,
v.
BOYNTON BEACH ASSOCIATES, XIX, LLLP, Appellee.

         Not final until disposition of timely filed motion for rehearing.

          Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Peter D. Blanc, Judge; L.T. Case No. 502016CA007123XXXXMBAB.

          Robert Rivas of Sachs Sax Caplan, P.L., Tallahassee, for appellant.

          Mark F. Bideau and Robert R. Kane III of Greenberg Traurig, P.A., West Palm Beach, and Julissa Rodriguez and Jay A. Yagoda of Greenberg Traurig, P.A., Miami, for appellee.

          Boatwright, Joe, Associate Judge.

         Appellant, Valencia Reserve Homeowners Association, Inc. ("HOA"), appeals the circuit court's final order granting partial summary judgment in favor of Appellee, Boynton Beach Associates XIX, LLLP ("Developer"). The HOA challenges the Developer's use of certain monies collected from homeowners to offset the Developer's financial obligation to the HOA. Specifically, the HOA claims that the Developer's use of the "working fund contribution" to offset its financial obligation to the HOA is prohibited by the Homeowners' Association Act ("HOA Act"), codified in Chapter 720, Florida Statutes. We hold that the Developer's use of the working fund contributions to offset its financial obligation to the HOA does not contravene Chapter 720. Therefore, we affirm the decision below.

         BACKGROUND

         Valencia Reserve is a single-family home residential community located in Palm Beach County. Valencia Reserve's HOA was established and governed pursuant to a Declaration of Covenants, Restrictions and Easements ("declaration") and the HOA Act. The Developer controlled the HOA from its inception until the date of turnover, when the Developer gave control of the HOA to the community's homeowners.

         According to the declaration, the Developer was required to pay its share of assessments on any lot owned by the Developer while the Developer was in control of the HOA. Pursuant to the declaration and the HOA act, the Developer had the right to excuse itself from payment of its share of assessments related to its lots so long as the Developer obligated itself to pay the deficit-i.e., any operating expenses incurred during the guarantee period which exceeded the assessments receivable from other members. The guarantee period began when the Developer recorded the declaration and ended upon the turnover date.

         The declaration defined the term "deficit" as the difference between the operating expenses incurred by the HOA during the guarantee period and the sum of: 1) the amounts assessed as guaranteed assessments against owners during the guarantee period; 2) the "working fund contributions"; and 3) any other income of the HOA.

         In order to offset the deficit obligation, the Developer used a provision in the declaration called the "Working Fund Contribution." The declaration's section entitled "Working Fund Contribution" states as follows:

Each Owner who purchases a Lot with a Home thereon from [the Developer] shall pay to the [HOA] at the time legal title is conveyed to such Owner, a "Working Fund Contribution." The Working Fund Contribution shall be an amount equal to a three (3) months' share of the annual, non-abated Operating Expenses applicable to such Lot pursuant to the initial Budget . . . . The purpose of the Working Fund Contribution is to insure that the [HOA] will have cash available for initial startup expenses, to meet unforeseen expenditures and to acquire additional equipment and services deemed necessary or desirable by the Board. Working Fund Contributions are not advance payments of Individual Lot Assessments and shall have no effect on future Individual Lot Assessments, nor will they be held in reserve. . . . Working Fund Contributions . . . may also be used to offset Operating Expenses, both during the Guarantee Period . . . and thereafter.

         The Developer elected to excuse itself from paying its share of assessments and thereby obligated itself to pay the deficit incurred during the guarantee period. Before the turnover, the Developer used the working fund contributions to satisfy the deficit, as authorized by the above provision.

         The HOA then sued the Developer, claiming that the working fund contributions could not be used to offset the deficit obligation under the HOA Act. Both parties filed cross motions for summary judgment. The circuit court granted summary judgment in favor of the Developer, finding that the ...


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