Mandatory Club Membership: To Amend or Not Amend?

10 April 2009 Publication
Author(s): Thomas M. Little

Legal News Alert: Hospitality, Resort & Golf

In early 2008, the Nineteenth Judicial Circuit Court of Florida issued a highly publicized ruling that held invalid an amendment to a homeowners’ association declaration requiring that all members of the Willoughby Community Association become at least social members of the country club. Granuzzo v. Willoughby Golf Club, Inc.1 The amendment to the declaration requiring mandatory membership included obligations that the members pay for the maintenance of the country club facilities as well as an annual food and beverage minimum. Club membership had been voluntary prior to the passage of the amendment.

In holding that the amendment could not be enforced, the Circuit Court relied heavily on prior decisions of the Florida Fourth District Court of Appeal, Flamingo Ranch Estates, Inc. v. Sunshine Ranches Homeowners, Inc.,2 and Holiday Pines Property Owners Association, Inc. v. Wetherington.3 Those decisions stand for the general proposition that declaration amendments should be enacted in a reasonable manner so as not to destroy the general scheme or plan of development within the community. In applying this standard in Granuzzo, the Circuit Court held that, even though the requisite 67 percent of the voting members approved the amendment, the amendments were not exercised in a reasonable manner and had the effect of destroying the general scheme or plan of the Willoughby Community. The Circuit Court explained further that property owners who had purchased in Willoughby prior to the passage of the amendment rightly believed, at the time of purchase, that they were not required to become members of the golf course or country club at any level of membership. Thus, the subsequent requirement of at least social membership, and its accompanying dues and other financial obligations, was an impermissible deviation from what had existed at the time of purchase.

The Circuit Court’s ruling in Granuzzo was appealed. However, the parties reached a settlement agreement before the appellate court rendered a decision. While the settlement was not made public, it has been reported elsewhere by the homeowners’ attorney that the settlement “grandfathers-in” existing parcel owners’ properties in perpetuity, such that only prospective buyers will be subject to the mandatory membership requirement. However, this settlement left the industry still questioning whether Florida’s courts would uphold declaration amendments that require mandatory club membership if the language expressly grandfathers-in existing parcels from the outset. That question now is under consideration in another lawsuit, Bristol Lakes Homeowners Association, Inc. v. Aberdeen Property Owners Association, Inc.4

That case addresses a series of amendments to the applicable declaration, one of which essentially divided the community into two parts — an Eastern Residential Area and a Western Residential Area. A subsequent amendment stipulated that prospective purchasers buying in the Western Residential Area will be subject to mandatory club membership, while existing owners in the Western Residential Area will be grandfathered-in and therefore would not be required to join the club. Eastern Residential Area owners, both current and prospective, were not encumbered by the mandatory club membership provision. The Fifteenth Judicial Circuit Court of Florida invalidated the amendment on the grounds that it created a fundamental change in the Aberdeen Community’s scheme of development since residents had relied on elective membership for more than two decades. Although there was a grandfathering provision for existing owners in the Western Residential Area, the court reasoned that this amendment impermissibly altered the relationship among the lot owners, since now Western Area homeowners who wish to sell are limited to prospective purchasers who are willing to accept the financial burden of mandatory club membership, while Eastern Area homeowners are free to sell without any such encumbrance. Accordingly, this court, like the Granuzzo court, held that the amendment destroyed the general scheme and scope of development within the community.

After the Circuit Court ruled against the amendment and in favor of the homeowners (represented by Bristol Lakes Homeowners’ Association), the master property owners association (Aberdeen Property Owners Association) filed in the Fourth District Court of Appeal a Petition for Writ of Prohibition, seeking to disqualify the Circuit judge who had made that ruling. The petition alleges bias by the Circuit judge in that he has been involved personally in a dispute with his own homeowners’ association regarding club membership dues. Depending on the outcome of that petition, an appeal of the underlying decision may later ensue, which quite possibly may allow the Fourth District to address the merits of the case. If such an appeal occurs, it will be interesting to see if the appellate court addresses the holding in the 2002 Florida Supreme Court case of Woodside Village Condominium Association, Inc. v. Jahren.5 In that case, the unit owners of a condominium association voted (with the requisite two-thirds requirement) to amend the condominium declaration’s leasing provisions to, among other things, limit the leasing of units to a term of no more than nine months in any 12-month period. Previously, leases in excess of one year were allowed with association approval. The Florida Supreme Court held that the amendment was proper and stated that these owners “purchased their units subject to the Declaration which expressly provides that it can be amended and sets forth the procedure for doing so.” As such, the owners were considered to be on notice of the amendability of the leasing provisions, since the declaration clearly allows for amendments. Although the Florida Legislature later amended Chapter 718 of the Florida Statutes, the Florida Condominium Act, to circumvent a portion of the Jahren holding,6 the case still stands for the proposition that purchasers (at least with respect to those buying into condominium communities) are on notice of the potential for future amendments that could adversely affect them. Interestingly, the court in Granuzzo tracked some of the language in Jahren in order to distinguish and dismiss any applicability, since the Jahren holding was in the context of a condominium association — a much more highly regulated and restricted form of property ownership when compared to other non-condominium forms of property associations such as those in Granuzzo and Bristol Lakes. If a mandatory membership case ever reaches Florida’s Supreme Court, it will be interesting to see if that Court makes the same distinction between property association forms.

1 Fla. 19th Cir. Ct. 2008.

2 Fla. 4th DCA 1974.

3 Fla. 4th DCA 1992.

4 Fla. 15th Cir. Ct. 2008.

5 Fla. 2002.

6 See, section 718.110(13), Florida Statutes, which now states that “[a]ny amendment restricting unit owners’ rights relating to the rental of units applies only to unit owners who consent to the amendment and unit owners who purchase their units after the effective date of that amendment.” (Please note that this grandfathering provision was placed in Florida’s Condominium Act, and thus applies only with respect to condominiums, not other property/homeowners’ association forms.)

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues.

If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney or the following individual:

Thomas M. Little
Tampa, Florida

Anthony M. Rodriguez
Tampa, Florida

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