Florida appellate court decides that a master association has no standing to sue its condominium association.

Recently, the trial judge presiding over Miami-Dade County's Complex Business Litigation Division was faced with a standing question when he ruled in favor of the defendants at the summary judgment phase in the case of De Soleil S. Beach Residential Condo. Ass'n, Inc. v. De Soleil S. Beach Ass'n, Inc.

This case stems from a dispute arising out of the operation of the Z Ocean Hotel. The building is composed of three legal parcels of land: a residential parcel, a commercial parcel and a garage parcel, each governed by separate rights, obligations and interrelationships. The owners of these three parcels are the three members of the master association. The master association's board consists solely of the owners of these three parcels: the developer, which is the owner of both the garage and commercial parcels; the residential association, an entity governed by a board and a membership consisting of the owners of the 80 condominium units.

The master declaration governs the shared facilities used by all three parcels of land. The residential association is governed by a declaration of condominium. In the event of inconsistencies between the two documents, the master declaration controls. In December 2017, the residential association convened a board meeting wherein they voted to suspend the voting rights of approximately 60% of its members for non-payment of its association assessments. 

By suspending the voting rights of most of the owners (including the developer’s), the residential association believed this would eliminate the need to satisfy the 75% membership approval condition precedent needed to file a lawsuit. In January 2018, the residential association filed suit seeking declaratory judgment against the defendants. In October 2018, the defendants moved for summary judgment, arguing the residential association’s suspension of member voting rights was unlawful and invalid because the residential association had failed to satisfy the condition precedent necessary to file a suit and lacked standing because it had failed to obtain the 75% vote of its members necessary to file suit. The trial court agreed and entered summary judgment in the defendants’ favor. This appeal followed. 

The master association contended the suspension of voting rights occurred illegally and without the sufficient number of voting units involved. The Third District examined whether the master association had “such a legitimate interest in a matter as to warrant asking a court to entertain it.” The Third District held that, because the master association is not subject to the terms and conditions of the residential association’s declaration of condominium, it did not have standing to challenge the residential association's suspension of 60% of its members’ voting rights. At the same time, the appeals court held that the developer had standing to sue the condominium association. 

Miami-Dade’s Complex Business Litigation Division presides over numerous cases involving condominium associations, master associations, and developers with convoluted inter-relationships between these and other various actors, including vendors and contractors. The court’s examination of standing in this context will assist with similar complex condominium cases in the future.
 

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