It is not uncommon in Florida for condominiums to be built upon land that is actually leased property. The Florida Condominium Act authorizes a condominium to be created upon land held under a lease provided that the lease conforms with some specific terms described in the Condominium Act. Some may be thinking "That's odd! You mean one can own a condominium unit but not the land it sits on?" Yes, in many cases, condominiums were built on land that was subject to a 99 year lease or some other rather long term. While the concept of building a condominium on leased property may seem odd, it is not uncommon at all. When you consider that the concept of condominium ownership itself creates real estate that potentially floats in mid air surrounded by other "floating" parcels of real estate, the concept of building on leased property does not seem so odd. Many condominium unit owners own condominium units that are built on leased property and may not even be fully aware of the nature or consequence of that arrangement.

For those unfamiliar with the risks of owning in a condominium built on leased property, a recent decision by the Fourth District Court of Appeal (the appellate court that hears cases from trial courts in Broward and Palm Beach Counties) is the judicial equivalent of a two by four to the head to any condominium unit owner whose condominium is built upon leased property. What started as a simple failure of the condominium association to make rent payments to the owner of the leasehold turned into a nightmare which ended with the owner of the underlying leased property dispossessing the unit owners and taking possession of the condominium property.

The facts, as described by the court in Blandin v. Bay Porte Condominium Association, Inc. (33 Fla. L. Weekly D1833 4th DCA 2008) reveal a tragedy of errors that resulted in these unit owners losing their condominium. The Association had not paid the rents for October and November, 2007. On November 7, 2007, the association's management company wrote a letter to the trial court taking the blame for the missed payments. The management company explained that the association had just hired the company to provide administrative and financial services, and that the company had been waiting to determine an accurate bank balance before writing any checks. The company requested that the trial court not penalize the unit owners for the delay. The trial court concluded that the management company's letter constituted good cause to allow for payment later than the court had originally ordered. The trial court ordered the landlord to accept checks for the October and November payments (which the association tendered at the hearing) and to continue accepting all future monthly payments during the pendency of the action. As it turns out, the association's bank did not honor the checks that had been tendered at the hearing because the person who signed the checks for the association was not an authorized signatory. The association sent replacement checks to the landlord's attorney's office, but one of the replacement checks lacked a signature. Apparently fed up with the series of errors concerning these payments, the landlord refused the association's secretary's offer to sign the unsigned check.

After the last instance when the monies were not paid because of the irregularity in the signing of the check, the court entered an immediate Final Default Judgment for Possession against the condominium association and its unit owners. On appeal, the appellate court affirmed the trial court's order granting the landlord's motion for final default judgment of possession. The court ordered that there be writs of possession issued, which, effectively, dispossessed all of the unit owners. The appellate court used the language contained in the Florida Landlord and Tenant Act to support its conclusion that the trial court had no alternative but to enter a final judgment of possession in favor of the landlord.

Section 83.232 (1) of the Florida Landlord Tenant Act provides that a tenant has an obligation to pay rent into the court registry during the pendency of an eviction action. If the amount to be deposited into the registry is in controversy, the tenant must pay an amount determined by the court into the registry on the date that the court makes the determination of the appropriate amount. The statute authorizes the court to extend the time period to allow for later payment upon good cause before the order is entered. In another section of that same statute, the law provides that, if the tenant fails to pay the money into the registry after the court has entered an order requiring payment, the effect of the failure to pay becomes an absolute waiver of the tenant's defenses and the landlord is entitled to an "immediate default judgment for possession without further notice or hearing thereon." In light of the mandatory language of the latter portion of the statute, the appellate court held that the trial court had no discretion to extend the period of time that the association would have to pay the past due rent without regard to the reasons for the series of errors that caused the default.

What does all of this mean to the average condominium association? It means nothing if your condominium is not built on leased property. If your condominium is one that is built on leased property, it is critical to ensure that payments are timely made to the landlord at all times. It may be prudent to set up an automatic withdraw arrangement with your bank to avoid the possibility that a payment would be missed. Given the fact that the effect of this case is so severe, it certainly behooves potential condominium buyers to inquire whether a condominium is built upon leased property. If the condominium is built upon leased property, careful consideration should be made as to whether another similar condominium that is not built on leased property may be a better value.

Stay tuned to BackerReport for further information about the effect and finality of this order. Given its significant impact on property owners in South Florida, it is entirely possible that the Fourth District may consider a motion for rehearing or the Florida Supreme Court may consider the issues raised in this case to be of such significant public importance that they will accept jurisdiction to hear an appeal of this order.

You may obtain back issues of BackerReport online by going to our website www.BackerLawFirm.com. Click the image above.