b'DETERIORATION CONSTITUTING AIn reversing the bankruptcy court, Federal DistrictMATERIAL ALTERATION CourtJudgeStevenMerrydayappliedCoronadoandPursuant to 718.113 (2)(a), Fla. Stat., . . . there found that the association indeed had an obligation toshall be no material alteration of . . . the common ele- undertake the repairs, and its failure to do so was thements without the requisite vote of the membership as proximate cause of the management entitys losses.Butprovidedinthedeclarationofcondominium,orbya Judge Merryday independently found that the abandon-vote of 75% of the membership if no percentage is set mentofrepairsbytheassociationalsorepresentedaforth in the documents. material alteration of the common elements:Havecommonelementsdeterioratedbyyearsofwear, insect infestation, hurricane damage, etc., and not Further, by allowing the Colony to deteriorate,rehabilitatedbytheassociationbacktotheiroriginal the Board and the majority of the memberscondition,beenmateriallyalteredasdefinedin impermissibly altered the common elements to the718.113(2)(a), Fla. Stat.,So thought one Tampa fed- detriment of a minority of the memberseral district judge sitting in an appellate capacity in In re The Condominium Act requires that no materialColonyBeach&TennisClubAssociation,Inc.,456 alterationto the common elements [occur]B.R. 545 (2011). except in a manner provided in the declarationThe Colony Beach & Tennis Club (The Colony) Fla. Stat. 718.113(2)(a). was(ithasbeentorndownbyorderofthe Townof The purpose of [this] provision [is] to protect theLongboatKey)a237-unithotelcondominiumon [unit] purchaser against unanticipated changes inLongboat Key.(The Colony, as a footnote to history, the common elements which could dramaticallyaccommodatedPresidentGeorgeW.Bushandhis affect the cost and enjoyment associated withentourage the evening of September 10, 2001). Per the owning a condominium. Wellington Prop. Mgmt.documents, control of the use of units was delegated to a v. Parc Corniche Condo.Assn, Inc., 755 So.2d 824,management entity which ran the hotel operation. The 826 (Fla. 5th DCA 2000).Deterioration of theunit owners were limited partners in the management common elements is an alteration andentity, and were entitled to the use of their unit for one achange against which the Condominium Actmonthayear.Thecondoassociationwasobliged protects the members who favor repairing theby the documents to maintain and repair the common common elements. Id. at 563.elements.TheColonyoperatedsuccessfullyuntil2006. DETERIORATIONThe problem was that most of the buildings were town- AFFECTING INSURABILITYhouses of wood construction, and no reserves had been PursuanttoFloridaStatute718.111(11)(a),collectedduringthe30-yearlifeoftheproperty.In a condo association is required to insure the common ele-2006, the management entity requested that the associa- ments for the replacement cost of the insured property astion pass a $50,000 per unit special assessment to reha- determinedbyanindependentinsuranceappraisalorbilitate the common elements and the unit interiors. The updateofapriorappraisal.Replacementcostboardoftheassociation,andmanyoftheowners, coveragemeanscoverageforthefullcostofrepairingbelieved that the management entity should share a por- and/or replacing damaged property without deduction fortionoftherehabilitationcost. Thepartiesreachedan depreciation.Most declarations also make it mandatoryimpasse. that the association secure adequate insurance coverage forBy 2010, the structures had deteriorated to the point the common elements.where they were no longer habitable. The management It is typical upon renewal for property insurance forentityfiledforbankruptcy,andinthoseproceedings carriers to inspect the property and require repairs as a con-brought a claim against the association seeking $23 mil- dition of renewal.Applications for new coverage or renew-lion for its loss of profits from the hotel operation. The al also carry an affirmative obligation on the insured tomanagement entitys main argument was that the associ- report any conditions at the property which would createationhadfailedtomeetitsrepairobligationsunder enhanced risk for the carrier. The failure of associations tostatute and the declaration. The bankruptcy judge found rehabilitate aging buildings can lead to the rejection of cov-thattheassociationhadnolegalobligationtothe erage, or denial of a claim due to non-disclosure of knownmanagement entity to undertake the repairs. defects in the buildings at time of application. ContinuedFFall 2021 Suncoast Review - 9'