Some additional information relating to my previous post on the possible illegality of the transfer fee. I have been trying to find any agency or other rulings on the application of §718.112(2)(i), prohibiting transfer fees for resales or leases of condo interests unless the declarations, bylaws, or articles of incorporation, provide that the association is required to approve any such transaction and the amount of the transfers fees to be charged are expressly stated in one of those governing documents. I have not found any specific court case rulings but there is a ruling by the Florida condominium, timeshare, and mobile homes agency that is instructive.
In
Potts v. Shell Island Beach Club Association, Inc., Case No. 2009-02-0900, the Florida Condominiums, Timeshares, and Mobile Homes Agency ruled on which statute applied to a claim for timeshare condominiums, the timeshare statute or the condominium statute. §718.112 has many different provisions applicable to condominiums and specifically states as to a few of the things in the statute, such as whether the association can prohibit proxy votes for issues to be determined at annual meetings and who could actually vote at meetings, that the statute expressly provided that those sections did not apply to timeshare condominiums. The agency ruled that the exceptions for timeshare condominiums applied solely to the specific sections in the statute that provided for that exception and only the condominium rules applied to any other sections in the statute. The Transfer Fees section of the statute does not provide any exception for timeshare condominiums, and thus it should apply to timeshare condominiums.
Of additional note, the §718.112 statute was in existence in 1990 and had the provision relating to transfer fees and provided that they could not be charged at all unless the association or managing entity was required in the POS documents to approve any resales. The statement in the declarations, declaring that
DVC retains no right to approve any resale, started with the original declarations for OKW, i.e., the DVD lawyers at that time appear to have been aware of the statute and a conscious decision may have been made to put that statement into the declarations to show DVC was not going to charge any such fees.
There is another related Florida statute. §689.28, which states:
“INTENT.—The Legislature finds and declares that the public policy of this state favors the marketability of real property and the transferability of interests in real property free of title defects or unreasonable restraints on alienation. The Legislature further finds and declares that transfer fee covenants violate this public policy by impairing the marketability and transferability of real property and by constituting an unreasonable restraint on alienation regardless of the duration of such covenants or the amount of such transfer fees, and do not run with the title to the property or bind subsequent owners of the property under common law or equitable principles.”
It thus generally declares that transfer fees are presumed improper. However, it allows homeowners’, condominium, mobile home or property owners associations to charge such fees “if the declaration, covenant, or law applicable to the association” allows it, indicating that the charge can be made only if allowed by law or it is expressly set out in the POS documents, which appears to mean that DVC must first adopt an amendment to such documents to allow any such fee, which may require the owners' actual vote.
One change to my prior post. That $100 fee limit stated in §718,112(2)(i) that can be charged for any transfer fees applicable to resales, if any fee can actually be charged, is now $150 as there is an inflationary adjustment to be made every 5 years, and one appears to have been made this year.
Also, there has been mention that perhaps the $500 fee created is to cover the necessary costs DVCM will incur to provide all the things it needs to provide relating to completing a resale. As I noted before, the timeshare statute, even if it applied, requires the managing agency to provide a number of verifications and documents relating to any sale, and DVCM is allowed to charge $150 maximum for doing that. The information and documents DVCM has to provide is basically all the information it needs to collect and provide for any resale, and under the statute it is not entitled to charge more than $150 for all that work. My sense is the $500 charge it has created means that DVCM has built in a profit amount and that its main purpose is to further reduce resales, AND, like so many fees that Disney has created in the past, it is likely that DVCM intends to raise it annually as the years pass. In other words, the future may be that selling will usually be an act that produces a loss.
