May 2018 Newsletter

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HOW TO WASH THE ASSOCIATION CLEAN OF A DIRTY LAUNDRY LEASE The termination and transitioning from one laundry vending company to another can be a dirty job. Rarely do companies fight as hard as laundry vending machine companies. While community associations should always ensure that their laundry lease with a laundry vending company includes clear termination provisions and specific obligations of the parties upon termination, the scenario as occurred in the case of CSC Service Works, Inc. v. Boca Bayou Condominium Association, Inc. and Commercial Laundries, Inc., recently decided by Florida’s Fourth District Court of Appeal in its March 7, <strong>2018</strong> published opinion, could happen to any association. The lessons learned from this case are equally relevant to many other contract situations, too. In this case, Boca Bayou Condominium Association, Inc. (“Association”) had a laundry lease with the laundry vending company, CSC Service Works, Inc. (“CSC”). Pursuant to the laundry lease, CSC was to install commercial washers and dryers in the Association’s 26 laundry rooms and maintain them for an initial term of seven years. The laundry lease also contained a seriously noxious and repugnant “right of first refusal” provision which gave CSC the option to again lease the Association’s laundry rooms before the Association is allowed to enter into a lease with a different laundry vending company. Upon the expiration of the initial seven-year term, the Association and CSC extended the laundry lease for an additional seven years. After the expiration of the extended seven-year term, CSC continued to lease the Association’s laundry rooms and have its washers and dryers in the Association’s laundry rooms on a month-to-month basis for almost two years. Around that time, the Association began receiving complaints from the residents. Spurred by the resident’s complaints, the Association sought lease offers from several laundry vending companies, including CSC and Commercial Laundries, Inc. The Association decided to go with Commercial Laundries. As such, the Association then sent CSC a letter terminating its laundry lease and inquiring as to when CSC would come to disconnect and remove its washers and dryers from the Association’s laundry rooms. Just over a week prior to Commercial Laundries’ scheduled delivery and installation of its washers and dryers, CSC informed the Association and Commercial Laundries that it was exercising its right of first refusal. However, CSC’s right of first refusal was denied by the Association. After several attempts by both the Association and Commercial Laundries to have CSC remove its washers and dryers, CSC failed to remove its washers and dryers in time for Commercial Laundries to install its washers and dryers. As a result, when Commercial Laundries arrived at the Association’s condominium with its washers and dryers in tow, Commercial Laundries disconnected CSC’s washers and dryers from the water and electric hook-ups and moved them to the side of the laundry rooms for CSC’s removal. None of CSC’s washers and dryers were damaged in the process or removed from the Association’s laundry rooms. Also, CSC was welcome to go to the Association’s laundry rooms, which remained unlocked, to remove their washers and dryers at any time. by Jeffrey A. Rembaum Kaye Bender Rembaum. Attorney’s at Law Due to CSC’s continued failure to remove its washers and dryers, the Association sent CSC a pre-suit demand letter providing that if CSC did not remove its washers and dryers within 15 days, the Association, as landlord, would evict CSC from the Association’s laundry rooms. Although CSC ultimately removed its washers and dryers in compliance with the Association’s letter, it was merely the beginning of its aggressive fight which resulted in a lawsuit being filed by CSC against the Association and Commercial Laundries for breach of the laundry lease, tortious interference, conversion, and unlawful detainer, which was the subject of this case. At trial, CSC argued that disconnecting its washers and dryers without legal process or CSC’s knowledge or consent was tantamount to being ousted from the Association’s laundry rooms. In the end, the case was decided by a jury. Yes, that’s right, CSC’s dispute went to the jury. As an aside, think of the tens of thousands of dollars expended in legal fees and costs just to get to that point. The jury ultimately decided in favor of the Association and Commercial Laundries. Then CSC appealed and lost. Thus the trial court’s jury decision was upheld by Florida’s Fourth District Court of Appeal. On appeal, CSC again argued that disconnecting its washers and dryers without legal process or CSC’s knowledge or consent was tantamount to an “ouster” from the Association’s laundry rooms and wrongful repossession of the laundry rooms by the Association. In legal terms, that is referred to as “unlawful detainer.” In defense, the Association argued that the disconnecting was not ouster and repossession because CSC’s washers and dryers were never removed from the laundry rooms. The Court provided that there are three factors in an unlawful detainer action: (1) the plaintiff (CSC) was in peaceful possession of the premises (the laundry rooms); (2) the plaintiff (CSC) was ousted of actual possession of the premises (the laundry rooms); and (3) the defendant (the Association and Commercial Laundries) withheld possession of the premises (the laundry rooms) from the plaintiff (CSC) without consent or legal process. Because CSC’s washers and dryers were never removed from the laundry rooms, the Court held that the action of disconnecting CSC’s washers and dryers and moving them to the side of the laundry rooms did not amount to ouster of CSC from its actual possession of the laundry rooms as required by an action for unlawful detainer. While the disconnecting and relocation of the washers and dryers may be a form of what the Court refers to as “constructive or useful dispossession,” unlawful detainer actions require actual dispossession, which did not occur in this case. Laundry leases, while often quite short, are also often written in tiny print whose terms can even give an experienced lawyer a run for the money as to the lease’s long-term implications. The laundry lease makes up for its brevity with obnoxious long-term effects and difficult concepts for a layman to understand. With that in mind, this case demonstrates the need for the association’s lawyer to review all of the association’s contracts. Just because the lease is two pages long, this does not mean its financial implications are not extremely far reaching. In any event, it is great to the see an association prevail against the laundry machine vendor! 4
HOA Hires Private Investigator to Catch Owners Conducting Short-Term Rentals by Roberto C. Blanch SRHL Law Condominium associations and HOAs throughout South Florida as well as across the country are seeking effective responses to the problem of short-term rentals that are in violation of their rules and restrictions. These unauthorized rentals, which have become prevalent with the growth of Airbnb and other online homesharing platforms, are creating significant security and liability concerns for associations. One response by a San Diego homeowners association recently drew the attention of its local ABC affiliate, which chronicled how the community had retained a private investigator to gather and document incontrovertible proof that specific owners were conducting the restricted rentals. The licensed private detective and his associates were hired by the HOA and other local associations to investigate homeowners and tenants who are violating association bylaws and CC&Rs that prohibit turning units into short-term vacation rentals. While the hiring of private detectives may initially seem as an extreme measure for an association, it makes sense when one considers the risks and concerns that are brought on by 5 these rentals for HOAs and condominiums. Also, court actions may become necessary against some unit owners who flout the rules, and the evidence obtained by these investigators as well as their testimony can be very helpful in these proceedings. In order to get away with these rentals, savvy owners have been known to sneak their transient guests into the property by advising security that their visit is authorized. As such, enhanced vigilance and guest-screening measures have become necessary, and many associations are now developing and implementing new registration forms for use with guests and tenants along with written assurances and non-compensation statements indicating that they are not paying for their stays. In addition to the use of private detectives, the implementation of a clear fining or suspension policy, if permitted, is essential for associations to address unauthorized shortterm rentals. This will typically entail the adoption of a new rule in which all of the fines and other consequences are delineated. Community associations are also responding by adopting new amendments, bylaws or rules to limit the number of nights a residence may be rented, which can offer a level of flexibility for owners while also avoiding the possibility of creating a revolving door of unfettered short-term guests. As the concerns created by the growth of short-term rentals continue to mount for community associations across the country, appropriate and effective responses such as these will help ameliorate the problem.
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May 2018 Newsletter

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