Article Courtesy of The Palm
By Mike Diamond
Published October 7, 2019
state appeals court has ruled that GL Homes may keep a special one-time fee it
collected from home buyers at Valencia Reserve, a 1,043-single-family home
development west of Boynton Beach on Lyons Road.
The issue was not
whether the so-called “working contribution fund” could be
imposed; it was who can keep it — GL or the Valencia Reserve
Homeowners Association. At stake was $867,243.
Potentially, though, tens of millions of dollars were at
stake as GL and other Florida builders routinely collect the
fee, that, in the case of Valenica Reserve, was equivalent
to three months of HOA fees. GL is Palm Beach County’s
largest home builder.
Valencia Reserve is responsible for GL Homes’ legal fees.
The court ruled that the HOA’s governing documents say that
the prevailing party in a lawsuit is entitled to be
reimbursed for its legal fees. The court will review
documents submitted by GL to award attorney fees. Numerous
legal papers have been filed with the court; GL lawyers have
made a number of court appearances since Valencia Reserve
first filed its lawsuit in June 2016.
Valenica Reserve argued state law barred GL from keeping the
money. GL turned control of the development over to the HOA
on Jan. 30, 2014. The HOA then sued GL to recover the money.
The special fee amounted to roughly $1,000 per home.
The clubhouse and Recreation hubat GL Homes' Valencia
Covein the Palm BeachCounty Agricultural Reserve, west of Delray
Beach and Boynton Beach.
The appeals court ruled that the trial court judge was correct when he found
that the HOA governing documents permitted GL to use the working contribution
funds to offset deficits incurred while the development was being built.
GL Homes declined to comment on the ruling. Valencia Reserve lawyers failed to
return phone calls seeking comment.
Lindsay Lehr, a Coral Gables-based real estate attorney who has represented both
HOAs and developers, said it is common practice for developers to levy the
working contribution fee. How it is used and whether it can be retained by the
HOA all depends on how the governing documents were written, she noted.
The case “reaffirms the importance of owners to review language in the governing
documents prior to purchasing in order to understand both their rights and their
obligations of the developer,” she noted.
The Reserve is also alleging, as part of the same lawsuit, that GL turned over a
development that was riddled with construction defects. That part of the lawsuit
is still pending. Among the alleged defects were a faulty irrigation system,
problems with the heating and air conditioning system at the Clubhouse and
walkways that had to be resurfaced due to root intrusion. GL has denied the
claims in papers submitted to the courts.