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By: Michael Kouskoutis
In Beach Club Towers Homeowners Ass’n v. Jones, 2017 Fla. App. LEXIS 14235, Florida’s First District Court of Appeal held in favor of an HOA in an attempt to settle a series of property tax disputes over government-owned land.
Before the DCA’s ruling, the trial court held that condominium unit owners were required to pay property taxes on land underneath the condo, despite the fact that the condo merely leased the underlying land from the County (and each unit owner subleased from the condo’s master lease). In reaching its conclusion, the trial court found that unit owners were the “equitable owners” of the underlying land for ad valorem tax purposes, since the condo held “virtually all the benefits and burdens of ownership of the leased property.”
Upon close examination of the lease itself, the 1st DCA reversed, holding instead that unit owners were not responsible for these property taxes. Key to the court’s decision was that the lease was not perpetually renewable–each unit owner’s sublease contained an option to renew for an additional term, with “conditions to be renegotiated at such time.” Therefore, since the renewal of each sublease was negotiable rather than automatic, none of the “primary hallmarks of equitable ownership” were present. The court also noted that whether land is improved has no bearing on the issue of equitable ownership. The County plans to appeal the decision to the Florida Supreme Court.
Condominium associations situated on government-owned land should keep in mind that the renewal terms contained in their leases could have profound impacts on the tax responsibilities of its members.
If you have any questions or would like more information, please contact Michael Kouskoutis at [email protected].