In short: Signing the declaration did not save the borrower here. In First West Cutler Gardens v. Regions Bank, a developer and its guarantors argued that the bank’s joinder in a declaration of condominium amounted to written consent to sell units, despite a loan clause barring sales without the bank’s consent. The trial court entered summary judgment for Regions on the borrowers’ fraudulent inducement claim, relying on Florida’s banking statute of frauds, and the Third District affirmed without an opinion on October 8, 2014.
The Facts
First West Cutler Gardens, LLC borrowed from Regions Bank, with individual guarantors, to acquire and renovate an apartment complex in Miami-Dade County. The bank’s counsel described it as a two-year loan, and the panel noted the commitment letter stated the loan’s purpose as acquisition and renovation. Section 7.1 of the loan agreement prohibited sales of the property, and any modification of it, without the bank’s consent.
After closing, the property was converted to a condominium. Regions signed the declaration of condominium as mortgagee. The borrower’s counsel said 49 units were sold to third-party buyers and that Regions received sales reports. Regions then declared a default for selling units without consent and sued to foreclose. The borrowers claimed Regions fraudulently induced them into the declaration and the sales contracts.
The trial court granted summary judgment for Regions, and the borrowers appealed (No. 3D13-2897). The case was argued on September 16, 2014. The points below are what the lawyers argued, not findings by the appellate court.
- The borrowers argued that section 718.104 required Regions, as mortgagee, to join in or consent to the declaration, and that a person who does so subjects its interest to the declaration, which expressly allowed the developer to sell units.
- They argued the loan documents were ambiguous because they referred to sales contracts, that the bank knew of the sales for months, and that converting the property was itself a modification Regions agreed to in writing.
- Regions argued that section 687.0304 bars a borrower’s claim based on any credit agreement or modification that is not in a signed writing, and that the declaration is an instrument creating a condominium, not an amendment of the loan.
- Regions also argued it never gave written consent to sell, as section 7.1 required, and that it acted within about 15 months, so there was no waiver.
The Decision
The Third District affirmed in a one-word per curiam opinion on October 8, 2014. The same day it granted Regions’ motion for appellate attorney’s fees and denied the borrowers’ fee motion. On November 17, 2014, it denied the borrowers’ motion for rehearing and clarification and their motion for rehearing of the fee order. The mandate issued December 3, 2014.
Because there is no opinion, the affirmance does not announce a rule that a mortgagee’s joinder in a declaration can never modify a loan. It means the summary judgment for the bank stands.
The Law
Under section 718.104, a condominium is created by recording a declaration, and everyone holding a recorded mortgage on the land must join in the declaration, record a consent to it, or subordinate the mortgage to it. The statute adds that a person who joins in or consents to the declaration subjects its interest in the condominium property to the declaration’s provisions. That was the borrowers’ main hook.
Florida’s banking statute of frauds, section 687.0304, says a debtor may not maintain an action on a credit agreement unless it is in writing, expresses consideration, sets out the relevant terms and is signed by both creditor and debtor. A lender’s agreement to forbear or to take other actions does not create a new credit agreement unless it meets those requirements, and a credit agreement cannot be implied from the relationship of the parties.
Read together, the bank’s position was simple: the declaration subjects the mortgage to the condominium, but it says nothing about the separate written promise not to sell without consent.
Lessons
- A lender’s signature on a declaration of condominium is a statutory requirement. Do not assume it is consent to sell units or release proceeds.
- If a loan requires the lender’s written consent to sell, get that consent, with release prices, in a signed document before contracting with buyers.
- Section 687.0304 makes course of dealing and oral assurances weak footing for a borrower’s claim against a lender.
- Guarantors share the risk when the project changes form; the guarantors here were on the losing side of the appeal and the fee award.
- A per curiam affirmance ends the case but does not explain which argument carried it.
Source: First West Cutler Gardens, LLC v. Regions Bank, No. 3D13-2897 (Fla. 3d DCA Oct. 8, 2014) (per curiam affirmed); ACIS docket, No. 3D2013-2897.
Watch the Oral Argument
This is the recording of the actual oral argument, posted on the channel. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
📑 The Bank Signed the Declaration of Condominium — Did That Modify the Loan Agreement?
Go Deeper
- Failed Bank, Condo Unit Releases and D'Oench Duhme (717 Estate Management v. BB&T)
- Loan Amendments, Grace Periods and Default Interest on Appeal (Royal Gardens v. Banco Popular)
- Closing Date Passed, but Was It Extended? Buyer's Case Revived (Stav Software v. Lederman)
Frequently Asked Questions
Does a lender have to sign the declaration of condominium in Florida?
Yes, in effect. Section 718.104 requires every holder of a recorded mortgage on the land to join in the declaration, record a consent to it, or subordinate the mortgage to it. In First West Cutler Gardens v. Regions Bank, the borrowers argued that signature was consent to sell units; the bank won.
Can a bank's conduct modify my commercial loan in Florida?
It is hard to rely on. Section 687.0304 bars a borrower’s action on a credit agreement that is not in a writing signed by both sides, and says a credit agreement cannot be implied from the parties’ relationship. Regions relied on that statute to defeat the borrowers’ fraudulent inducement claim.
Can I sell condo units if my loan prohibits sales without the lender's consent?
Not safely without written consent. In this case, the bank declared a default and foreclosed after units were sold, and the summary judgment for the bank was affirmed. Get signed consent and release terms before you sign sales contracts.
Are guarantors liable when a project changes from apartments to condos?
Guarantor liability depends on the guaranty’s terms. The individual guarantors in First West Cutler Gardens joined the appeal and lost, and the Third District awarded Regions its appellate attorney’s fees.
Talk to a Florida real estate litigation lawyer
Weidner Law, P.A. handles Florida real estate disputes, title problems and appeals from St. Petersburg. If you need a real estate litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
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