The Kaufman Clause: A Guide to Legislative Changes in HOAs

As a homeowner and member of your HOA's board, it's crucial to stay informed about the legal landscape that affects your community. One key factor is the impact of new laws on your HOA's operations. The Kaufman Clause, a legal term derived from a landmark court case, plays a significant role in determining how legislative changes apply to your association.​

Kaufman Language: A Legal Landmark

The term "Kaufman language" refers to a specific phrase, "as amended from time to time," found in many HOA governing documents. This phrase, derived from the landmark case Kaufman v. Shere, ensures that new legislation automatically applies to the association.

The Kaufman v. Shere Case

The 1977 District Court of Appeal of Florida Third District case Kaufman v. Shere was a class action suit challenging the validity of a Rent Adjustment or "escalation" clause in their condominium recreation lease. The Kaufmans were unit owners in the condo Fifth Moorings Condominium located at 1401 NE Miami Gardens Dr, Miami.  The court ruled that the association's governing documents, which included Kaufman language, meant that a new law limiting rent increases applied to the association, even though the law was passed after the lease was signed. 

Boiled Down Implications of Kaufman Language

HOAs with Kaufman language in their documents have a significant advantage: they are automatically updated with new laws. This ensures that the association's rules and regulations remain current and compliant.

Retroactive vs. Prospective Application

If an HOA's governing documents do not contain Kaufman language, the applicability of new laws depends on whether they are procedural (affecting how laws are carried out) or substantive (changing rights or regulations). Procedural changes typically apply retroactively, while substantive changes may or may not, depending on various factors. "Because condominium declarations are creatures of contract, amendments to the Condominium Act, Ch. 718, Florida Statutes, do not apply retroactively without express statutory intent," according to the Florida Third District Court of Appeal. 

Constitutional Considerations

The Contracts Clause of the Florida Constitution limits the government's ability to change contracts. However, in the context of HOAs, the courts have generally ruled that new laws can apply to existing HOA declarations, even if they may seem to alter the terms of a contract.

The Pomponio Analysis

For a substantive statute to be applied retroactively to an HOA, it must pass a three-prong test established by the case of Pomponio v. The Claridge of Pompano Condominium, Inc. in the Florida Supreme Court. 

1. Importance of State Authority: The state's interest in enacting the law must outweigh the individual's right to have their contract remain unchanged.

2. Significance of the Evil Addressed: The problem addressed by the new law must be more significant than the individual's right to have their contract remain unchanged.

3. Extent of Contract Impairment: The law must not severely impair the individual's contractual rights.

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The Kaufman Clause, derived from the landmark case Kaufman v. Shere, has become a cornerstone of HOA governance in Florida. Its presence or absence in an HOA's governing documents significantly impacts how new laws are applied to the association.

For HOAs with Kaufman language, the process is straightforward: new legislation automatically applies. This ensures that the association remains in compliance with current laws and regulations.

However, for HOAs without Kaufman language, the situation is more complex. The applicability of new laws depends on whether they are procedural or substantive and whether they meet the requirements of the Pomponio analysis.

Understanding the implications of Kaufman language is crucial for HOA members and management. By knowing whether their association's documents include this phrase, they can better anticipate and navigate the legal landscape, ensuring that their community remains well-governed and compliant with the law.