MRTA and How to Revive Expired HOA Covenants and Restrictions
During the last 30 to 40 years, exponential population growth and concomitant community development has occurred throughout the Sunshine State.
November 19, 2018 at 01:34 PM
5 minute read
During the last 30 to 40 years, exponential population growth and concomitant community development has occurred throughout the Sunshine State. Most newcomers to Florida during that period of time became accustomed to purchasing homes in amenity-rich communities that offered pools and clubhouses, and, in many instances, gates and guardhouses with a promise of security that required privatization of the streets and roadways within them. During that same period, local governments were all too eager to pass along maintenance responsibilities for lakes, swales and open green spaces and other areas within these communities over to the homeowners' associations that governed them, instead of those governmental authorities picking up the tab in the traditional manner. It was a well-devised plan to keep property taxes low, attracting hordes of new transplants from the North looking to escape their high tax burdens, and for local politicians to keep themselves in power by being able to brag about such accomplishments.
So, most of us accept as a given that the homeowners' association acts as a governing body controlling how to maintain and upkeep properties. In most organized communities, homeowners cannot renovate their homes, or even change their landscaping or the color of their homes, without gaining approval from their homeowners' association. Symmetry of beauty, uniformity of maintenance and harmony of aesthetics is proven to promote property values that benefits all owners in the community. Therefore, the ability of the homeowners' association to administer to and enforce the private covenants and restrictions for the community is vital. Most view this well-entrenched system of private community governance as both necessary and positive.
Well, here's the glitch. In Florida, there's a law that was enacted back in 1964 called the Marketable Record Title Act, or as it's affectionately referred to by those in the legal community MRTA (Ch. 712, F.S). While a complicated law, which was enacted to eliminate stale claims and interests affecting property titles that even few lawyers fully understand, the bottom line is that this law renders the covenants and restrictions that enable the private system of community governance unenforceable and extinguishes them after 30 years. If and when that occurs, governing associations may no longer be able to collect assessments to perform maintenance and upkeep on facilities and improvements within a community and to enforce the aesthetic covenants which enhance property values. Given the number of communities throughout Florida that were developed during the '80s and '90s this is becoming a major problem in many locales. Because of the high turnover rate among volunteer HOA boards, it is not hard to imagine how issues with consequences that don't occur for several years can tend to get overlooked.
Fortunately, the Florida Legislature has crafted two methods by which a homeowners' association can remedy this problem (Ch. 720, Part III, F.S.). For those associations that are thinking ahead, there is a relatively simple procedural mechanism to preserve and extend the covenants for 30 more years by the HOA's board of directors, as long as this action occurs before expiration. Even so, under MRTA there does exist a somewhat more rigorous and complicated procedural mechanism for HOA members who live in a community whose covenants have been extinguished after 30 years to “revitalize” or “revive” those expired covenants. This can occur through a majority vote, which among other things requires those homeowners to petition the Florida Department of Economic Opportunity to plead their case that their community will be prejudiced if the governing covenants and restrictions are not reinstated. While far more laborious, given the obvious hardship which covenant extinction can impose on a community with even minor maintenance obligations, it is still an achievable objective.
However, a recent Legislative change to MRTA (HB 617) enacted on March 1, 2018, which just went into effect on Oct. 1, 2018, provides that, if commenced no later than Oct. 1, 2019, owners of parcels whose governing covenants or restrictions have been extinguished as of Oct. 1, 2018, may bring an action claiming that revitalization of the extinguished restriction or covenant would unconstitutionally deprive that owner of rights or property. Thus, a judicial determination agreeing with this claim would bar covenant revitalization per the affected parcel owners. It is now easy to imagine a race to the courthouse where a recalcitrant parcel owner who lives in a community with expired covenants, knowing the law and the amendment, might try to set himself up for a ”free ride” of assessment-free community living by seeking just such a judicial determination of property rights preventing revitalization as to his parcel. So, this recent change in the law presents a potential showdown between competing stakeholders who do not share perspectives.
Now is the time for HOA boards and members to educate themselves and to be diligent and vigilant about the status of their association's governing documents, as tremendous risk to the continued viability of privately governed communities comes along with this recent amendment to the law enacted by the Legislature.
Andrew B. Blasi is a shareholder with Shapiro, Blasi, Wasserman & Hermann, one of the largest independent full-service litigation and transactional law firms in South Florida. Blasi also serves as general counsel to the Realtors Association of the Palm Beaches. He may be reached at 561-477-7800 or [email protected].
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