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The Impact of the Marketable Title Record Act on Homeowners’ and Community Associations’ Declarations of Covenants, Conditions and Restrictions (March Litigation Quarterly 2009)

March 1, 2009

Pursuant to Florida law, the Marketable Title Record Act (“MRTA”) was created via the enactment of Chapter 712, Florida Statutes.  Pursuant to Florida Statute Section 712.02:

“Any person having the legal capacity to own land in this state, who, alone or together with her or his predecessors in title, has been vested with

any estate in land of record for 30 years or more, shall have a marketable record title to such estate in said land, which shall be free and clear of all claims except the matters set forth as exceptions to marketability in s. 712.03.”

The purpose of MRTA is to extinguish claims to property which are at least 30 years old and which predate the root of title of the property in question.1 MRTA contains the scheme to accomplish the objective of stabilizing property law by clearing old defects from land titles, limiting the period of record search, and clearly defining marketability by extinguishing old interests of record not specifically claimed or reserved.2 In short, MRTA was established in order to assist in the simplification and facilitation of land transactions by letting interested parties rely on record title.3

The impact of MRTA is of vital importance to Homeowners and Community Associations, as it administers and provides the stipulations by which the Association and its members are governed and regulated while seeking to maintain and enforce their Declaration of Covenants, Conditions and Restrictions.  The Declaration of Covenants, Conditions and Restrictions provides the legal mechanism by which the Association’s rules and regulations can be enforced,4 as the failure to properly secure their enforceability would be damaging to the Association’s oversight of its members. If an Association’s Declaration of Covenants, Conditions and Restrictions is permitted to expire, residents will no longer be compelled to act in accordance with the Declaration, and organizational and financial ruin could potentially ensue.

In order to address the evident concerns relating to the expiration of an Association’s Declaration of Covenants, Conditions and Restrictions, the Florida Legislature enacted Florida Statute Section 712.05, which aimed to provide a means for parcel owners to preserve any established covenant or restriction.  Due to the fact that the original version of Florida Statute Section 712.05 did  not permit an Association to independently act in the preservation of  its Declaration of Covenants, Conditions and Restrictions, several amendments to the statute were passed in order to expand an Association’s authority to do so.

One of the more recent amendments to Section 712.05, implemented in 2003, states:

[a]ny person claiming an interest in land or a homeowners’ association desiring to preserve any covenant or restriction may preserve and protect the same from extinguishment by the operation of this act by filing for record… a notice, in writing.

Section 712.05(c) specifically outlines the requirements for such notice as it pertains to Homeowners’ Associations. As such, a notice filed by a Homeowners’ Association must be “approved by at least two-thirds of the members of the board of directors…at a meeting for which a notice” was provided at least seven (7) days prior to the meeting.

At the time of the 2003 amendment, this incarnation of Section 712.05 provided the clearest route for an Association to preserve its Declaration of Covenants, Conditions and Restrictions by removing sole preservation authority from individual parcel owners and providing the Association’s Board of Directors such capability under a specified voting formula. Although the 2003 amendment allowed the Association’s Board of Directors to participate in the preservation of yet-expired Declaration of Covenants, Conditions and Restrictions, another unresolved set of circumstances remained: How would the Association proceed in the revival of already-expired Declarations?

Subsequently, Florida Statute Section 720.403 was enacted to address such a situation. Specifically, Section 720.403 created a clearly delineated process by which expired Declarations of Covenants, Conditions and Restrictions could be revived.  Pursuant to Section 720.403(2):

“[i]n order to preserve a residential community and the associated  infrastructure  and  common  areas  for  the purposes described in  this  section,  the  parcel  owners in  a  community that was previously subject to a  declaration of covenants that has ceased to  govern one or more parcels in the  community  may  revive  the  declaration  and  the homeowners’ association for the community upon approval  by the parcel owners to be governed thereby as provided in this act, and upon approval of the declaration and the other  governing  documents for   the association by  the Department of Community Affairs in a manner consistent with this act.”

In conjunction with the revival process described herein, Florida Statute Section 720.404 outlines the specific requirements by which eligibility for such revival is permitted. These requirements set forth strict guidelines as to the substance of the Declaration of Covenants, Conditions and Restrictions, as well as the particular parcels that may seek revival.  More specifically, Florida Statute Section 720.405 establishes that “[t]he proposal to revive a declaration… shall be initiated by an organizing committee consisting of not less than three parcel owners located in the community…”  Pursuant to Florida Statute Section 720.406(1), “[n]o later than 60 days after the date the proposed revived declaration and other governing documents are approved by the affected parcel owners, the organizing committee or its designee must submit the… materials to the Department of Community Affairs” for their review and determination.

Although Florida Statutes, Chapter 720 displays much progress in the protection against the extinguishment and lapse of an Association’s Declaration of Covenants, Conditions and Restrictions, further advancements are still necessary. As was the case with the evolution of Florida Statute Section 712.205, the scope of Section 720.403 and the revival of Declarations must be expanded to provide for an Association’s Board of Directors direct involvement in the revival process.

It is essential for Homeowners’ or Community Associations to be able to maintain the enforceability of its Declaration of Covenants, Conditions and Restrictions, or to have the ability to revive a Declaration that may have unintentionally expired. The Declaration permits an Association to impose fees, file liens, collect assessments, and implement other financial standards, which contribute to the economic security and well-being of the Association. If a Declaration is permitted to expire and the parcel owners hold the authority to revive the Declaration, the Association may be subject to parcel owners who do not want to live under such constraints and limitations.

As such, additional safeguards should be implemented in order to allow the Association further means to protect its established Declaration of Covenants, Conditions and Restrictions, especially in these times of economic uncertainty. It is understood that such overtures are currently being made in the Florida Legislature, but the situation remains unsettled. It is apparent that Homeowners and Community Associations must presently take it upon themselves to properly oversee the status of their Declaration of Covenants, Conditions, and Restrictions.

(Endnotes)

1         Berger v. Riverwind Parking, LLP, App., 842 So. 2d 918 (Fla. 5th DCA 2003).

2         H & F Land, Inc. v. Panama City-Bay County Airport and Industrial District, 736 So. 2d 1167 (Fla. 1999).

3         Sawyer v. Modrall, 286 So.2d 610 (Fla. 4th DCA 1973), cert. denied, 297 So. 2d 562 (Fla. 1974).

4              Hunt Ridge at Tall Pines, Inc. v. Hall, 766 So.2d 399 (Fla. 2d DCA 2000).


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