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A Message To Subdivision Owners

Who would argue that we’ve confused things in Washington to the point that there will probably be no winners – only losers? This article is about how the State of Florida has scrambled the law of subdivision covenants in exactly the same way. This subject is not fun, even to lawyers. But it affects every owner of property in a subdivision and every real estate professional. Please don’t change the channel until you understand the message presented here.

This discussion could start in lots of places. But let’s start last week in a conversation with an officer of a local homeowner’s association (HOA). His 40+ year-old subdivision has fairly standard, (but really tepid), restrictions. For instance, junk in the yards and mobile homes are prohibited.

The question asked by this HOA was prompted by the board’s observation that even though this has traditionally been a higher value subdivision, some lot owners are falling way behind in maintenance, and are beginning to create the visual impression of third-world living. What, they asked, can be done?

We have serious philosophical differences in this country about whether a community (HOA) should do anything at all. There are those who say “This is America. If some people want to live without society’s norms or values, they have that right.” Others say, “Maybe so, but those people should go live in the woods somewhere, where they can leave their old car, toilet, or a worn-out, over-stuffed easy chair in the front yard and the only person affected would be themselves.” Clearly, without something in writing that commands a standard, not everyone will adopt the same standard. Some acknowledge no community right to establish standards at all.

Every right known to America is subject to the question, “How much freedom of expression can my neighbor exercise without affecting me?” Those are the policy questions that confront every draftsman for every HOA Developer – these questions are answered, hopefully with some care and forethought, by every developer, in the Declaration of Covenants he or she records at the beginning of sales.

Since in these articles I have a license to be both personal and legal, I declare here my personal opinion that the further society gets from parents who teach behavior to their children, and the closer together people live (such as in today’s zero-lot-line subdivisions or townhouses), the more we need written rules. But the state of Florida has created a law that treats subdivision covenants like the little dots in a Pac-Man game; without warning or ceremony, covenants get eaten. This article is about the Marketable Record Title Act, called “MRTA”, and how it operates like Pac-Man on subdivision covenants.

Florida Statute 712.01 (MRTA) was passed in1963, a time when official records of ownership were almost Gutenberg in form. The statute says generally that all real property title documents recorded before the “root of title” are to be disregarded and considered void unless that document appeared again, referenced by book and page, in a conveyance after the root. The “root of title” is the most recent conveyance more than 30 years old. The Statute makes it unnecessary to research all those dusty Gutenberg documents going back to the Spanish land grant because modern commerce could not tolerate that delay.

Since at least 2011, Florida Courts have held the protective covenants in subdivisions is one of the title interests invalidated by MRTA. Therefore, unless some deed to each lot in question recorded after the root of title makes reference to the book and page on which the original covenants were recorded, the covenants are void. To test the effect of that, if you live in a subdivision, simply look at your own deed. Almost always it will say something like “Lot ___, block___, Rocky Bayou (for instance), ‘subject to covenants and restrictions of record.’” Note that this description does not describe the covenants by book and page. The covenants are dead, since they were first recorded more than 30 years ago, unless some other interim deed incorporated the book and page reference of the covenants. Most deeds do not. To make this decision yet more dizzying, remember that each lot is considered separately. Therefore, the developer’s presumed intent to create a uniform pattern of development is almost certainly destroyed because after 30 years, some lots are likely to have covenants, while others do not.

There are ways to reinstate covenants eaten by the MRTA Pac-Man. It is not an easy process, and it involves a study of every lot in the subdivision. Every HOA in Florida (not generally a condominium) should discuss the MRTA expiration of its covenants with its lawyer. That conversation won’t be easy even for the lawyer. Call your lawyer and tell him why you’re coming. Give him or her a chance to study this before you walk in. The last person I mentioned this to said he had his own Air Force lawyers review my opinion; They had never heard of MRTA, (or me), so I must be wrong.

I personally hope courts will do everything in their power to breathe life into aging subdivision covenants. But as I said in the beginning, not every owner wants covenants at all, and not every judge will have my predisposition. Even if he or she does, the court must follow the law. Every HOA should follow the covenant extension procedure in the statute. It is time consuming and probably expensive – but if you do, your members will get to vote on whether or not to revive expired covenants, or to extend ones not yet expired.

Remember that regardless of your personal philosophy about the need for covenants, each director has a fiduciary duty to protect subdivision covenants.

Realtors might ponder whether there is a need for disclosure to a purchaser to whom covenants are important. If you decide to confuse your head with this whole business, remember that your concern is not really whether your purchaser has covenants on the property he is buying. The concern is whether all other owners in the subdivision have covenants. In other words, whether the subdivision in which he is buying has a uniform enforceable standard going forward. Then, does the lack of enforceable covenants materially affect the value of the property for this purchaser?

Finally, let me say that this article is subject to at least two complaints – both valid. One is from lawyers, who will find it both incomplete and painfully simplistic. They are right. The second is from everyone else who will find it confusing and the result too stupid for more discussion. They are also right. In the middle are those trying to remember where they heard the words “Pac-Man.”

This article was published in the Coastal Homes publication of the Northwest Florida Daily News on Saturday, February 2, 2019: http://www.coastalhomesfla.com/Olive/ODN/NWFLDNCoastHomes/