Monday, September 28, 2009

Who is "Marta" and why is "she" creating problems for older homeowners' associations?

The Marketable Record Title Act (or "MRTA") has been on the books in the state of Florida since 1963. This law was originally created at the behest of title insurance agents who were understandably frustrated with having to go back to the Spanish Land Grants when writing title insurance policies. These folks asked for a cutoff date beyond which they needn't go when searching title.

This is yet another example of a good law with a bad unintended consequence. It was presumably never the Florida Legislature's intention to make trouble for HOA's but that is exactly what happened. If you create a cutoff date for the viability of restrictions at 30 years from the root of title that will impact the Declaration of Covenants and Restrictions recorded for homeowners' associations. Up until a few years ago, once an older HOA's documents were extinguished by MRTA, there was no way to breathe new life into them. That has now changed and there is a method by which you can easily extend those covenants' life before the 30-year time period runs out or not-so-easily reinstate them after the 30 years has passed.

What will happen once a set of older HOA documents are extinguished by MRTA? A board's ability to collect assessments and/or enforce use restrictions such as age restrictions or architectural control provisions are based on the binding contract between the owners and the association comprised of the covenants and restrictions. Once those are dead, so is your ability to enforce them under a contract theory. There are certain equitable arguments for enforcement that can still be made but those are much more difficult and well beyond the scope of a blog topic.

What are some common misperceptions about MRTA?

My documents say they are good until 2040! The expiration date found in the documents is trumped by the application of MRTA.

We amended and restated our documents within the 30-year time period. If you did not file a Notice of Preservation within the 30-year time period, amending your documents or recording an entirely new amended and restated declaration will not save you from MRTA's harsh effects. There is a case on point, Berger v. Riverwind, which holds that amendments do not create a new root of title and thus do not extend the life of older covenants.

Why don't condominiums have this issue? Every time a condominium unit is sold, the deed references the underlying Declaration of Condominium and thus, creates a new root of title. Most deeds to HOA lots reference only the lot, block and Plat although there are occasional exceptions.

If your HOA covenants and restrictions were recorded in 1985 or earlier you need to speak to your association attorney immediately about your need to either preserve or reinstate those covenants. I worked on the first HOA reinstatement in Florida and have handled dozens of successful preservations and reinstatements since that time. There is nothing more unnerving than finding out that your HOA restrictions seem to have vanished but you can do something about it and the sooner the better!

3 comments:

  1. I was wondering if there were established seperation of duties for HOAs. My HOA said that there was so much work that we had to pay our VP to do it. When I became secretary, she refused to give me the minutes or membership and would not let me share in the web site posting. Is there a law stating the secretary duties? Are bylaws that are not executed valid?

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  2. Most governing documents do delineate duties amongst the various officers. If you are a Florida condominium director, you cannot be paid to serve in a particular office as it is a violation of Florida statutes. Check your Articles and Bylaws to see what is said about each officer's duties. I have never seen a set of association documents that did not outline the various officer duties.

    If you have that much work, your board might consider hiring a professional manager to assist with these duties as opposed to overloading board members and officers. As for the bylaws, so long as they are recorded in the Public Records they should be enforceable absent other extenuating circumstances.

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  3. I am the Secy of a residential HOA in Lakeland, FL. The Deed Restrictions were recorded by the developer in 1979 & state in the Covenants that they are binding & in effect until 12/31/2025. Rozell McKay w/the Dept of Econ Opp stated that MRTA supersedes any language in the HOA covenants which means that the Covenants may be expired per the 30 yr rule. Is this true? Does not the date of 12/31/2025 supersede MRTA?

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