Saturday, June 25, 2011

What does the dissolution of the DCA mean for older HOAs?

When Governor Scott signed the 838-page SB 2156 last week, he ended the 42-year history of the Department of Community Affairs (DCA) in Florida. Primarily, the DCA was charged with preventing sprawl and congestion by monitoring housing and commercial development but from a community association perspective, the DCA played a significant role in allowing older homeowners' associations in our State to reinstate their covenants which had been extinguished by the Marketable Record Title Act (MRTA).

The DCA currently employs about 220 people, 150 of whom are expected to retain their jobs when some of the DCA's previous functions are merged into the new Department of Economic Opportunity which will officially be created on October 1st.

What does all this mean for older HOA's who have failed to preserve their covenants within the thirty-year time period allotted under MRTA?

In 2004, the Department of Community Affairs was charged with the responsibility to oversee the reinstatement process for communities looking to reinstate their covenants. Under Section 720.403, et. seq. of the HOA Act, at least a majority of the members must approve a revised declaration and adhere to the following statutory procedures when submitting same to the DCA for its approval:

720.404 Eligible residential communities; requirements for revival of declaration.—Parcel owners in a community are eligible to seek approval from the Department of Community Affairs to revive a declaration of covenants under this act if all of the following requirements are met:

(1) All parcels to be governed by the revived declaration must have been once governed by a previous declaration that has ceased to govern some or all of the parcels in the community;
(2) The revived declaration must be approved in the manner provided in s. 720.405(6); and
(3) The revived declaration may not contain covenants that are more restrictive on the parcel owners than the covenants contained in the previous declaration, except that the declaration may:
(a) Have an effective term of longer duration than the term of the previous declaration;
(b) Omit restrictions contained in the previous declaration;
(c) Govern fewer than all of the parcels governed by the previous declaration;
(d) Provide for amendments to the declaration and other governing documents; and
(e) Contain provisions required by this chapter for new declarations that were not contained in the previous declaration.

I worked on the first HOA reinstatement in Florida and my Firm has now successfully reinstated dozens of older HOA documents since then. Absent a successful reinstatment, older homeowners' associations find themselves unable to collect assesments, enforce use restrictions and basically continue operating as a mandatory, private residential community.

Two questions come to mind as a result of the passage of SB 2156: will the new Department of Economic Opportunity or perhaps the DEP take up the DCA's role pertaining to HOA reinstatements and/or do the provisions in Chapter 720 outlining the DCA's role need to be amended next year to reflect the correct agency now handling these functions?

Stay tuned for more information. If you have a proposed or pending covenant reinstatement, please speak to your association attorney immediately.

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