Transforming a voluntary “recreational and shareable neighborhood association” into a mandatory association restricting use was the subject in Van Loan v. Heather Hills POA, Inc., Case No. 2-D 15-5430 (Fla. 2d DCA, December 30, 2016). Issues raised included the authority to amend recorded covenants and the consequences of an overly broad or otherwise improper recorded instrument.
The background facts reach back literally half a century:
1967: The Heather Hills subdivisions were created, each subdivision restricted by separately recorded plat and restrictive covenants. The covenants reserved the right to amend to the developer or the developer’s successors. No association was mentioned.
1969: The POA was incorporated as a voluntary organization for the “purpose of promoting recreational and charitable interests for those living in Heather Hills.”
2012: The POA amended its articles of incorporation to provide that “the record title holder of all lots [in Heather Hills] shall be members” and changing the corporate purpose to “managing and operating Heather Hills” as “a community intended and operated” as ‘housing for older persons.’” The amended articles of incorporation were filed with the Florida Secretary of State but not apparently recorded.
An “Additional Declaration of Covenants, Conditions[,] and Restrictions” were recorded in the county’s public records which included an “over 55 community” restriction, and stated that the covenants were “applicable and binding upon the lots of all consenting property owners situated in Heather Hills” and also stated that “the owners who consent to and join in this Declaration do hereby impose upon the lots, blocks[,] or parcels of such owners in Heather Hills … and all members of the POA“ the restrictions. (Emphasis in decision).
The plaintiff lot owners brought an action for declaratory relief, quiet title and slander of title, all of which the trial court dismissed.
The appellate court focused on the apparent contradiction in the amended declaration, which stated it applied to those who consented and “all members of the POA.” The court remarked that there is no indication as to which owners consented. The court held that the amended declaration which stated that it would run with the land contained a “ambiguity” and that the amended declaration placed “a cloud on the titles of the Homeowners’ Lots.”
Concerning the authority to amend, the court recited that the original covenants did not mention an association or delegate the right to amend to third parties. Thus:
Because there is no express delegation of authority to the [POA] to amend the restrictive covenants, the restrictive covenants can only be amended by the consent of all the property owners in the subdivision.
Thus, the court held that a cause of action for declaratory relief was sufficiently stated.
The court also held that a quiet title claim was stated, building upon the above holdings that the plaintiff homeowners owned the property in controversy, that a cloud on title exists, that there are facts that give the cloud on title apparent validity, and that the alleged facts show the restriction is invalid.
Concerning the slander of title claim, the dismissed complaint alleged that the POA falsely declared to the public that POA membership was mandatory, posted signs that the community was age restricted and distributed fliers with the same alleged false statement. The homeowners’ claimed they suffered damage by loss of value in the lots and inability to convey clear title without the asserted approval of the POA. The appellate court held that the lack of clarity in the amended covenants “results in the appearance that the homeowners’ lots are subject to the amended restrictive covenants.” Thus, a cause of action for slander of title was stated.
In hindsight, this decision reinforces the need for caution when attempting to create a mandatory association to enforce existing covenants, or to convert a voluntary association with covenants, to a mandatory association. A recorded instrument may slander title leading to damages. The facts also indicate a need to confirm that the person or entity signing the new covenant instrument has the authority to do so, both in terms of a right confirmed by a chain of title and whether the original restrictions permit the substantive changes.
Interestingly, the decision does not indicate and does not address whether a statute of limitations issue was pled. Noting that the amended covenants were recorded in 2012 and that there were three complaints filed, the original complaint, and amended complaint and a second amended complaint, there may have been a relatively short period of time between the recording of the amended covenants and filing of the suit which seemingly would have avoided a statute of limitations defense. Otherwise, if there was a sufficient passage of time, there may have been a valid limitations defense under Harris v. Aberdeen, POA, Inc., 135 So. 3d 365 (Fla. 4 DCA, 2014) as well as Hilton v. Pearson, ___ So. 3d ____ Fla. 1st DCA, 2016; Silver Shells Corp. v St. Maarten at Silver Shells, 169 So. 3d 197 (Fla. 1st DCA, 2015) which under these decisions could have breathed life into the covenants.. Also interesting is the court’s recitation that both plaintiffs and defendant agree that the amended restrictive covenants did not apply to the Plaintiffs/
Many thanks to Mr. Christy, Ms. Hartley and Mr. Holtsberg for providing the decision.
Best wishes for a new year.
Michael J. Gelfand
Florida Bar Board Certified Real Estate Attorney
Florida Supreme Court Certified Mediator: Civil Circuit Court & Civil County Court
Michael J. Gelfand
Immediate Past Chair
Real Property, Probate and Trust Law Section of The Florida Bar