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24th Nov 2015

Did you know that there is a provision in Florida law that could result in the expiration of the covenants of the homeowner’s association? The Marketable Record Title Act, Chapter 712 of Florida Statutes (“MRTA”), provides that the declaration of covenants and restrictions for a residential homeowners’ associations will expire and no longer serve as the source of marketable title with regard to the transfer of title for individual member’s residences. In effect, the declaration will cease to be and the community will no longer be covered by the former covenants and restrictions. Florida law requires the association to preserve the covenants at least once every 30 years. Otherwise, the covenants will expire and can only be reinstated by vote of the homeowners.

MRTA is conceptually difficult but the key date is the date the declaration of covenants is recorded in the public records of the county where the property is located. If the Board fails to take the necessary steps within 30 years of the date of its original recording, the Association will lose its ability to enforce its covenants, including its ability to collect assessments.

Prior to the date of expiration, the Board must notice and hold a meeting in which the meeting “address[es] the Statement of Marketable Title Action.” Written notice of the meeting must be given to all owners at least 7 days in advance of the meeting date. At least 2/3 of the members of the Board must approve the recording of the Statement of Marketable Title Action in order to retain the status of the declaration as the source of marketable title and renew it for another 30-year period from the date that Statement is recorded in the public records.

Note that amending the declaration in whole or in part during the 30 years following the date of initial recording does NOT restart or toll the 30-year deadline. The Board must still preserve the declaration within 30 years of the date of the original recording of the declaration pursuant to the process outlined above.

If 30 years pass without the Board recording a notice of preservation, the declaration will expire. The Board may not even realize that its covenants have expired until some owner challenges the covenants in court, say for example, in a lien foreclosure action. If the covenants have expired, there is a process available under Chapter 720 of Florida Statutes to reinstate the declaration. Reinstating an expired declaration is costly and time-consuming. It requires a vote of the homeowners in order to reinstate the declaration, and an approval of the documents by the Florida Department of Financial Affairs in Tallahassee.

Because recording the notice of preservation is a relatively straight-forward and simple process, homeowner’s associations should take immediate action. The first step is to determine when the 30-year deadline will occur. Naturally, boards are well-advised to start the process of preservation far in advance of the expiration date.

Should your HOA need advice on MRTA preservation or reinstatement, please feel free to give us a call at (941)203-6075.

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