A recent decision from the Florida 4th District Court of Appeal illustrates some special land use concerns that come into play when the affected party holds a leasehold interest rather than fee simple ownership.
Changing Regulations Can Affect Leaseholders
In Village of N. Palm Bch. v. S&H Foster’s, Inc., 80 So. 3d. 433 (Fla. 4th DCA 2012), the plaintiff, as a leaseholder, operated an “after hours bar” in Palm Beach County which was permitted to serve alcohol for consumption on premises until 5:00 a.m. The owner of the property filed a petition to voluntarily annex the property into the Village of North Palm Beach. The statutory procedure for annexation required only the consent of the landowner and not the leaseholder. An existing Village ordinance prohibited the sale of alcoholic beverages for consumption on premises between 2:00 a.m. and 7:00 a.m., effectively depriving Foster’s of three hours of business it had enjoyed for many years while in the unincorporated county. After approval of the annexation, the leaseholder sought relief in court prohibiting application of the Village’s ordinance and allowing the bar to remain open until 5:00 a.m.
The trial court ruled in favor of the bar and found that the bar was “grandfathered” to operate under the old hours until its leasehold interest expired in 2015, but the appellate court reversed. The appellate court held that the Village had the authority to regulate the sale of alcohol within its borders pursuant to State statute, and that the Village properly followed the statutory procedure for voluntary annexation. Accordingly, the bar had to comply with the Village’s liquor sales ordinance, and was not “grandfathered” under the County’s old hours of operation.
The case illustrates how leaseholders can fall through the cracks with regard to zoning and land use matters. The owner of the property often has the ability to proceed through rezonings, annexations, and similar procedures without the consent of the tenant, and notices of code violation and nearby pending zoning matters frequently are sent only to the owner of record. Drafters of leases may well want to consider addressing such matters during lease negotiations, particularly when representing tenants.