With the turnover of volunteer homeowner’s association (“HOA”) board members over time, it is not surprising that certain important long-term issues may be overlooked. There is one very important law, however, which board members may not be aware of that can eliminate an HOA’s ability to enforce its restrictions.
I am often contacted by an HOA board at the last minute before their restrictions “expire” under this law and even sometimes after they expire. Below is a breakdown of the two different processes an HOA must follow to preserve the restrictions before they expire or, if the deadline has been missed, to revitalize the restrictions.
What is the law and why?
The Marketable Records Title Act (“MRTA”) is a Florida law designed to eliminate “stale” recorded claims that affect the title to real property, such as old recorded leases for which the beneficiaries have long departed or dissolved. Without MRTA, all of these documents still have to be shown on title commitments and policies even though they may have long since become irrelevant and unused. Unfortunately, there isn’t an exemption to save old (and still active) association covenants unless the affirmative steps are taken to preserve them.
What does it mean to HOA’s?
The simplified explanation is that the recorded covenants governing a community must be preserved before the end of a 30 year period beginning on the date they were recorded. The Florida statute lays out the process that an association must go through to preserve the effectiveness of the recorded covenants if the 30 years has not yet expired. The preservation process will mean that the covenants are effective under MRTA for another 30 years. HOA’s must still look at the Declaration to determine if the covenants expire under their own terms at another date without an automatic renewal.
Merely amending or restating the covenants does not restart the 30-year clock. The statutory process must be followed. For preservation, the Statement of Marketable Title Action provided in Section 712.06, Florida Statutes must be sent to all homeowners seven (7) days in advance of the board meeting to consider preserving the covenants. The Board must approve the preservation by at least 2/3 vote of the Board, and then a Notice of Marketable Title Action is recorded in the public records.
What if an HOA misses the 30-year deadline?
“Revitalization” is required to reinstate the recorded covenants for another 30 years. The revitalization process that applies to HOA’s is found in the Homeowners’ Association Act (ch. 720, Florida Statutes).
Revitalization Process
In order to revitalize, a majority of the owners of the affected property must approve of the revitalization. The process also includes:
- Forming an “Organizing Committee” to prepare the proposed revitalized documents.
- Providing notice to all homeowners that includes the HOA documents (as well as the current articles of incorporation and bylaws), a graphic depiction of the property (often a copy of the plat, if applicable), and the form of written consent for them to sign to approve the revitalization (unless the HOA is holding a vote at a meeting).
- Submitting the approved documents, the consents, and other documentation verifying that the proper process was followed to the Florida Department of Economic Opportunity (“FDEO”) for approval.
- Upon approval by the FDEO, the revitalized Declaration, the current Articles, Bylaws, and affected property owners and property list are recorded.
Bottom Line
It is important to note that the expiration date under MRTA applies regardless of whether an HOA’s Declaration of Restrictions contains its own expiration date. Both the MRTA deadline and the Declaration’s own expiration provisions must be addressed by all HOA’s. The process may be daunting for some Boards, but a successful revitalization or preservation is possible with some diligence.
To schedule a consultation to see how MRTA applies to your HOA, please contact our HOA Group Chair, Colby Keefe at colby.keefe@henlaw.com or by phone at 239-344-1184.