The First District Court of Appeal’s recent holding in Howard v. Murray, No. 1D14-1996, 2015 WL 6847833 (Fla. 1st DCA Nov. 9, 2015), serves as a cautionary tale for those purchasers taking title to a parcel of real property that has been previously approved as a part of a development of regional impact (DRI).
In Howard, the original developer of the 2300 acre Sandestin DRI went bankrupt and the DRI was then fragmented. The initial DRI development order was also amended to allot 550,000 square feet of commercial development rights to a 48.1 acre parcel, 16 acres of which were later sold. The deed’s language granting legal title to the 16 acre parcel made no mention of development rights.
One of the questions raised and resolved in the litigation is whether development rights approved as a part of a DRI development order automatically pass upon the conveyance of a portion of the DRI land to a third party.
The First District Court of Appeal held that:
[i]n the absence of any agreement to convey specified development rights, no development rights were transferred when the 16-acre parcel ‘separated’ from the 48.1 acre parcel…” It further noted that “[o]btaining title to real estate subject to a DRI order does not…in and of itself confer development rights.”
After the First District Court of Appeal’s decision in Howard, it is now clear that development rights do not pass automatically with the conveyance of the fee interest in a DRI subparcel. Moreover, there is no automatic transfer of a specific proportion (or even some reasonable portion) of the development rights allotted to a large parcel on a DRI master plan when a conveyance is made of title to only a portion of the large parcel.
Accordingly, unless the development rights have been specifically allocated in the DRI Development Order itself, a purchaser wishing to acquire development rights along with title to the real property should ensure that the appropriate language is provided in either a deed or separate contractual agreement.
If you have any questions or inquiries regarding compliance with the Howard opinion, please do not hesitate to contact Henderson Franklin’s Land Use Department at 239-344-1100.