The Marketable Record Title Act (MRTA) May Nullify Homeowner’s Association’s Covenants, Conditions, and Restrictions.

March 11th, 2014

Posted in Business & Corporate Law

Do you live in a homeowner association developed in the mid 1980s or earlier?  If so, you should be aware of the Marketable Record Title Act (MRTA) and how it could affect the enforceability and applicability of your community’s covenants and restrictions.

MRTA was enacted by the Florida Legislature in 1963, and was intended to simplify title searches and real property transfers by clearing old defects from land titles, limiting the period of record searches, and extinguishing old interests of record not specifically claimed or reserved (also known as “stale claims”).  MRTA, which is codified in section 712.02 of the Florida Statues, provides:

Any person having the legal capacity to own land in the state, who, alone or together with his predecessors in title has been vested with any estate in land of record for 30 years or more, shall have a marketable record title to such estate and land, which shall be free and clear of all claims except the matters set forth as exceptions to marketability in [F.S.] 712.03.

Thus, a person who has owned, or through his or her predecessors in title has owned, his or her land for 30 years or more has marketable record title free and clear of all restrictions.

Importantly for this discussion is the fact that restrictions covered by MRTA would also include covenants, conditions, and restrictions (CC&Rs) of most homeowners associations (HOAs) where specific reference to the recording information of the CC&Rs is not made in the deed to the parcel.  As a consequence of MRTA, HOAs might find themselves without legal authority to enforce their CC&Rs, which would therefore lead to the inability to undertake basic actions such as hiring managers, providing for landscaping of the community, providing security, and levying assessments to otherwise maintain and administer the common areas and amenities.

The good news for community associations is that the legislature has recognized the unintended problem and created a process for HOAs to preserve their CC&Rs.  Additionally, the legislature has enacted procedures for HOAs to renew or revive CC&Rs that expired as a result of MRTA.  The former process is less costly and can be done by way of a vote of the Board of Directors (“Board”) of the Association.  The latter process serving to revive the governing documents is more costly and requires approval by a majority of the parcels, as well as the recording of the revitalized or revived CC&Rs.

Associations are encouraged to discuss with counsel the applicability of the Marketable Record Title Act and what actions should be taken to preserve the Association’s right to enforce the CC&Rs.  This is especially true for communities whose covenants were recorded 25 years ago or greater.  Even if the covenants for your community have expired, fear not!  There is a process to revive these documents, as can be further outlined by the Association’s legal counsel.

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