“Rental Amendments Are Valid; May Require Grandfathering” – News-Press
Q: Is an amendment to our association documents legal under Florida law if it limits my right to rent out my property? (M.W., via e-mail)
A: An amendment to a declaration of condominium or covenants that restricts an owner’s ability to lease their unit or home is valid under Florida law, provided it meets the procedural requirements for amending the declaration and does not violate public policy or constitutional rights.
In a 2002 landmark decision, the Florida Supreme Court upheld amendments to a declaration of condominium which altered the terms for which units could be rented. In that case, called Woodside Village Condominium Association Inc. v. Jahren, the court found that unit owners are bound by properly adopted amendments to the declaration, even if they purchased their units before the amendment was enacted, as long as the amendment is not arbitrary, unreasonable, or in violation of public policy or constitutional rights.
The Woodside case involved amendments that prohibited unit owners from leasing their units for more than 9 months in a 12-month period and prohibited owners from leasing their units during the first 12 months of ownership. These amendments were a response to concerns that the increasing number of non-owner occupied units would negatively impact the quality of life in the development and the units’ market value. The amendments were adopted by a vote of at least two-thirds of the unit owners, as required by the declaration.
Some owners who had acquired their units before the amendments were enacted challenged the lease restrictions. However, the Supreme Court ruled that the amendments were valid and enforceable against these owners, reversing the decision of the Second District Court of Appeal, which had sided with the unit owners. The court found that the owners were on notice that the unique form of ownership they acquired was subject to change through the amendment process and that they would be bound by properly adopted amendments.
The court also found that the owners failed to demonstrate that the lease restriction, in and of itself, violated public policy, and that they also failed to point out any provision in the statutory scheme for condominiums or any provision in the state or federal constitution that would bar enforcement of the lease restrictions against owners who purchased their units before the declaration was amended.
The Florida Supreme Court acknowledged concerns that owners who purchase units for investment purposes might have and suggested that any restraint on the right to enact lease restrictions is best addressed by the Legislature. In response, in 2004, Florida Legislature enacted legislation providing that any amendment to the declaration that restricts unit owners’ rights related to the rental of units applies only to those owners who consent to the amendment and to unit owners who purchase their units after the effective date of that amendment.
The Legislature later clarified the restriction to apply to amendments prohibiting unit owners from renting their units, altering the duration of the rental term, or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period. The so-called “rental amendment grandfathering clause” is found at Section 718.110(13) of the Florida Condominium Act.
In the homeowners’ association context, where the legal principles are slightly different, most attorneys conversant in this field believe that the logic of Woodside would likely be applied in the HOA context, and that covenant amendments may restrict leasing rights. The Florida Homeowners’ Association Act has its own rental amendment grandfathering clause, found at Section 720.306(1)(h) of the HOA Act which provides that any amendment to a governing document, enacted after July 1, 2021, which prohibits or regulates rental agreements, applies only to parcel owners who consent to the amendment or those that acquire title after the effective date of the amendment.
Unlike the condominium counterpart, a homeowners’ association may still amend its governing documents to prohibit or regulate rental agreements for a term of less than 6 months and may prohibit the rental of a parcel for more than three times in a calendar year, and such amendments shall apply to all parcel owners. There is also an exemption for associations of 15 or fewer parcel owners.
Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. Send questions to Joe Adams by e-mail to jadams@beckerlawyers.com. Past editions may be viewed at floridacondohoalawblog.com.
