Homeowners Associations and the Marketable Record Title Act (“MRTA”)

Article Courtesy of  JD SUPRA
By Shumaker, Loop & Kendrick, LLP

Published May 1, 2022


Chapter 712, Florida Statutes, the Marketable Record Title Act (“MRTA”), presents a mortal risk to Florida homeowners association, potentially rendering them unable to levy and collect assessments or otherwise enforce their governing documents.[1] Generally, MRTA extinguishes interests in a parcel of real property which are older than the “root of title” for the parcel – defined as the first deed or other instrument transferring ownership of the parcel which is at least thirty years old – unless an exception applies. Since a homeowners association developer typically records the declaration of covenants and restrictions and then begins to deed individual parcels to owners, a homeowners association’s declaration of covenants and restrictions is at risk of expiring beginning thirty years after the initial deed from the developer, unless an exception applies.

There are several exceptions to MRTA commonly applicable to prevent extinguishment of declarations of covenants and restrictions for homeowners associations. An exception arises where the root of title or subsequent deeds or other muniments of title identify the declaration of covenant and restrictions by book and page. An exception also arises where, subsequent to July 1, 2018, a homeowners association records a properly adopted amendment to its declaration of covenants and restrictions prior to extinguishment. Finally, an exception arises where the homeowners association records notice of preservation in accordance with Sec 712.06 or Sec 720.3032(2), Florida Statutes, prior to extinguishment. The simplest option for filing a notice of preservation is compliance with Sec 720.3032(2),[2] which allows a duly authorized officer of the Association (i.e., pursuant to board vote) to record a notice of preservation containing basic information relating to the community specified in the statute, such as the legal name and address of the association, names of affected subdivisions, and identification of the recording location of the covenants, without limitation. See Sec 720.3032(2) for complete requirements.

These exceptions reduce, but do not eliminate, the likelihood of extinguishment under MRTA. As such, it remains incumbent on the Association to ensure that its governing documents remain in effect. In recognition of the serious risk MRTA presents to homeowners associations, effective July 1, 2021, Chapter 720 mandates that each newly elected Board of Directors, at its first regular meeting following the annual meeting (excluding the organizational meeting), consider the need to preserve the association’s governing documents against expiration under MRTA and, as needed, authorize an officer to file a notice in accordance with sec. 720.3032, described above.

Homeowners associations’ can revive expired declarations of covenants and restrictions under Part III of Chapter 720, but the revival process is much more onerous than preservation. Generally, revival requires an organizing committee of affected parcel owners to create proposed revived declaration of covenants and restrictions, provide copies to affected parcel owners, and obtain approval of a majority of affected owners. Once the affected owners approve the revived declaration of covenants and restrictions, the organizing committee must submit for approval by the Department of Economic opportunity before recording in the public records. See Sec 720.403 – 407 for complete requirements.

The process for investigating, preserving, and reviving expired declarations of covenants and restrictions is full of pitfalls, but is critical for homeowners associations to continue to operate for the protection of property values and to the benefit of its members.

[1] In rarer cases, MRTA may also apply to condominium associations. See Eastwood Shores Property Owners Association, Inc. v. Department of Economic Opportunity, 264 So.3d 264 (Fla. 2d DCA 2019).

[2] Sec 712.06, by comparison, requires the association to send copies of the governing documents, index them to the certified tax rolls, and contains other requirements not applicable under Sec 720.3032(2).