Can Master Condominium Associations Revitalize Covenants?

Excluding certain covenants, including a condominium association’s declaration of condominium, Florida’s Marketable Record Title Act (MRTA) may begin to extinguish covenants not sooner than 30 years after they are initially recorded. At times, a master condominium association may administer its declaration of condominium and other covenants recorded against non-condominium property. Therefore, it is crucial to determine whether these “other covenants” can be preserved or revitalized by the master condominium association. In addition, under current law, certain master condominium associations are governed by Chapter 718, F.S., (the “Act),” while others are not. There is great debate as to whether or not master condominium associations should be regulated by the Act, or Chapter 617, F.S., the Florida Not For Profit Corporation Act, or Chapter 720, F.S., the Homeowners’ Association Act.

Where it all began – a history lesson of the genesis of the master condominium association. Raines v. Palm Beach Leisureville Community Association, decided in 1982 by the Florida Supreme Court (the “Court”), was the first significant court decision regarding the definition of “association” as relates to a master condominium association. The Court ruled that a master condominium association was not an “association” governed by the Act because it is not the entity responsible for the operation of a condominium. Similarly, in the 1985 case of Department of Business Regulation, Division of Land Sales v. Siegel, the Court ruled that the Act does not apply to a master condominium association when the development is not complete and the developer could add non-condominium units to the development.

Then, in the 1988 case of Downey v. Jungle Den Villas Recreation Association, Inc., decided by Fifth District Court of Appeals created a two-pronged test where both prongs must be met to determine whether a master association is a master condominium association subject to the Act: the “constituency test,” requiring that an “association” consist exclusively of condominium unit owners; and the “function test,” requiring the court to look at how an association was being managed. If the functions and actions of an association are “in substance and in equity” those of a condominium association, then the entity would meet the “function test” regardless of the intent behind its formation.

With the apparent intent of codifying the Jungle Den decision, the Florida Legislature addressed master condominium associations in 1991 by broadening the definition of “association” in the Act. Though, fundamental differences between traditional condominium associations and master condominium associations were left unaddressed. Sadly, today, the definition of “association” is substantially similar to its 1991 counterpart.

Then, in 2012 in the case of Heron at Destin West Beach & Bay Resort Condo Association, v. Osprey at Destin West Beach, it was determined that a master condominium association meets the definition of an “association” as defined in the Act, “if it is primarily responsible for the operation of real property or facilities that are not common elements of an individual condominium or property of a condominium association and i) condominium unit owners have user rights in the master association’s property; ii) the voting membership is exclusively condominium unit owners; iii) membership in the association; and iv) the master association is authorized to assess its members for assessments and has lien rights.”

Prior to recent amendments to the Florida Statutes to broaden the abilities of all property owners’ associations to preserve and revitalize covenants from the effects of MRTA, such abilities were limited to a “homeowners’ association” as defined in MRTA to mean “a homeowners’ association as defined in s. 720.301, or an association of parcel owners which is authorized to enforce use restrictions that are imposed on the parcels.” This left a question in practitioners’ minds as to whether the covenants of a statutory master condominium association may be preserved and revived if it is deemed subject to the Act but not saved by any exception to MRTA as would a traditional declaration of condominium.

Finally, an answer: in the January 2019 case of Eastwood Shores Property Owners Association v. Florida Dept of Economic Opportunity, the master condominium association was subject to the Act and operated pursuant to its covenants which did not fall under any exception to MRTA. Because the non-condominium declaration covenants were being extinguished by MRTA, the master condominium association undertook revitalization efforts to save them. However, the revitalization was disapproved by the Department of Economic Opportunity (a necessary step in revitalization) because of the condominium form of ownership. Essentially, the Department substituted the term “condominium parcel” as defined in the Act for the term “parcel” as defined in MRTA, resulting in the inability of the master condominium association to revitalize its covenants. However, the case was decided in favor of the master condominium association finding that the Department “erroneously interpreted the applicable sections of MRTA and chapters 718 and 720.” As such, master condominium associations can take advantage of revitalization when necessary.

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