No Deed Restrictions - A Costly Error
A recent trial court ruling invalidated the deed restrictions for one HOA for not using the correct voting procedures.
The Rules Apply to Everyone, Including the HOA ItselfYesterday was a good day for the homeowners who scored a victory in their fight over deed restrictions in Bayhead Landings. It was a tough battle with me, being the only attorney with my firm handling HOA cases, against Becker & Poliakoff. For those of you who do not know B&P, they are the biggest association law firm in Florida. This battle was over deed restrictions which included a specific expiration date without any of the usual automatic renewals. In order to extend the deed restrictions, 75% of the owners and mortgagees had to vote to amend the expiration date. The issue in this case was the method for obtaining the approval. For this community it meant just one method -- voting in person or by proxy at a meeting. This was the method provided for in the bylaws. Additionally, Fla. Stat. 720.306(1)(a) states "Unless otherwise provided in this chapter or in the articles of incorporation or bylaws, decisions that require a vote of the members must be made by the concurrence of at least a majority of the voting interests present, in person or by proxy, at a meeting at which a quorum has been attained." The HOA didn't follow these rules and instead collected ballots door-to-door. Their argument was one we see a lot. Fla. Stat. 617.0701, governing not-for-profit corporations, allows voting by written consent. The problem is this conflicts with Fla. Stat. 720.306 and Fla. Stat. 617.1703 states in the event of a conflict with Chapter 720, Chapter 720 will prevail. The funny thing is this case was not about not wanting deed restrictions. My clients actually supported keeping the deed restrictions. What they could not support was the way the HOA went about doing it. It's pretty much a safe bet to say that if a HOA doesn't follow the rules and procedures for one issue, they tend to ignore the rules and procedures for dealing with other issues. This wasn't about not wanting deed restrictions, but about playing by the rules.
And the Lesson Is.....A HOA must follow the rules and restrictions just like the lot owners. While this is a very complicate area of law (even though it shouldn't be), the board made the mistake of trying to circumvent the process to accomplish its goal. This probably wasn't necessary since most of the community was in favor of deed restrictions. They