Restrictive Covenants Enacted in Connection with Governmental Regulation are not Extinguished by the Marketable Record Title Act
Florida’s Marketable Record Title Act (Chapter 712 of the Florida Statutes) (“MRTA”) was enacted in order to free real property from older title defects by creating a 30-year limitations period on certain matters of title. As noted in Florida Statute Section 720.04, “a marketable record title is free and clear of all estates, interests, claims or charges, the existence of which depends upon any act, title transaction, event or omission that occurred before the effective date of the root of title.” Florida Statute Section 712.01(2) defines “Root of title” as “any title transaction purporting to create or transfer the estate claimed by any person and which is the last title transaction to have been recorded at least 30 years prior to the time when marketability is being determined.”
Although MRTA has added to the responsibilities of homeowners’ and community associations in terms of ensuring their covenants are preserved under MRTA, the statute does have its benefits. MRTA can, at least to some extent, simplify and limit the record search process required to establish marketability of title, thereby facilitating the closing of real estate transactions. That being said, there are exceptions to MRTA, which must be considered in the analysis of whether a particular title matter has been extinguished by MRTA. The statutory exceptions are enumerated in Florida Statute Section 712.03.
Beyond the statutory exceptions, Florida case law has also identified an exclusion from MRTA with respect to recorded restrictions that are imposed as part of a process involving governmental regulation or approval. In Save Calusa Trust v. St. Andrews Holdings, Ltd., 193 So. 3d 910 (Fla. 3d DCA 2016), the Third District Court of Appeal considered whether a recorded restrictive covenant that predated the root of title would be extinguished by MRTA where the covenant was required by the Zoning Board of Appeals of Miami-Dade County (“ZAB”) in connection with a variance application. Noting the well-established principle that government-imposed restrictions on property, such as zoning, do not impact marketability of title, the court held that, because the restrictive covenant at issue was imposed as part of the governmental approval process (in this case, through the ZAB), “the duly imposed restrictive covenant in [the subject] case [was] a governmental regulation, rather than an estate, interest, claim or charge affecting the marketability of title so as to be subject to extinguishment under MRTA.” Id. at 916.
Given the court’s conclusion in the Save Calusa Trust case, when considering whether MRTA applies to the extinguishment of a recorded title matter, in addition to assessing the applicability of the exceptions under MRTA, one must also give due consideration to whether the instrument at issue was recorded as a condition to, or in connection with, a governmental approval or regulation. From a practical perspective, this may prove to be a daunting task. To read the full text of the Save Calusa Trust case, click here: http://caselaw.findlaw.com/fl-district-court-of-appeal/1722944.html.
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