Tuesday, December 31, 2013
A popular topic among association dwellers is the right of an association to restrict rental of property. This is one of the areas where it is important to distinguish between a COA (condo association) and a HOA (single family homes). Each association is governed by different laws. Fla. Stat. Chapter 718 governs COAs and Fla. Stat. Chapter 720 governs HOAs.
Condo rental restrictions are common and receive the most attention. A few years back a judicial ruling supported condo rental restrictions which were created by a membership vote, noting when a person buys a condo they are on notice the rules and restrictions of the COA can be amended. In response to the ruling, the Florida Legislature enacted Fla. Stat. §718.110(13), which states any amendment to restrict rentals is only effective against those owners who voted for the amended and those purchasing property after the amendment is recorded.
HOAs have traditionally been treated differently than COAs when it comes to rental restrictions. The reason being COAs have members living in very close proximity to each other whereas a majority of HOAs have stand alone housing (the exception being townhomes, which are more like condos, but formed as HOAs).
The court cases involving HOAs have for the most part ruled the right to sell, lease or otherwise transfer property is a vested right which cannot be taken away without consent of the owner. A vested right is any right which would be a deal-breaker for the reasonable buyer if the rule prohibiting it were in existence at the time of purchase. In other words, if the restriction existed when you were considering your purchase you would have not purchased the property.
The issue members of HOAs have in asserting this right is the rulings are at the appellate level and if an owner does not know to argue this at the trial level and cite the appellate rulings, the judges will consider the condo rulings because the HOA lawyers will use those to promote their position the HOA can create rental restrictions.
The lack of a significant amount of case law governing HOAs means judges and lawyers turn to the condo cases for guidance. In a majority of the issues, the law is the same, but there are still differences between the two. This is why it is important to have a lawyer for these types of cases and one that is experienced in HOA and condo law. Not only are there nuances in the law, but both types of associations have special procedures for litigating.