Court case clarifies how to change a restrictive covenant

On Behalf of | Aug 12, 2022 | Real Estate Law |

Restrictive covenants provide a legal means to enforce agreed-upon terms regarding the use and ownership of a specific property. Most common in planned developments, homeowners’ associations and condominiums, these agreements remain part of the property’s deed and cannot discriminate. They can address a wide range of issues, from restrictions on land use and property alternation to home and property maintenance. Regardless of the type, covenants have rules on how to change specific restrictions.

Corporate declaration and bylaws

A recent court case in the Florida Court of Appeals brings together restrictive covenants, their terms, and how to amend them in the context of property owned by a corporation. A couple purchased a second condominium in an upscale real estate development. A requirement recorded in the Declaration of Covenants required existing property owners to purchase an additional club membership. The club changed this rule by amending its bylaws. The couple forfeited the deposit on the second property after the club refused to waive the requirement.

A lower court had granted a motion supporting the club’s position that the bylaws permitted such a restriction. The dispute revolved around what portion of the covenant the club should have amended. While the Declaration required three-fourths of the homesites to approve; the bylaws required only one half to approve. The court found the declaration superseded the bylaws. The club had no authority to approve the property restriction with only approval of 50% of its owners.

Experience with entities that require enforcement

Restrictions on land use and ownership define what a community and its members value. The language of a restrictive covenant significantly impacts the process to follow either to loosen or tighten those restrictions. Attorneys with a strong foundation of knowledge in how to enforce similar type covenants can offer guidance.