CALL Alert: SB 802/HB 733 MRTA & Housing Discrimination
One of the most important and valuable aspects of a property owner’s rights is the ability to market and sell their property, and to do so free from the fear of “hidden” or outdated restrictions or claims which may have previously burdened their property. But, what to do when a person raises a claim of a 50-year old unrecorded and unused easement agreement between neighbors entered into by a “gentleman’s handshake”? Or, what about the long lost great-grandnephew who arrives home from sea with an unrecorded quit claim deed to the property executed and delivered to him personally by his deceased beloved aunt 40 years earlier?
Chapter 712, Florida Statutes, titled the “Marketable Record Title Act” (“MRTA”), was first introduced by the Florida Legislature in 1963 with the goal of protecting owners from certain types of stale and undocumented claims against property which are more than 30 years old from the property’s “root of title” (i.e.: deed). Since its introduction, the application of MRTA in helping to clear title to property by automatically extinguishing potentially troublesome claims has done much to provide a sense of stability and peace of mind to buyers and sellers alike. (Not to mention the cost and time savings for title companies in conducting and reviewing a 30-year title search as opposed to a 75- or 100-year title search!)
This session, the Florida Legislature will again revisit how MRTA can be used to tackle and remove outdated and irrelevant burdens to the transfer of real property. The target this time: “discriminatory” restrictions. CS/CS/HB 733, originally introduced by Rep. David Smith, (Dist. 28) and CS/SB 802, introduced by Senator Keith Perry (Dist. 8), would amend the current language of Chapter 712, F.S., in two significant ways. First, the bills would amend the language of MRTA (s.712.04, F.S.) to clarify that the law not only applies generally to the covenants and restrictions contained in an association’s declaration or other governing documents but that it also specifically applies to any covenants and restrictions that are in the governing documents because they were required as part of the approval or permitting process imposed on the developer by the local city or county government (i.e.: local zoning ordinance, gated community ordinance, building code, development permit process).
The second important proposed amendment would expand MRTA’s application to extinguish any “discriminatory restriction” which restricts the ownership, occupancy, or use of any real property by a person based upon their race, color, national origin, religion, gender or physical disability (“protected class”). Unfortunately, the existence and influence of discriminatory use restrictions in real estate transactions were at one time commonplace, not just in the south but throughout the country. For example, the 1948 United States Supreme Court case, Shelley v. Kraemer, 334 U.S. 1 (1948), involved the attempted and unsuccessful purchase of a home by an African American couple in St. Louis, Missouri. A neighboring property owner sued to enforce a 1911 race-based restrictive covenant which specifically prevented purchase of any property in the neighborhood by “people of the Negro or Mongolian Race.” In that case, the U.S. Supreme Court found that any state court action to enforce such a blatantly discriminatory restriction was in violation of the Equal Protection Clause under the Fourteenth Amendment of the U.S. Constitution.
The Shelley case made it clear that state courts cannot enforce discriminatory race-based covenants, however, the case did not go so far as to automatically make illegal the existence of discriminatory covenants in the first place. In other words, community associations and individual neighbors (in lieu of a community association) were still free to create, impose, and abide by discriminatory restrictions, as long as they did not sue and try to enforce those restrictions in state court. Although rare, the reminders and remnants of this period in American history are still around today. More specifically, there are still older covenants and declarations for some Florida community associations which contain obviously discriminatory restrictions based upon a person’s racial, national, ethnic, or religious identification. To the extent that these restrictions exist in an association’s governing documents, even if they are not enforced, it leaves an association open to liability for claims of discrimination under the Federal and Florida Fair Housing Acts.
The intention of HB 733 and SB 802 is both admirable and desirable in that it uses MRTA to automatically extinguish and invalidate any restriction that may violate a person’s equal protection rights under federal and state law. Similar language is also found in CS/SB 1154 (Sen. Dennis Baxley – Dist. 12) and CS/CS/HB 623 (Rep. Jason Shoaf – Dist. 7), and would make unenforceable and void as a matter of law “discriminatory restrictions” which are found in the governing documents, without any further notice or action to be taken by the association.
To more effectively target and address these problematic restrictions, CALL recommends that language be inserted which would help to identify and more narrowly capture the type of covenants intended to be extinguished by MRTA. For instance, MRTA might be amended to add a process by which there is first an objective and official determination by a court or county attorney that a restriction is considered “discriminatory” for purposes of this statute. For example, in California, a restriction is found to be discriminatory and thus void as a matter of law after notice, review and confirmation by the county attorney. In Washington state, the law includes a specific list of examples of potentially discriminatory provisions which are considered void as a matter of law. The current language of these bills as proposed do not provide any preliminary or subsequent objective review process, by a court or county attorney, nor a list of examples which would help identify a “discriminatory restriction” subject to extinguishment. Another recommendation is to use the phrase “facially discriminatory restriction” in order to describe the type of covenants to be extinguished. The term “facially” refers only to those restrictions which are “on their face” or obviously discriminatory based on a plain reading of the language of the covenant – for example, the race-based restrictive covenant in the Shelly case which specifically and explicitly prevented the sale of property to persons of a certain race or a restrictive covenant prohibiting sale and/or occupancy to persons of a particular religious faith.
A more narrowly tailored approach in this regard would also help curb potentially disingenuous claims from owners that an otherwise legitimate and reasonable restriction is “discriminatory” just because it in some way restricts that owner’s use of their property. For example, under the current version of the bills, does a declaration provision restricting holiday decorations to a particular time frame or holiday season violate a person’s equal protection rights based upon their religion if that person wants to maintain Christmas or Halloween decorations year-round? Without further direction from the legislature in the first instance as to the type of provisions that are considered “discriminatory,” an association’s board is left to wonder whether they may be enforcing a provision that seems objective and reasonable but may ultimately be challenged as “discriminatory” by an offended owner.
CALL supports the aim of these bills in removing archaic and obsolete restrictions against property, especially those that are based upon clearly discriminatory intentions. However, we believe that with additional guidance provided within the language of these bills, the intended goals will be achieved without undermining the enforcement of reasonable and objective covenants and restrictions. Last week, HB 733 was approved without dissent by the House Judiciary Committee by a vote of 15-0 and has been placed on the calendar for the full consideration and vote of the House. SB 802 previously passed through the Senate Judiciary Committee (Y:4, N:0) and the Innovation, Industry and Technology Committee (Y:10, N:0) and is awaiting consideration by the Senate Rules Committee. As always, we welcome your thoughts and recommendations as we reach out to the sponsors and committees during this critical review and amendment process. We will be sure to keep you informed and updated as to how these bills progress over the next couple of weeks.