How Restrictive Covenants Can Limit Your Rights as a Property Buyer
Florida real estate transactions are often complicated by a myriad of legal factors, not the least of which are zoning and development restrictions. Before you purchase any residential or commercial property in the Florida, you need to be aware of any covenants or local ordinances that may affect your use of the property. And you should never assume that a restriction is unenforceable or even unlikely to be enforced. Remember, there is always some third party that may have an interest in a particular development restriction.
Court Rules Condo Residents Can Enforce Restrictions on Construction of Neighboring Hotel
Consider this recent case from West Palm Beach. The subject of this litigation is a parcel of property leased by the City to a private company. The original lease, executed in 1979, included language restricting development on the property. Of interest here, the lease said the entire property would be organized under “condominium ownership,” with separate residential and commercial units. The commercial portion would then be further subdivided into two units, with the condominium association operating all three units.
Under the original lease, buildings on the commercial units could not be taller than four stories. In addition, the subsequent condominium declaration said that no building on one of the commercial units (known here as C-2) could exceed 75 feet in height. In 2007, the original assignee of the lease sold the C-2 parcel to another company, which in turn negotiated a deal with the City of West Palm Beach to construct a hotel. The City agreed to “waive” its rights under the lease to enforce the prior development restrictions, and the owner proposed to move forward with an eight-story hotel, nearly double the size permitted under the original restrictions.
However, several residents of the adjacent residential condominium objected. They maintained the original restrictions remained in force, which meant the hotel could not be taller than four stories and 75 feet in height, among other things. They filed a lawsuit seeking a judicial declaration that any development violating these restrictions required prior, unanimous approval from the City Planning Commission.
In response, the City argued the condo residents lacked standing to enforce the development restrictions. This question ultimately ended up before the Florida Fourth District Court of Appeal, which held the residents “have standing as co-lessees and grantees from a common grantor to enforce the restrictive covenants found in the lease against the owner of Unit C-2.” In plain English, there is a single lease, under which both the residents and the owner of C-2 are tenants. As co-lessees, the residents have every right to “enforce building restrictions found in the lease” since it is part of a “general building scheme” and the restrictions were designed to provide “mutual and reciprocal benefits to all of the unit owners.”
Seek Advice from a Florida Real Estate Closing Lawyer
Cases like the one discussed above illustrate why you need to work with a qualified Real Estate Attorney before entering into any contract for the purchase and sale of residential or commercial property. You never know what restrictive covenants or local rules might limit your rights going forward as the property owner. That is why it is critical to identify and address these issues prior to closing. If you are thinking about or are ready to purchase property in Florida, start by calling our office in St. Petersburg, Florida, at 727-537-6818, to schedule an appointment with one of our experienced Real Estate Attorneys today!