Adrift in the amendments sea: Florida courts struggle for logic and consistency part II.

AuthorHartenstine, J. Michael
PositionReal Property, Probate and Trust Law

Eighteen years after Flamingo Ranch Estates, Inc. v. Sunshine Ranches Homeowners, Inc., 303 So. 2d 665 (Fla. 4th DCA 1974), the Fourth District Court of Appeal again ruled on an amendment to subdivision restrictions in Holiday Pines Property Owners Association, Inc. v. Wetherington, 596 So. 2d 84 (Fla. 4th DCA 1992). Echoing, but surprisingly omitting citation to, Flamingo Ranch, the Holiday Pines court asseverated, "In determining the enforceability of an amendment to restrictive covenants, the test is one of reasonableness.... [A] reserved power to modify restrictions must be exercised in a reasonable manner so as not to destroy the general plan of development." (1) Applying this standard, the court invalidated an amendment approved jointly by a developer and two-thirds of the lot owners that created mandatory membership in a homeowners' association and converted the subdivision into a "quasi-condominium development." (2) The amendment was not "a continuation of a scheme of development but a radical change of plans, altering the relationship of lot owners to each other and the right of individual control over one's own property." (3) The court upheld a separate amendment establishing an architectural review board because it "was not a fundamental departure from the scheme of development." (4)

As in Bay Island Towers, Inc. v. Bay Island-Siesta Association, 316 So. 2d 574 (Fla. 2d DCA 1975), the Holiday Pines court, without comment or analysis, extended the reasonableness rule to include lot owner-initiated amendments. If an amendment brought about an unreasonable change in the general plan of development, it did not matter whether the developer or the lot owners approved the amendment; in neither case would the amendment be valid.

Richardson v. Deerwood Club, Inc., 589 So. 2d 937 (Fla. 1st DCA 1991), questions that conclusion. The restrictions in Richardson designated access to a development via an entrance road along the east side of the development. The restrictions expressly authorized the developer to relocate the entrance road to another point along the east side. Instead, the developer, citing safety concerns, closed the entrance road on the east side and substituted a new entrance road on the south side. Paragraph 40 of the restrictions permitted amendments by the developer as long as the amendments conformed to the general purposes and standards of the restrictions. The developer amended the restrictions to authorize closure of the original entrance road and substitution of the new entrance road. The court ruled that the amendment was invalid because it did not conform to the general purposes and standards of the restrictions. (One wonders if this is a fair characterization of the amendment. It may not have conformed to the specific purposes and standards of the restrictions--it changed the location of an entrance road--but mere relocation of a road would seem to conform to the general purposes and standards of the restrictions --there was still an adequate entrance road to the development.)

An even more confounding part of the Richardson decision followed: "[W]e note that Deerwood may still seek to amend the covenants and restrictions pursuant to paragraph 41, which gives the developer the right to amend, so long as 75 percent of the lot owners consent." (5) Presumably paragraph 41 did not include the "general purposes and standards" limitation, since an amendment permitting relocation of the entrance road by whatever means would still fall short of the court's view of the general purposes and standards of the restrictions. Is the court implying that there are no limitations on amendments adopted by lot owners, contrary to Bay Island and Holiday Pines, or is the court suggesting that relocation of the entrance road, while not conforming to the general purposes and standards of the restrictions, would not be an unreasonable change in the general plan of development? The latter position appears unlikely. A road relocation would seem to impact a "general plan of development" more than it would the "general purposes and standards" of restrictions. Unless the court's opinion is dismissed as hopelessly inconsistent, it must stand for the proposition that lot owner amendments are not subject to the reasonableness rule. Yet Richardson has never been cited for this proposition, and the few subsequent Florida cases dealing with lot owner amendments have continued to apply the reasonableness rule.

For example, in Granuzzo v. Willoughby Golf Club, Inc., No. 432004CA1006 (Fla. 19th Cir. Ct. January 17, 2008), the circuit court ruled that an amendment by lot owners imposing mandatory membership in the community country club was unreasonable and destroyed the general scheme of development. The standard of review, the court stated--without citation to any authority but essentially quoting Flamingo Ranch --was "whether or not the power to amend the [restrictions] was exercised in a reasonable manner so as not to destroy the general scheme or plan of development of the Willoughby community." (6)

Similarly, the court in Klinow v. Island Court at Boca West Property Owners' Association, Inc., 64 So. 3d 177 (Fla. 4th DCA 2011), quoting the language of its earlier Holiday Pines opinion, stated that amendments to restrictions were subject to the test of reasonableness. "Reasonable," the court observed means not arbitrary, capricious, or in bad faith.

In other words, as we stated in Holiday Pines, the modification of restrictions cannot "destroy the general plan of development." Amendments which cause "the relationship of lot owners to each other and the right of individual control over one's own property" to be altered are unenforceable. Such an alteration is considered a "radical change of plans...."

This court has defined a radical change as a change which would create an inconsistent scheme, or a deviation in benefit from that of the grantee to that of the grantor. (7)

The court's treatment of the terms "arbitrary" "capricious," and "bad faith" as the equivalent of destroying a general plan of development is perplexing. Although an amendment made arbitrarily, capriciously, or in bad faith would not be reasonable, such amendment would not necessarily destroy a general plan of development. (8) Likewise a logical, sensible, and well-meaning amendment--i.e., an inherently reasonable amendment --could be considered destructive of a general plan of development (Richardson is a case in point). The court's opinion could have been clearer if the words "in addition" had been used instead of "in other words."

Granting that a "radical" change is destructive of a general plan of development, what sort of change is "radical"? The court identifies three such changes: 1) an alteration of the relationship among the lot owners and individual control over one's own property; 2) a change that creates an inconsistent scheme; and 3) a deviation in benefit from that of a grantee to that of a grantor.

The amendment under review in Klinow transferred lot owner responsibility for maintaining the lot's driveway and sidewalk to the homeowners' association, so that the association could institute a driveway beautification program. The court reasoned that this change was entirely consistent with the general plan of development --no inconsistent scheme results when uniformity is promoted. The court further concluded that the amendment actually benefitted the lot owners because uniform driveways would create a better-looking community; no shift in benefit from grantee to grantor exists when the lot owners benefit from the change. That is all the court needed to find that the amendment was "reasonable and beneficial" to the lot owners. (9)

But what about the radical change resulting from the amendment's alteration of the relationship among the lot owners and individual control over one's own property? The amendment transferred control of a lot owner's driveway from the lot owner to the association. Was that not a radical change under the court's own definition? Not necessarily. Taken literally, the court's definition required both an alteration of lot owner control and an alteration of the lot owners' relationship. Even so, would not the shift of maintenance responsibility for one's driveway to the homeowners' association --thereby ceding the judgment of the individual lot owner to the collective judgment of all the lot owners as expressed through the association --constitute an alteration of the lot owners' relationship among themselves? The court did not answer, or even address these questions further undermining predictable application of the reasonableness rule.

Also contributing to the elusiveness...

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