Estate and Succession Planning
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Marketable Record Title to Real Property – Addressing MRTA’s Unintended Consequences
Chapter 712 of the Florida Statutes is entitled “Marketable Record Titles to Real Property”. The act, however, is more commonly known as the Marketable Record Titles Act (“MRTA”). As a result of certain unintended consequences, MRTA may be undergoing some important changes. And, those changes may start with a recent bill from the Florida Legislature’s House of Representatives which purports to limit MRTA’s applicability to common interest communities – like the communities run by homeowner’s associations (“HOAs”).
The purpose of MRTA is to protect the free transferability of land by: limiting the time in which people can make claims against title to land, curing title to land by eliminating certain old or stale restrictions, and dually ensuring that (for the most part) what is provided in the public records related to real property may be relied upon and that people have sufficient notice of the restrictions and outstanding claims (if any) on the property in which they have an interest.
MRTA can be a difficult statute to understand. It is complicated. And, in certain cases, MRTA has produced some odd and perhaps even unintended results. For example, in a 1970 Florida Supreme Court case, the court upheld MRTA’s application to extinguish an individual’s claim to certain property. This was an odd result because the individual, whose claim was extinguished, for all intents and purposes, was the rightful owner of the property. But, instead of conferring title on this person, the court held that MRTA applied to protect the innocent recipients of, what was, a forged/fraudulently produced deed. That is, the court held that the otherwise rightful owner’s claim was essentially time-barred and eliminated by MRTA. Further, MRTA could apply to protect title in those who, without participating in any wrongdoing, received title to property as a result of a fraudulent act.[1]
Relatedly, MRTA has been employed to extinguish certain restrictions which, in actuality, were intended to last far beyond MRTA’s reach. One such example would be the covenants and restrictions contained in declarations recorded by common interest communities. When MRTA applies to extinguish a declaration’s restrictions, it does not necessarily extinguish those restrictions for all properties – that is, certain properties may still be subject to the declaration’s restrictions.[2] This can leave the community looking like swiss cheese where some properties are clearly abiding by the restrictions in the declaration and others are not.[3] The big problem, of course, is that the declaration exists to protect the community owners’ property values by having all properties abide by certain rules. As such, even though the declaration may cause certain owners small inconveniences, on the whole, owners want the declaration to remain in place. They do not want their property values to decrease.
The Florida Legislature realizes that MRTA has produced some unintended consequences over the years and is due for some updating. And, with respect to MRTA’s impact on common interest communities at least, big changes may soon come.
Although the board of directors of the community association has a duty[4] to preserve its declaration’s restrictions by timely filing a simple notice in the public records of the county in which the community is located,[5] many boards remain totally unaware of MRTA or its potential effects. Thus, the Florida Legislature, through a bill recently proposed in the House of Representatives, is proposing that MRTA’s future application to common interest communities be severely limited and, where the MRTA has already affected those communities, increasing the right to revitalize restrictions that have been extinguished. Both of these changes would be a great relief.
Time will tell if the Legislature deems it wise to pass this piece of legislation. For the sake of property owners in common interest communities, however, let’s hope that they do.
About the Author:
Brian M. Stephens is an associate in Dean Mead’s Viera/Melbourne office. He represents businesses and developers in various aspects of commercial and residential real estate, leasing, financing, land use, title claims and growth management. He may be reached at (321)259-8900 or by email at BStephens@deanmead.com.
[1] See generally, Marshall v. Hollywood, Inc., 224 So.2d 743 (Fla. 4th DCA 1969); See also, Marshall v. Hollywood, Inc., 236 So.2d 114 (Fla. 1970).
[2] See e.g., Matissek v. Waller, 51 So.3d 625 (Fla. 2nd DCA 2011).
[3] See generally, Id. See also, Southfields of Palm Beach Polo and County Club Homeowner’s Ass’n, Inc. v. Straub et al., 111 So.3d 283 (Fla. 4th DCA 2013); Berger v. Riverwind Parking, LLP, 842 So.2d 918 (Fla. 5th DCA 2003) (as an example of a court’s analysis applying the declaration to certain lots but not others).
[4] See, Southfields of Palm Beach, 111 So.3d 283.
[5] §712.05, Florida Statutes (2015).
