Article by Oscar Rivera and John Catalano in Daily Business Review: “Ruling Reminds Fla.’s Courts, Property Owners of Legal Precedents for Removal of Obsolete Restrictive Covenants”

An article authored by the firm’s Oscar R. Rivera and John Catalano is now featured on the homepage and will soon appear in the print edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which is titled “Ruling Reminds Fla.’s Courts, Property Owners of Legal Precedents for Removal of Obsolete Restrictive Covenants,” focuses on the takeaways from a recent decision by Florida’s First District Court of Appeal on the state’s legal procedure for making antiquated restrictive covenants that have been rendered obsolete by modern development go away.  Their article reads:

. . . The decision came in mid-October in Gate Venture v. Arthur Chester Skinner. The case stems from a 2007 transaction in which Skinner et al. conveyed to Gateway Professional Campus, LLC approximately 15 acres pursuant to a warranty deed that included restrictions limiting future development solely to professional and medical offices.

Since the time of the conveyance, significant development of the surrounding properties and changes to their zoning classifications have taken place, and Skinner et al. no longer owns any adjacent or nearby real estate. This led Gateway to pursue the removal of the restrictions via an agreement with Skinner and its partners, and it provided the original sellers with a site plan and information on its intentions to now develop the property as a multi-family community that would complement, not compete with, the surrounding properties.

Unfortunately for Gateway, its complaint alleges the request was “met with opposition” and could not be accommodated. Among the “opposition,” the representatives of the original sellers indicated they would agree to remove the restrictions in exchange for $6 million.

The lawsuit states that since the restrictions were recorded, circumstances in the area surrounding the property have substantially changed, and the sellers had acquiesced in the past to some of these zoning changes that conflict with the restrictions. It also alleges the restrictions are an unlawful restraint on the free and fair use of their property, and they have been rendered obsolete and no longer provide any benefit to any party, including the original sellers who no longer hold any interests in properties in the area.

In its lawsuit, the plaintiff argued that the sellers already demonstrated the restrictions serve no beneficial purpose when the sellers offered to remove or revise them in exchange for a monetary windfall, while the deed expressly states that “approval or disapproval shall not be unreasonably withheld or delayed or based upon monetary consideration therefor.”

Gateway sought a judgment declaring that the original purpose and intent of the restrictions were frustrated by the subsequent material changes to the surrounding area, and it asked the trial court to remove and extinguish them.

The trial court did not “see any scenario where a viable claim can be stated to get that deed restriction removed.” Not only did it grant the motion to dismiss the plaintiff’s lawsuit, it did so with prejudice.

In the ensuing appeal, the appellate panel’s unanimous opinion examines Florida’s controlling precedent on the test to be applied when a party seeks the removal or cancellation of deed restrictions. It cites 1938 and 1957 Florida Supreme Court rulings holding that changes in surrounding areas materially affecting properties will warrant the granting of relief from restrictive covenants, and the test is whether conditions and circumstances existing at the time the restrictions were placed have changed to the extent that the restrictions are now obsolete.

The ruling also cites the First DCA’s own decisions from 1976 and 1983 granting relief from restrictive covenants and finding that it is only necessary that the change in circumstances materially affecting the lands for which relief is sought be in their immediate neighborhood. The panel reversed the lower court’s dismissal, concluding that the trial court judge improperly focused on the merits of the action rather than on the allegations in the plaintiff’s complaint. The First DCA found that the crux of the case was to determine what was the intended purpose behind the restrictions limiting development of the property only to office space. The panel further concluded that such an analysis and determination should not have been made by the trial court at the motion-to-dismiss stage. . .

Oscar and John conclude their article by noting that the First DCA has sent a clear and thorough reminder to Florida’s courts and property owners of the legal precedents and thresholds that are in place for the removal of such allegedly outdated and obsolete deed restrictions.  They write that antiquated restrictions can thwart future developments that could provide substantial economic benefits for their surrounding areas, and the state’s courts have the authority to remove such restrictions based on the case law established by this opinion and those which it cited.

Our firm salutes Oscar and John for sharing their insights into the takeaways from this recent decision with the readers of the Daily Business Review.  Click here to read the complete article in the newspaper’s website (registration required).