MARKETABLE RECORD TITLES ACT-What You Need to Know
MARKETABLE RECORD TITLES ACT -
WHAT IS IT AND WHY YOU NEED TO KNOW
 
WHAT IS THE MARKETABLE RECORD TITLES ACT AND WHAT DOES IT DO:
 
    In 1963, the Florida legislature adopted a law entitled the 'Marketable Record Titles Act' (hereinafter 'MRTA'), the purpose of which was, and still is, to legislatively abolish certain 'stale' recorded claims affecting real property. For instance, during the early boom years of Florida’s population growth, many documents were recorded that now have no continuing effectiveness and merely 'junk up' the title (e.g. timber leases owned by long departed companies). Notwithstanding their ineffectiveness, those claims still needed to be listed on all title insurance policies until MRTA was adopted.MRTA CONCEPTS:

    First, the legislature had to decide when a claim became 'stale'. For this they decided that all recorded claims which were at least thirty (30) years old were subject to being abolished. Next, it had to arrive at a way to determine the exact date that would be used to determine which claims would actually be abolished. For this, the Legislature created a concept called 'root title'. Generally speaking, the 'root title' is the first valid deed that was recorded at least thirty (30) years before the date that the title search is being performed. As will be addressed below, the legislature also exempted certain claims from the effect of MRTA.

EXAMPLE OF HOW MRTA ACTUALLY WORKS:

    For this article, we will assume that our title search is being performed on April 1, 2004, which means that the earliest deed that could act as the 'root title' must have been recorded at least thirty (30) years prior to that date (April 1, 1974). You then search backward in time from April 1, 1974 until you find the first valid deed that was recorded prior to that date. For our example, we will assume that this deed was recorded on June 1, 1972. This becomes your 'root title' date. You then continue to search backward in time to determine what recorded claims existed prior to June 1, 1972. Finally, you determine which of those claims are exempt (as addressed below). The final result is that all non-exempt claims that were recorded prior to June 1, 1972 are terminated, are void, and are not required to be reported on any title insurance policy.

WHAT CLAIMS ARE EXEMPT:

    Due to the severe consequences of MRTA, the legislature provided the following two categories of claims that would not be abolished.

    1. AUTOMATIC EXEMPTION:

    First, the legislature provided that certain claims would be automatically exempted from the effect of MRTA based on public policy principles. Examples of these are easements and governmental titles.

    2. SPECIFIC EXEMPTION:

    Secondly, the legislature provided that any claims that are specifically and validly re-recorded after the date of the root title, and those claims that are specifically referenced in a document that is recorded after the date of the root title will not be abolished. We will address this exemption more fully below.

WHY IS MRTA IMPORTANT TO US:

    Several years ago, and much to the surprise of many communities (both homeowners associations and condominium associations), the Florida courts ruled that recorded covenants and restrictions were subject to MRTA and were not automatically exempted from its drastic effect. This meant that any such covenants and restrictions that were recorded prior to the date of the root title would automatically become void and unenforceable unless they fell into exemption 2 addressed above. (Thankfully, most condominiums do, as will be addressed below.)

WHAT CAN YOU DO TO PROTECT YOUR COMMUNITY:

    The following steps must be taken to protect your community:

    1. DETERMINE THE DATE OF YOUR COVENANTS AND RESTRICTIONS:

    First and foremost, you must determine when your covenants and restrictions were recorded. If they are coming up on thirty (30) years of age, you must take one of the steps outlined below.

    2. DETERMINE IF YOU QUALIFY FOR ONE OF THE MRTA EXEMPTIONS:

    Next, you must determine if you qualify for one of the above described exemptions. Remember that claims that are specifically referenced in a document that is recorded after the date of the root title will not be abolished. This is a critical exemption for most, but not all, condominiums and some homeowner associations for the following reason. We find that the vast majority of condominium units are transferred using deeds that define the unit by specifically referring to the actual Declaration of Condominium (e.g. Unit 101 according to the Declaration recorded at Official Records Book 1111, Page 11 of the Public records of Orange County, Florida). For this reason, the requirements of the specific exemption above are met because each new deed specifically references the covenants and restrictions. However, because condominiums can be deeded by reference to the plat of the condominium, it is critical that all deeds be reviewed to determine that the exemption applies. In those very rare times when the exemption does not apply, the condominium association must go to step three below. While occasionally the same type of exemption can be used for non-condominium property, it is rare, so most homeowners associations must go to step three.

    3. ADMINISTRATIVELY 'RE-ADOPT' YOUR COVENANTS:

    Finally, if you do not qualify for the exemption, you must administratively re-adopt your covenants and restrictions as addressed herein.

    In response to the decisions rendered by the Florida courts, in 1997 the Florida legislature amended MRTA to specifically afford community associations another specific method of preserving their covenants and restrictions. This method required recording a notice in the public records in the county where the affected property was located. However, the notice could only be recorded if the preservation of the covenants and restrictions were approved by a majority vote of the membership at a meeting where a quorum was present. Further, the statute required that the notice contain the names and addresses of all owners of property to which the covenants and restrictions applied.

    In 2003, the legislature again amended MRTA and made the process for preserving covenants and restrictions much easier. Now the notice can be recorded if the covenants and restrictions are approved by at least two-thirds (2/3) of the members of the board of directors at a board meeting for which a notice of the time and date of the meeting and a statutorily-required statement were mailed or hand delivered to all association members not less than seven (7) days prior to the meeting.

    The required statement is found in Section 712.06(1)(b), Florida Statutes (2003) and specifically alerts each owner that the association is taking action to preserve the covenants and restrictions. An affidavit executed by an appropriate board member stating that the notice was given replaces the old requirement of listing the names and addresses of each property owner affected and recording this list with the required notice.

    Although the process has been simplified, it still requires meticulous attention to ensure it complies with the statute. This process should be started at least a year before the thirtieth (30th) birthday of your documents and your representative should contact your legal counsel so that they can guide you through this very important process.

The firm of Taylor & Carls, P.A., with offices located in Maitland, Melbourne and Daytona Beach, Florida, was founded in 1981 and has practiced in the area of community association law since that date. This edition prepared by Gene S. Boger. Esq. and Robert L. Taylor, Esq. of Taylor & Carls, P.A. The information contained in The Association e-Lawyer should not be acted upon without professional legal advice.


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