BEWARE THE BOARD’S RULES AND REGULATIONS
Do you live in a deed restricted community? If so, you are probably somewhat familiar with the covenants and conditions encumbering your home. You may sleep soundly in the knowledge that those restrictions cannot generally be changed without a well-publicized vote of the homeowners. What then, does one make of that pesky “cease and desist” letter quoting not from the declaration of restrictive covenants, or even the bylaws, but the “rules and regulations” adopted by the board of directors?
Those rules can be more onerous than you think and, more importantly, they can be created and changed at the whim of a select few on short notice.
In all likelihood, the fine print in your restrictive covenants grants to the board of directors of your neighborhood the power to enact rules and regulations governing the common areas, community amenities and even parcel use. Have you been thinking of putting up a small garden flag to celebrate the season? Is your attic bursting with items perfect for a garage sale next weekend? Did you double check your declaration to ensure you were not over stepping the line? Good job. But what about those rules which you did not know existed?
The statutes in Florida governing condominiums and homeowners’ associations are clear that the rule-making power of community associations is alive and well. Section 720.304(1), Florida Statutes, says that “[t]he entity or entities responsible for the operation of the common areas and recreational facilities may adopt reasonable rules and regulations pertaining to the use of such common areas and recreational facilities.” Section 718.123(1) has a similar provision for condominiums. But buried in the fine print of your declaration of restrictions could be a broader mandate; one allowing your board to create nearly any rule it wishes.
When an owner challenges a board’s rule-making powers, Florida courts have adopted a two-prong test. “When a court is called upon to assess the validity of a rule enacted by a board of directors, it first determines whether the board acted within its scope of authority and, second, whether the rule reflects reasoned or arbitrary and capricious decision making.” Beachwood Villas Condo. v. Poor, 448 So. 2d 1143, 1144 (Fla. 4th DCA 1984). Interestingly, the second part of the test (reasoned vs. arbitrary) is often rendered toothless by the business judgment rule, by which courts defer to the business judgment of a board of directors. Cedar Cove Efficiency Condo. Assn., Inc. v. Cedar Cove Prop., Inc., 558 So. 2d 475, 479 (Fla. 1st DCA 1990). More importantly, absent from this analysis is the presumption that such rules shall be construed in favor of the free and unrestricted use of land, as is the case with restrictive covenants. Orange Gardens Civic Assn. v. Harris, 382 So. 2d 1340, 13441 (Fla. 5th DCA 1980).
In sum, it is likely that the board of directors of your community has more power than you think. Check carefully before you decorate for the season or plan a small yard sale. What you do not know can result in an unwanted letter from your association or, gulp, your friendly neighborhood attorney.