Covenants: A newly discovered amendment

Started by EvaM1 • 8 replies • 1496 views

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EvaM1 (Florida)
Posts: 190

Posted:

About 20 years ago, our association incorrectly recorded an amendment easing lease restrictions from 90-day minimum rental to a 30-day minimum rental. We know, that the unit owners approved the amendment but the consent of the applicable mortgagee was not obtained as required. (see below).

This amendment has not been included in the master copy of our documents and consequently owners who acquired a unit here after that date do not even know about it. In other words this amendment has been simply ignored but it is floating in the county records.

Does this amendment stand since it has never been declared as invalid? Must we vote on it again? How would you handle a situation like this? I'd appreciate your comments.

Our covenants at that time said:

‘Article XV: Amendments (2) This Declaration can be amended only by consent of 51% of all unit owners together with the consent of the institutional mortgagee with the highest aggregate mortgage indebtedness on the townhouse units. The aforementioned consent shall be in writing and affixed to the Amendment to this Declaration. ‘

MaryA1 (Arizona)
Posts: 7,043

Posted:

Eva,

Not being an attorney, I can't say if the amendment could be challenged by a mortgage co. However, as long as the amendment was recorded it IS in effect regardless of whether or not the members were made aware of it. My question is: how would the assn even know what mortgage co holds the highest amount of indebetness????

EvaM1 (Florida)
Posts: 190

Posted:

Mary,

I agree, how would anyone know which mortgagee holds the highest amount of indebtedness since the banks usually do not reveal the balance of each mortgage. It is almost impossible to figure this one out accurately. This restriction was put in by the Developer those days. I guess he did that to get the construction loan or, who knows why.

MicheleD (Kentucky)
Posts: 4,491

Posted:

I saw something similar to this on another thread.

Could this actually mean the lending institution that holds the note on the community as a whole? Like, for example, the developer's bank?

EvaM1 (Florida)
Posts: 190

Posted:

Michele,

have no idea. As far as I can tell each buyer got his own mortgage company. The Developer's construction loans were paid off when the project was turned over to the association, I believe. I asked one attorney and he said 'any mortgagee is an institutional mortgagee'.

AnnJ2 (Colorado)
Posts: 120

Posted:

these kinds of restrictions on changing ccr's are common place and almost impossible to to comply with for one simple reason mortgage servicers and the mortgage marketplace. You get a mortgage and before you even make the first payment it is sold in a bundle to another bank or servicer and there is no recorded change in the county files.

the fact that it is recorded and of record means it is in effect that is correct. the question is could it be challenged? that is a question for an attorney to answer with regard to your state. there may be laws in place that preclude the reversal if it has been in practical effect for over a certain period of time regardless if it was not done correctly in the beginning. Grandfathering basically.

for elgality you shoudl get the opinion in writing from your attorney but practically speaking is it an issue that needs to be addressed? has anyone been turned down for a loan because of the loosening of the restrictions or has there been other issues with short term rentals?

EvaM1 (Florida)
Posts: 190

Posted:

Ann, yes. We can ask, an attorney if the 30-day lease is valid or, vote on it again. The permanent residents would like to limit the 30-day minimum lease to four times/year. The investors may feel differently about it.

We have no problem with short term leases (snowbirds). We’ve had a couple of serious problems with annual leases though. Our covenants say the units ‘shall be used as ‘single families’ residencies only. The‘single family’ is not defined and consequently no one is sure if it is a zoning term or a legal term or, both. We have allowed leases to corporations, where the units were used to accommodate their transient employees. Our covenants do not give the board any authority to reject any lease or purchase applications.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By EvaM1 on 06/04/2009 7:00 AM
Ann, yes. We can ask, an attorney if the 30-day lease is valid or, vote on it again. The permanent residents would like to limit the 30-day minimum lease to four times/year. The investors may feel differently about it.

We have no problem with short term leases (snowbirds). We’ve had a couple of serious problems with annual leases though. Our covenants say the units ‘shall be used as ‘single families’ residencies only. The‘single family’ is not defined and consequently no one is sure if it is a zoning term or a legal term or, both. We have allowed leases to corporations, where the units were used to accommodate their transient employees. Our covenants do not give the board any authority to reject any lease or purchase applications.

EvaM, with all due respect, I believe your 'single family' is "defined."

Generally "single family" is a zoning designation, not a value definition. The designation has to be made before the developer can begin construction so that the zoning board knows that it complies with the designation for that area.

Your state or local statutes will have a definition for 'single family,' but in most cases it simply designates that individual units cannot be sub-divided into smaller units. It's more of a number of persons-per-square-foot (and bathroom/kitchen/bedroom area) than a formal pronouncement of the word "family." (Such as mom, dad, kiddos, married, unmarried, etc etc etc).

Here, for example, is our local Planning and Design definition of single-family: One or more persons occupying premises and living as one housekeeping unit using one kitchen, and distinguished from a group occupying a boarding and lodging house, fraternity or sorority house, a club, hotel, or motel.

You might want to do a search on your local or state government websites to clarify what your zoning and codes people intended with the term "single-family."

MaryA1 (Arizona)
Posts: 7,043

Posted:

Eva,

Here are a few difinitions of "single family residence" I found on the Internet:

FL Statute: Definition of single-family residence From Section 62-1

Single-family residence means and includes a detached single-family dwelling designed or intended for occupancy by one person or by one family.

AZ: A single family residence, or single family home, is the easiest to define in Arizona. Single family residences are detached homes, usually with both a front and back yard, driveway, and attached carport or garage.

As you can see, the AZ definition does not mention "people" or "family". The designation only pertains to the type of structure.

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