Fla. Discriminatory Covenants Law: Does Your HOA Have Any?
SB 374, one of the last bills signed by Gov. DeSantis this year, prohibits “discriminatory restrictions” from any title transaction recorded in the state. Until now, those restrictions could be added or allowed to remain in any title transaction – they just weren’t enforceable in court.
FORT LAUDERDALE, Fla. – One of the last few bills to be approved by Governor DeSantis at the end of this year’s legislative session was Senate Bill No. 374 which became law on September 4, 2020. The new law defines and prohibits “discriminatory restrictions” from any title transaction recorded in the State of Florida and creates section 712.065, Florida Statutes, in the Marketable Record Title Act (Chapter 712, Florida Statutes).
This provision automatically extinguishes as void and unenforceable “discriminatory restrictions” which are defined to mean, a provision in a title transaction (i.e., deeds, easements, declaration of restrictions and covenants), that “restricts the ownership, occupancy or use of any real property [...] by any natural person on the basis of a characteristic that have been held, or is held after the effective date of this act, by the United States Supreme Court or the Florida Supreme Court to be protected against discrimination under the Fourteenth Amendment [of the U.S. Constitution] or Section 2, Article I [of the Florida State Constitution] including race, color, national origin, religion, gender or physical disability.” (Section 712.065(1), F.S.)
Although the specific acknowledgment of and statutory prohibition against these type of restrictions is new as a matter of Florida statute, the legal battle against restrictive discriminatory covenants, especially those based upon an individual’s race and national origin, has been long and hard fought in courtrooms across the United States for over half a century.
One of the first, and most important, cases on this issue was argued by then civil rights attorney, later turned Supreme Court Justice, Thurgood Marshall in Shelley v. Kraemer, 334 U.S. 1 (1948). The case revolved around the validity of race-based restrictive covenants contained in private agreements between neighbors that prohibited the neighbors from selling or allowing the use of their property to any person “not of the Caucasian race.”
In Shelley, the U.S. Supreme Court for the first time considered two sets of neighborhood agreements (one in St. Louis, Missouri, the other in Detroit, Michigan) which contained similar race-based restrictions, and whether the state courts could enforce these private contracts without also violating the Fourteenth Amendment’s guarantee of equal protection for all individuals under the law. Almost twenty years before the Civil Rights Act of 1964 (prohibiting discrimination in voting, school, employment and public accommodations) and the Civil Rights Act of 1968 (certain portions of which have come to be known as the Fair Housing Act), the U.S. Supreme Court held in Shelley that “among the civil rights intended to be protected from discriminatory state action by the Fourteenth Amendment are the right to acquire, enjoy, own and dispose of property.”
Therefore, although individuals are free to voluntarily create and abide by these type of discriminatory contracts, a court’s enforcement of these contracts was equal to discriminatory state action that had the effect of denying equal rights to people of color in violation of the Fourteenth Amendment.
The Court’s ruling in Shelley went further than any Supreme Court case had previously done in protecting certain constitutional property rights for all Americans, however, it did not go so far as to declare the mere existence of discriminatory covenants and restrictions void as a matter of law. Accordingly, for years after the case was decided in 1948, there were still many covenants and restrictions across the country which included blatant and obvious restrictions intended to keep certain groups of people from purchasing, occupying, or using real property. It would take several decades after Shelley was decided before state lawmakers began to take up the issue and address discriminatory covenants as a matter of state law.
The newest amendment to Florida’s Marketable Record Title Act picks up where Shelley left off in 1948 by declaring “unlawful,” “unenforceable” and “null and void” all discriminatory restrictions contained in any title transaction, and automatically extinguishes and severs the restriction from the rest of the title transaction.
For example, if a deed to a parcel contains a provision which restricts the lot from being sold or used by a person from a particular country, Section 712.065(2), F.S., now makes that specific provision null and void as a matter of law while preserving the remaining, non-discriminatory deed provisions. There is no requirement for any type of legal proceeding or a court order officially declaring the restriction invalid and unenforceable.
A “discriminatory restriction” as defined by Section 712.065(1), F.S. is automatically declared by the Act as “null and void” as a matter of law. Section 712.065(3), F.S. specifically addresses discriminatory restrictions and covenants which are contained within a “property owner’s association’s” recorded governing documents and allows for any parcel owner who is subject to the documents to request the restriction be removed by an amendment approved by a majority vote of the board of directors, without requiring a vote of the owners.
While discriminatory restrictions like those at issue in the Shelley case are less likely to be found in modern community covenants and restrictions, they sometimes exist in older documents either on their face or through the disparate impact they may have on a particular group. In light of the uncertain and potentially far-reaching effects of this new law, community association boards should carefully review their governing documents with the association’s counsel to determine if amendments may be required in order to avoid challenges.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
© Mondaq Ltd, 2020, Ms. Shayla J. Mount, Becker & Poliakoff, Ft. Lauderdale