Leasing Restrictions on Condominiums

I bought this condo to lease however, the Association said I could not lease it.  Is that legal?

Funny you should ask.  In the past month, I have had occasion to review two separate legal issues on this very subject.  In the first instance, person owns a condo that is underwater.  The person decided to rent out the unit.  The Declaration of Condominium prohibited leasing unless the HOA approved the unit owner for a leasing permit.  A leasing permit was only allowed for 25% of the total number of units.  What does that mean? Once 25% of the units are rented out, you are placed on a waitlist until a leasing permit becomes available, if at all.

Another person came to me because the HOA recently amended their Declaration to include a 20% cap on leasing.  The Declaration at the time of purchase contained no previous leasing restrictions.

Are leasing restrictions on condominiums valid? The Florida Supreme Court addressed this issue in a case we will call Woodside. Woodside Vill. Condo. Ass’n, Inc. v. Jahren, 806 So. 2d 452, 456 (Fla. 2002).  In Woodside, the Court explained that Florida law   “expressly recognizes that a declaration of condominium may contain restrictions concerning the use, occupancy, and transfer of units.” In Woodside, the Declaration was amended to include leasing restrictions after two owners purchased their units.  The Declaration at the time of purchase contained a leasing provision that permitted an owner to lease their unit without prior HOA approval for a period of one year or less.  The amended leasing provision required all leases, subleases and assignments of leases to be approved in advance by the HOA, and restricted the lease term to a total of nine (9) months in any twelve (12) month period. The Court explained that since Florida law and the Declarations provided broad legal authority to amend the declarations, “courts have recognized the authority of condominium unit owners to amend the declaration on a wide variety of issues, including restrictions on leasing.”  For those reasons, the Court found that “the lease restriction amendment was properly enacted under the amendment provisions of the Declaration, and that the respondents took title to their units subject to the amendment provision set out in the Declaration and authorized by statute.”

Properly adopted leasing restrictions will be presumed valid unless the restriction is arbitrary, against public policy, or in violation of some fundamental constitutional right. The Court in Woodside recognized the concerns leasing restrictions impose on purchasers of condominiums for investment purposes, but explained that the Court is constrained to the view that this issue is better addressed by the Legislature.

In sum, Florida law permits leasing restrictions.  Declarations that previously contained no leasing restrictions at the time of purchase which are subsequently duly adopted to impose leasing restrictions, will subject both current and new owners to those restrictions.

written by Beejal P. Thakore, attorney at Davis Basta Law Firm, P.A.

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