Flagler Federal Savings & Loan Association v. Crestview Towers Condominium Association

In Flagler Federal Savings & Loan Ass'n v. Crestview Towers Condominium Ass'n, 595 So. 2d 198 (Fla. 3d DCA 1992), the court also addressed a declaration amendment prohibiting leasing as applied to an owner who acquired title to a unit prior to the amendment. The original declaration provided that unit owners could not lease their units without the express approval of the association, but excluded from the leasing restriction institutional mortgagees acquiring title. While this provision was in effect, Flagler Federal became the mortgagee on units 216 and 503. Subsequently, the declaration was amended to prohibit leasing entirely and eliminated the previous exclusion for institutional mortgagees acquiring title. In 1987, Flagler Federal acquired title to unit 503 by purchasing the unit at a foreclosure sale and acquired title to unit 216 when the mortgagors gave it a quitclaim deed in lieu of foreclosure. Thereafter, when the association objected to Flagler Federal's attempt to lease the units, the bank filed suit seeking declaratory and injunctive relief. The trial court denied the bank's claim and granted the association a final summary judgment upholding the lease restriction as amended. On appeal, the Third District affirmed, holding that both units were bound by the amendment to the declaration. First, the court rejected Flagler Federal's argument that title to unit 216, acquired by quitclaim deed in lieu of foreclosure, related back to the date of the mortgage. See id. at 220. Thus, the court found that the operative date for determining the applicability of the declaration amendment to unit 216 was the date of the quitclaim deed. See id. The court noted that when Flagler Federal acquired title by quitclaim deed the amended declaration was in effect. Further, the court stated Flagler Federal had notice of the recorded declaration and its amendment provisions when it mortgaged the unit and acquired the unit. Accordingly, the court concluded that Flagler Federal could not complain that the declaration amendment was binding on unit 216. See id. Although Flagler Federal's title to unit 503 related back to the date of its mortgage, the court held it was nonetheless bound by the subsequent declaration amendment prohibiting leasing. See id. at 200. In so doing, the court recognized that restrictions found in a declaration "are clothed with a very strong presumption of validity which arises from the fact that each individual unit owner purchases his unit knowing of and accepting the restrictions to be imposed." Id. As to the effect of the subsequent amendment, the court reasoned that since Flagler Federal was on notice of the recorded declaration's provisions for amendments to the declaration when it issued the mortgage, it, like other unit owners who acquired title prior to the amendment, was bound by the subsequent amendments to the declaration. See id.