I wrote this week’s column about a condominium in Venice, Casa di Amici, that passed a restriction apparently banning unmarried persons from jointly purchasing or leasing a condo unit in the community.
Shortly before this section’s Thursday deadline, I learned from an association spokesperson that the board unanimously had approved a proposal to repeal the restriction; the proposal will be submitted to the membership for approval.
While acknowledging that the restriction created intense criticism for being perceived as being discriminatory against gay couples, and could harm property values by narrowing the pool of unit buyers or renters, the spokesperson said the restriction is being repealed not “because it is illegal but because it is wrong.” Well said.
Anyway, here’s the article I wrote before I knew any of that:
Is occupancy the same as ownership, even if possession is nine-tenths of the law? Of course not. We all know that occupancy can be consistent with ownership in the property, but property also can be occupied by those with no ownership interest, such as the case of a lease.
Why my sudden interest in 2 “O” words? The answer lies in a story from Venice that recently ran in this paper and was covered by other media outlets. A condo owner is alleging that her association is being discriminatory based upon marital status and sexual orientation. What seemed unclear was whether this alleged discrimination related to who can occupy units together or who can own units in common. This made me wonder whether one or both are true and if so, if that constitutes illegal discrimination.
I also thought, “Oh, great. Florida’s condo boards are already considered ‘commandos.’ Now do we have to add to it the term condo Anita Bryant?”
The term “discrimination” is powerful. The term invokes negative connotations. In other words, discrimination = bad, if for no other reason than it often is. Often, but not always. We discriminate whenever we make a decision, choosing one option over another. No doubt then, that being discriminating sounds better than being discriminatory. Just as adopting a restriction by proper owner vote, albeit one that restricts ownership or rental by an already limited pool of candidates, may pass legal muster and still be unwise.
I read the Declaration of Condominium restriction at issue here. That provision states that a unit can only be sold, leased or otherwise transferred to an individual, to a husband and wife jointly, to a trustee or trustees of a trust (but only if the beneficiaries of the trust are limited to an individual, a husband and wife, or the lineal descendants of either or both of the husband and wife), or to a partnership organized for the purpose of holding title to a unit and the partners of which are an individual or a husband and wife.
Sales, leases or transfers to multiple owners, trustees, partners, partnerships, except as specifically permitted by that section, and to corporations are prohibited. The amendment also restricts how many units can be held by an individual, by a husband and wife together or individually, or by a qualifying partnership or any of its partners.
Condominium associations usually have the authority to approve sales, leases and other transfers of interests in the units, based on “good cause” as set forth in the declaration. Condominium associations have a legitimate reason for screening potential buyers and lessees to make sure the residents are financially responsible, not convicted felons and that their intended occupancy of a unit is consistent with the condominium’s restrictions on unit use.
Condo associations also frequently want to limit the number of units that can be held in common ownership. Limiting investor ownership can preserve the residential quality of the community by encouraging owner-occupancy of the units, and can avoid running afoul of lender guidelines on how many units can be rented at any one time. So far, so good.
In my opinion, though, the provision goes too far, even if it is legal. To me, it is much more important to control how a unit is occupied than how it is owned. Title to real property can be legally held in myriad ways, and it is a field of law that is constantly in flux. I am confident that I could send the provision at issue to any estate planning attorney and would be told all the ways existing owners could run into problems with this provision in transferring units for estate planning purposes.
One example: You are a widow with no living children. You are very close to your nieces and nephews and would like to leave your unit to them to sell or dispose of as they see fit. Your attorney has suggested placing your unit in trust, with you as trustee and your nieces and nephews as beneficiaries. Guess what? If you lived in that condo, you would be prohibited from doing that. The association’s stance could be that the restriction exists to protect against allowing transfers that allow multiple owners, none of whom live on the property, from treating it like a hotel. Yes, but, there are less-restrictive ways of dealing with those concerns than overly regulating the transfer or “alienation” of real property.
First, make sure that the declaration of condominium limits the occupancy of units to that by a “single family.” Is that term defined? If not, that is a problem because the term is too subjective. My standard definition of single family is “one or more persons, related by blood, adoption or marriage, or not more than two so unrelated persons residing together as a single housekeeping unit.”
This definition protects against a unit being treated like a flop house, while still acknowledging that not all unit occupants will consist of only an individual or a traditional family, with husband, wife and 2.5 kids.
I have met with some resistance with this definition when I have proposed it. An elderly director explained that she did not want unmarried couples living “in sin” in “her” building. I wanted to tell her that if her neighbors judged her, too, they may live in fear that she will forget to turn off her stove. Of course, I did no such thing. I asked her what would happen if she became incapacitated, and she decided to employ a live-in caretaker. Under her standard, this would be forbidden. Did she think that was fair, or any of the association’s business, to place a blanket prohibition on it? She rethought her position.
I always counsel association directors to analyze proposed amendments to their condominium documents as if the amendments affected them personally because they do or, at least, can. Study the potential consequences of restricting the sales, leases and other transfers of interests in units.
Defining “single family occupancy” does become more complicated when an artificial entity like a corporation, LLC or partnership is concerned. That can be handled by requiring, as a condition of the association’s approval, that a “primary occupant” (or some other similar term) is designated by the entity. The primary occupant has to be a natural person and is treated like the actual owner for voting and occupancy purposes. The primary occupant has to be approved just like an individual, any change of primary occupant must also be approved and no change can be made on less than an annual basis (or other time frame.)
Assuming the association also has in place restrictions which restrict guest occupancy, especially when the “owner” is not in residence, it can prevent units from being used as transient lodging or as a corporate perk.
I don’t know why it would be considered a bad thing to approve a sale to unmarried people. The association would have not one person to hold accountable for money due the association, but two, jointly and severally liable.
Tamela Eady is a Florida Bar board-certified real estate attorney. Send email to tke@eadylaw.com.
