- Limits On Owning Multiple Units in an HOA Becoming More Common
- November 22, 2014 | Author: Joseph E. Adams
- Law Firm: Becker & Poliakoff, P.A. - Fort Myers Office
Question: I live in a community governed by a homeowners’ association. The owners recently approved an amendment to the declaration of covenants that provides that no one individual can own more than two units in the community. I am wondering if such an amendment is legal. M.C. (via e-mail)
Answer: It is likely that the association, in adopting the amendment, is trying to control the number of investment properties in the community. As a result of suppressed prices after the real estate market meltdown, it is common to see investors purchasing multiple units with the sole intention of renting them out. This is of concern to those who believe that a high percentage of rentals drives down property values, which seems to be a widely held view.
Such restrictions may be considered a “restraint on alienation” which is a legal term for covenants and agreements which restrict the free transferability of property. However, courts uphold restraints that are reasonable. While no Florida court has been asked to determine the reasonableness of this particular type of restriction, the Massachusetts Supreme Judicial Court has ruled on this exact issue and found it to be reasonable, at least in the condominium context. Specifically, the Court held that such a restriction is a reasonable means of accomplishing the stated purpose of the restriction - the desire to impart a degree of continuity of residence, inhibit transiency and safeguard the value of investment.