Five-Year Statute of Limitations Bars Any Challenge to the Validity of Articles of Incorporation in Community Associations

It has been commonplace in Florida for condominium owners or homeowners to move into a community and then challenge the propriety or validity of the governing documents which, by virtue of purchasing in the community, they agreed to be bound by at the closing table. Recently, the Florida Second District Court of Appeal expanded the First and Fourth District Court of Appeals’ prior clarifications that a homeowner only has five years from either the date the challenged documents were recorded or five years from the date the condo/homeowner took title to the property. Now, this five-year limit also applies to amendments to Articles of Incorporation as opposed to just restrictive covenants. This rationale arises from Florida Statute § 95.11(2)(b), which provides: “[a] legal or equitable action on a contract, obligation, or liability founded on a written instrument… shall be commenced within five years.”

It was initially the First District Court of Appeal that affirmed Florida law in Hilton v. Pearson, 208 So.3d 108, 110 (Fla. 1st DCA Feb. 10, 2016), holding that “[a] suit challenging the validity of an amendment to restrictive covenants must be filed within five years of the date that the amendment is recorded, even if the suit alleges that the amendment was void because it was not properly enacted.” The plaintiffs in Hilton filed suit in July 2013 against a homeowners’ association, alleging that amendments made in 2001 and 2005 to restrictive covenants were “null and void” and that the original covenants remained in full force and effect. Hilton was permitted to intervene in the action and raised the five-year statute of limitations defense, arguing that the plaintiffs should have brought their actions in 2006 and 2010 respectively. However, the trial court declared the amendments void. On appeal, the First District Court of Appeal reversed the trial court, ruling that the plaintiffs’ suit challenging the amendments was barred by the applicable five-year statute of limitations. Specifically, the court found that the plaintiffs did not file suit against Hilton until July 2013, twelve years after the association’s 2001 amendment and eight years after the 2005 amendment—well beyond the five-year statute of limitations.

Likewise, in Harris v. Aberdeen Prop. Owners Ass’n, 135 So. 3d 365, 367 (Fla. 4th DCA 2014), the court held that the five-year statute of limitations barred the homeowner’s claim contesting the validity of a homeowners’ association’s membership requirement because that claim accrued when the membership requirement was recorded in 2004, and the homeowners did not sue until more than five years later. In Harris, the trial court entered final summary judgment in favor of the association, finding the five-year limitations period applied pursuant to Florida Statute § 95.11(2)(b). The cause of action accrued in 2004, when the association’s amendment was recorded. The Fourth District Court of Appeal affirmed, specifically stating: “[t]o the extent that Harris challenges the validity and the enactment of the mandatory membership amendment, we agree . . . that the statute of limitations with respect to such a challenge began to run from the 2004 date the amendment was recorded in the public records.” See also, Fredrick v. N. Palm Beach County Improvement Dist., 971 So. 2d 974, 979-80 (Fla. 4th DCA 2008)(holding the statute of limitations on a challenge to municipal assessments imposed for expansion of a road began to run either from the date the assessments were created or the date they were approved); Keenan v. City of Edgewater, 684 So. 2d 226, 227 (Fla. 5th DCA 1996)(holding that a challenge to a resolution imposing special assessments for the purpose of construction of a water and sewer treatment plant accrued when the resolution was passed); Winkelman v. Toll, 661 So. 2d 102, 107 (Fla. 4th DCA 1995)(noting that Florida has a notice-type recording statute, which functions to give “notice to the world” that a property is subject to any properly recorded provisions and regulations).

Similarly, in Silver Shells Corp. v. St. Maarten at Silver Shells Condo. Ass’n, 169 So. 3d 197, 201 (Fla. 1st DCA 2015), the defendant developer recorded an amendment to the restrictive covenants on December 4, 2000. Thereafter, on March 30, 2009, the condominium association filed suit challenging the validity of the amendment, among other unrelated actions. The court held that the association had five years to file suit, which it did not do. Accordingly, the court opined, “[t]he Association’s claims challenging the validity of the amendment to the restrictive covenants that removed the entire Beach Property from the Resort’s common properties are time-barred.”

Now, due to the decision in Fairways at Eagle Ridge Condo. Ass’n v. Eagle Ridge Prop. Owners’ Ass’n, 2019 Fla. App. LEXIS 10835 (Fla. 2d DCA July 10, 2019), this five-year limit to file suit encompasses Articles of Incorporation in addition to restrictive covenants. In Fairways, there was a challenge to the applicability of an amendment to the Articles of Incorporation that had been filed with the Florida Secretary of State and enforced for nearly 28 years. The Second DCA affirmed the Twelfth Circuit’s order on motions for summary judgment. The Twelfth Circuit specified that, even though the amendments at issue in Hilton, Silver Shells and Harris were public county records, that fact did not affect the validity of the amendment to Articles of Incorporation, nor the time of accrual.

Regardless of whether a condominium association governed by Florida Statutes Chapter 718 or a homeowners’ association governed by Florida Statutes Chapter 720, the governing documents, including declarations, bylaws, articles of incorporation and amendments thereto, control. Florida’s appellate courts have clarified that any challenge to the validity of these controlling documents, including amendments, must be brought within five years from the date in which they become effective (i.e., recorded as a public record and/or filed with the Secretary of State). Based upon the foregoing holdings, associations should be aware that once a governing document or amendment thereto is recorded, the clock starts to run on a challenger’s ability to contest the validity of its controlling instrument.

*Joelle and Jeannie work in our Fort Lauderdale, Florida office. Jeannie, a shareholder, can be reached at 954.847.4953 jahanrahan@mdwcg.com. Joelle, an associate, can be reached at 954.847.4938 or jjvogel@mdwcg.com.

_{Defense Digest, Vol. 25, No. 4, December 2019 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2019 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}