Covenants - How Past Requirements Can Affect Future Owners

06 May 2022

The recent Florida Supreme Court ruling in Hayslip v. U.S. Home Corporation, Case No. SC19-1371 (January 22, 2022) should make property owners seriously consider using counsel who is well-versed in title issues, to review the original deed transferring their property from the builder to the original owner, and all subsequent deeds in the chain of title, as part of their property purchase. Specifically, this recent case held that if any of those deeds contain provisions that bind the property, they remain effective against new owners, even if those new owners were unaware or these “covenants running with the land,” and even if the covenant is not mentioned in the last several deeds.  This also impacts our firm’s Community Association clientele, insofar as the Association could otherwise unwittingly take title to a property through foreclosure or deed in lieu thereof, without knowing it is subject to these covenants and must comply with them or seek to eliminate them.

Hayslip purchased property from the original owner in 2010, and the Deed to Hayslip stated that it is “subject to easements, restrictions, and limitations…”. In 2017, Hayslip sued the builder alleging construction defects, without first completing the arbitration required by the deed-referenced covenants. The trial and Appellate courts found, and the Florida Supreme Court later agreed, that the performance of the covenant affected the occupation and enjoyment of the home, as it dictates how Hayslip must seek to correct building defects, and therefore the arbitration provision was a valid covenant running with the land by which Hayslip and subsequent purchasers of that landowners were bound.

Florida law divides such covenants into two major classes:

(1) real covenants which run with the land that bind the heirs/assigns, because they “touch and involve the land or some right … appurtenant thereto and tends necessarily to enhance the value of the property or renders it more convenient and beneficial to the owner…” Maule Industries, Inc. v. Sheffield Steel Products, Inc., 105 So. 2d 798, 801 (Fla. 3d DCA 1958); or

(2) personal covenants which bind only the covenanting parties personally.

(Palm Beach Cnty. v. Cove Club Invs. Ltd., 734 So. 2d 379, 382 n.4 (Fla. 1999))

A valid and enforceable covenant running with the land must: (1) touch and involve the land; (2) be an intention that the covenant run with the land; and (3) provide notice of the restriction against whom enforcement is sought. Winn-Dixie Stores, Inc. v. Dolgencorp, Inc., 964 So. 2d 261, 265 (Fla. 4th DCA 2007). Real covenants running with the land include Association Covenants, Conditions and Restrictions, Declarations, and easements.  

A deed covenant may be enforced against a subsequent owner and is not extinguished with the transfer of the property if that owner had notice of the covenant. That includes mere “constructive notice” which everyone is considered to have regarding all recorded instruments in Florida, under section 695.11, Florida Statutes. In this case, a subsequent purchaser would be on notice of a prior deed recorded in the official records of the County and therefore bound by the covenants noted.

(Park Ave. BBQ & Grille of Wellington, Inc. v. Coaches Corner, Inc., 746 So. 2d 480, 482 (Fla. 4th DCA 1999), See also Hagan, 186 So. 2d at 310.).

Based on Hayslip, Developers/Builders may begin including more restrictions in their deeds, limiting the remedies available to subsequent owners of the property. Therefore, moving forward, it would not only be prudent, but should likely become common practice, to include the original deed and subsequent deeds in any and all title searches conducted to determine not only whether they are subject to the Covenants, Conditions and Restrictions of the Association, but also whether those subsequent purchasers are bound to broader covenants of which those new owners (or Associations) do not have actual knowledge.