Long before the Condominium Act, more specifically, section 718.110(13) of the Florida Statutes, was amended to include that “an amendment prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of that amendment” there was Beachwood Villas Condominium v. Poor, et. al., a 1984 Fourth District Court of Appeals (4th DCA) case where several owners challenged rules enacted by their association’s board of directors which regulated both unit rentals and occupancy of units by guests. The trial court invalidated the rules, while the 4th DCA reversed the trial court’s ruling and reinstated the board adopted rules.
The 4th DCA noted that there could be two sources of use restrictions, those set out in the declaration of condominium and those adopted by the board. As to the use restrictions set out in declaration, such restrictions are “clothed with a very strong presumption of validity,” as initially provided in Hidden Harbor Estates V. Basso, a 1981 4th DCA case. Since the rules that are set out in the declaration of condominium are recorded in the public records, all purchasers, prior to becoming owners, have notice of these rules. But this is not the case for board adopted rules.
In examining board adopted rules, the court first determines whether the board acted within its scope of authority, in other words, whether the board had the power to adopt the rule in the first place and, then if so, whether the rule reflects reasoned or arbitrary and capricious decision-making. The board’s exercise of its reasonable business judgment in adopting a rule is generally upheld so long as the rule is not “violative of any constitutional restrictions and does not exceed any specific limitations set out in the statutes or condominium documents.”
It is interesting to note that the 4th DCA discarded an argument that use restrictions adopted by the board must be clearly inferable from the declaration of condominium. In so doing, the 4th DCA decided that such a test would be too stringent. The resulting test to determine the validity of board adopted rules as applied by the 4th DCA is relatively simple: “provided that a board-enacted rule does not contravene either an express provision of the declaration or a right reasonably inferable therefrom, it will be found valid, within the scope of the board’s authority. This… test safeguards the rights of unit owners and preserves the unfettered concept of delegated board management.”
In examining board adopted rules ask yourself:
1) Did the board have the power to adopt the rule?
2) Does the rule conflict with the declaration?
3) Is the rule reasonable as measured by being rationally related to the objectives of the association?
If the answer to these three questions is “yes,” then the rule is valid and would quite likely be found enforceable upon owner challenge.
Remember that rules prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period applies only to unit owners who consent to the amendment of the declaration of condominium and unit owners who acquire title to their units after the effective date of that amendment, the Beachwood Villas Condominium test to determine the validity of board adopted rule is still good law.