Homeowners' Association Has No Right of First Refusal to Gifted Property

A Florida appeals court rules that a homeowner's agreement with a homeowners' association does not give the association a right of first refusal where the property in question was gifted, not sold. Webster v. Ocean Reef Community Assn. (Fl. App., 3rd Dist., No. 3D08-327, Sept. 24, 2008).

Anita Sculthorpe and her late husband purchased a home in the Ocean Reef community, which is operated by a homeowners' association, in 1967. In 2000, Ms. Sculthorpe transferred title to the home to a trust, which entitled her to use the home until the earlier of her death or five years after the trust was implemented. In 2005, following Ms. Sculthorpe's term as beneficiary, the home was transferred to her son, Daniel Webster, pursuant to the terms of the trust.

The Ocean Reef homeowners' association asserted that the transfers of the property, first to the trust and later from the trust to Mr. Webster, required the association's approval. It also asserted that it had a right of first refusal for the purchase or lease of any of the lots in the community. Mr. Webster filed a declaratory judgment action and sought damages.

The association argued that its bylaws require approval of a purchaser before a conveyance of property could be completed. Mr. Webster countered that because he was not a 'purchaser,' the association's prior approval of the transfer was not required. The trial court granted summary judgment for the association and Mr. Webster appealed.

The Florida District Court of Appeals reverses, finding that the relevant provisions of the association's bylaws clearly apply only to sales of property and do not prohibit the donative transfers involved here. The court opines that the association's construction of the bylaws would give it "a right of first refusal to acquire the residence for nothing, nada, zero. We will not construe the documents to produce an absurd result."

To download the full text of this decision in PDF format, go to: http://www.3dca.flcourts.org/Opinions/3D08-0327.pdf.
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