August 20, 2019

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August 19, 2019

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Case Law Update: Covenant to Operate Golf Course

Vista Golf v. Vista Royale Property Owners Ass’n, Florida 4th District Court of Appeals (May 13, 2015)

This was a case where an owner of a golf course that was subject to covenants to operate the golf course and keep it as a single parcel was seeking to nullify the covenants. Specifically, the golf course was subject to a covenant to continuously operate the property as a 27 hole golf course and a “unity of title” covenant that required the owner to hold, sell, or lease the property as a single parcel. The original developer placed the covenants on the golf course “for the purpose of enhancing and protecting the value, desirability and attractiveness of the condominium communities” that adjoined the golf course.

The trial court concluded that the golf course owner could not be affirmatively compelled to operate a golf course business. Interestingly, the property owners association did not appeal such ruling, and therefore, the appellate court did not discuss it. The trial court may not have wanted to enforce a covenant that might require the owner to raise capital and potentially lose money. Some courts are reluctant to enforce affirmative covenants that require the land owner to undertake an action similar to restrictive covenants that restrict a property owner from using the property in a certain way. See City of New York v. Dellafield 246 Corp., 662 N.Y.S.2d 286 (App. Div. 1997).

The trial court interpreted the covenant to operate the golf course instead as a restrictive covenant that prohibited the property from being used or operated as anything other than a 27 hole golf course. The District Court of Appeals affirmed the trial court interpretation, stating that it was the only reasonable interpretation. The court explained that when one interpretation of a contract is absurd and another reasonable, the contract should be interpreted in the reasonable manner.

The trial court nullified the unity of title covenant that required the land to be held as a single parcel. The District Court of Appeals affirmed on the basis that the covenant was an unreasonable restraint on the alienation of the property.

Although one who takes title to a golf course that is subject to a covenant to operate may find a court reluctant to enforce the covenant, this court decision suggests that the golf course owner should not assume that the court will ignore it and as such, the owner may not be able to convert the course to another use. However, the court’s decision to nullify the unity of title covenant may suggest that a court would not object to the owner reconfiguring the golf course so as to develop a small piece of it.

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About this Author

Glenn Gerena, Greeberg Traurig Law Firm, Boca Raton, Real Estate and Hospitality Attorney
Shareholder

Glenn A. Gerena is a community development and hospitality attorney, whose practice focuses on structuring and documentation for recreational club membership programs and community governance. Glenn has significant experience in a variety of transactions and agreements involving recreational facilities, resorts and residential and mixed use communities.

Concentrations

  • Club, marina and resort

  • Community development

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