Aquarian Foundation, Inc. v. Sholom House, Inc.
448 So.2d 1166 (1984)
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Rule of Law:
A condominium association's power to arbitrarily, capriciously, or unreasonably withhold consent for the transfer of a unit is an invalid restraint on alienation unless it is coupled with a corresponding, non-illusory obligation for the association to purchase the property or find another buyer at fair market value within a reasonable time.
Facts:
- The Sholom House Condominium's declaration of condominium required unit owners to obtain written consent from the association's board of directors for any sale or transfer of their unit.
- The declaration explicitly empowered the association to withhold its consent "arbitrarily, capriciously, or unreasonably."
- The declaration also contained a reverter clause stating that if a unit owner violated the transfer restriction, the title to the unit would revert to the association.
- Upon reversion, the association would be obligated to pay the former unit owner the fair appraised value of the unit at the time of the reversion.
- Bertha Albares, a unit owner and member of the board of directors, sold her condominium unit to the Aquarian Foundation, Inc. without obtaining the required consent from the association's board.
Procedural Posture:
- Sholom House, Inc. sued Aquarian Foundation, Inc. in a Florida trial court to set aside the conveyance of a condominium unit.
- The trial court, after a non-jury trial, entered a judgment for Sholom House, Inc., declaring the conveyance to Aquarian null and void and ejecting Aquarian.
- The trial court retained jurisdiction to determine damages and fees.
- Aquarian Foundation, Inc. (appellant) appealed the trial court's judgment to the District Court of Appeal of Florida, Third District, where Sholom House, Inc. was the appellee.
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Issue:
Does a condominium declaration provision that allows an association's board to arbitrarily, capriciously, or unreasonably withhold consent to a unit transfer constitute an unreasonable restraint on alienation, when the declaration also contains a reverter clause that only obligates the association to compensate the owner after an unapproved transfer has already occurred?
Opinions:
Majority - Daniel S. Pearson, Judge
Yes, such a provision constitutes an unreasonable restraint on alienation. An absolute restraint on the right to transfer property, such as the power to arbitrarily withhold consent, is valid only if the association has a corresponding obligation to purchase or procure a purchaser for the property at its fair market value. The reverter clause in this case does not save the provision because it creates an illusory obligation; it is only triggered after a violation (an unapproved sale) occurs, which a prospective purchaser is highly unlikely to risk. This effectively leaves the unit owner with no way to alienate the property, thus rendering the restraint unreasonable and unenforceable.
Analysis:
This decision significantly clarifies the limits of private land use restrictions within condominium governance. It establishes that the public policy favoring the free alienability of property applies even in the context of condominium declarations, which are generally given a strong presumption of validity. The case sets a precedent that any absolute power to restrain a sale must be counterbalanced by a practical, non-illusory mechanism that ensures the owner can still sell their property at fair market value, such as a right of first refusal or a direct purchase obligation on the part of the association. This holding prevents associations from effectively trapping a unit owner who cannot find a buyer that the board is willing to approve, no matter the reason for the disapproval.
