What to do if new regulation limits your vacation rental value

August 5, 2016

It is well known that for property investors, Florida has a lucrative market for vacation rentals. Many owners of vacation homes in Florida do not permanently reside in Florida and utilize rental income to subsidize their vacation investment. One of the many issues with vacation rentals of this kind is that the surrounding community is populated with full time residents who have an interest in the type of vacationers, number of vacationers, and activities which go on in the vacation rental. On occasion, these interests can conflict resulting in municipal, county, or state government action. For many vacation rental owners, this government action can result in a reduction in property value. In Florida, these rental owners have a remedy known as the Bert J. Harris Act.

What is the Bert J. Harris Act?

The Bert J. Harris Act, or Section 70.001 of the Florida Statutes, is a Florida statute enacted for the purpose of extending protection to property owners in inverse condemnation actions. Essentially, the legislature affords property owners relief when their rights have been restricted, burdened or otherwise limited by government action but will otherwise fall short of a constitutional taking.

In situations where vacation rental owners find that their normal use of their vacation rental has become restricted to a use which results in loss of value, a Bert J. Harris action may be a way to recoup the loss of value.

Road Map to Relief

In order to establish an action under the Bert J. Harris Act, a property must be seeking a claim as a result of a governmental regulation. Matters imposed by a Home Owners Association or other deed restriction type matters are not covered.

The first step to making a claim is to present a claim in writing to the head of the governmental entity that instituted the action resulting in loss of property value no less than 150 days prior to filing an action in an appropriate court of jurisdiction. Section 70.001(4)(a) Fla. Stat. (2016). Along with the written claim, the property owner is to attach a valid appraisal that supports the claim and demonstrates the loss in fair market value of the real property. Id.

During the 150 day notice period, the governmental entity may respond to the written claim with an offer of settlement and a “Statement of Allowable Uses.” The settlement offer is predicated on the appraisal submitted by the property owner and an evaluation by the governmental entity. The Statement of Allowable Uses is a notice by the governmental entity informing the property owner of allowable uses of the subject property during the 150 day notice period. If the governmental entity fails to issue a Statement of Allowable Uses, the property owner is granted the relief under the statute to bring their claim before the court. If the statement is issued, but the settlement offer is denied by the property owner, at the end of the 150 day period, the property owner may bring their action before the court.

Jurisdiction for these claims is placed with the Florida Circuit Courts. The Circuit Court is charged with determining whether an existing use of the real property or a vested right to a specific use of the real property existed. In the vacation rental industry, local governments have been burdening property owner’s existing uses by restricting the number of renters that occupy their property during a rental where previously no such restriction existed. A “vested right” is a right belonging unconditionally to a person that cannot be infringed by the acts of another private individual and that the government is duty bound to protect. For example, a vacation rental owner with a permit issued by a local government to improve his/her property for a particular purpose has gained a vested right which would give rise to a claim under the Bert J. Harris Act if that right is later restricted by government action. If the court determines that there was an existing use or vested right, then the court must determine if the governmental entity has inordinately burdened the real property. Section 70.001(5)(a) Fla. Stat. (2016).

A second type of claim is for a property owner under the Bert J. Harris Act to file a “government exaction” claim. Section 70.45 Fla. Stat. (2016). This is a new claim under the Bert J. Harris Act which took effect on October 1, 2015. The basis of this option is for property owners to bring a cause of action for recently imposed conditions by a government entity on a property owner’s proposed use of real property that lacks a nexus to a legitimate public purpose. These actions are essentially the inverse to the traditional claim. Under the traditional claim, the government imposes a regulation which changes the existing use. This new cause of action contemplates a recently enacted governmental regulation which may prohibit a future use of the property by an owner.

In order to institute a claim under this section, at least 90 days before filing an action before the court, but no later than 180 days after the imposition of the prohibited use, the property owner shall provide to the relevant governmental entity written notice of the propose action. Section 701.45(3) Fla. Stat. (2015). This written notice must identify the exaction, or condition imposed by the governmental entity, that the property owner believes is prohibited, detail the basis for the belief the exaction is prohibited, and provide an estimate of damages.

The governmental entity then has the obligation to review the notice of claim and respond in writing to the property owner. The governmental entity must identify the basis for the exaction and explain why the governmental entity maintains that the exaction is proportionate to the harm created by the proposed use of the real property. The governmental entity may in the alternative remove all or a portion of the exaction. Section 70.45(3)(a) Fla. Stat. (2016). It is important to note that the statute imposes upon the governmental entity the burden of proving the essential nexus between the exaction and a legitimate public purpose, and is proportionate to the impacts of the proposed use that the governmental entity is seeking to avoid, minimize, or mitigate.

This is a complicated legal process with a need for expertise in the applicability of the Bert J. Harris Act. Property owners have the right to protect their own interests. However, attorneys with experience in pursing these claims are essential to understanding the nuances and to prosecute these claims in court. The statute contemplates this matter and imposes a mutual attorney’s fee provision which could compensate the property owner for having to bring a suit to recoup their lost property value. In order to be awarded attorney’s fees in a traditional Bert J. Harris claim, first the property owner must prevail in their action, and second, the court must determine that the government’s settlement offer, together with the Allowable Use Statement, did not constitute a bona fide offer to the owner. For a governmental exaction claim, the court is granted discretion to award attorney’s fees to the prevailing party. However, if the court determines that the exaction lacks an essential nexus to a legitimate public purpose then the Court will award attorney’s fees and costs to the property owner.

Property owners across the state of Florida have a right to protect the value and use of their property from government action. If a government action has reduced the value of your property, or limited the future use thereof, the attorneys at Lewis, Longman & Walker, P.A. have the experience to assist you with instituting a claim under the Bert J. Harris Act. We, at Lewis, Longman & Walker, P.A., have over 20 years of experience advocating on behalf of property owners all across the state of Florida and are ready to assist you in all matters regarding your property rights.

For more information, contact Nicole J. Poot at npoot@llw-law.com or Richard P. Green at rgreen@llw-law.com.