Can you decline to take an application for a property outside your lending area? Or decline an application in process because the property is outside your lending area?

Example we are a MA chartered bank, frequently have requests for loan in FLA.

Sure - your primary responsibility is to meet the credit needs of the communities you serve (as long as you have delineated them in a non-discriminatory way).

But be careful and consistent.
That means no loans outside the AA! Unless you have a ironclad policy, a vacation home outside the AA for a good customer or director can burn you!