In 2016, a Master Association adopted seven amendments to its declaration. The amendments addressed the Master Association’s authority to approve proposed uses of certain buildings, increased assessments on them, and imposed additional restrictions on those buildings’ tenants. In response, the building’s prior owner (“Building Owner”) filed suit against the Master Association and eight individual directors and officers, seeking six forms of relief: (1) a declaratory judgment concerning the legality of the amendments; (2) damages for tortious interference with a business relationship; (3) damages for breach of fiduciary duty; (4) an accounting; (5) a temporary injunction; and (6) a permanent injunction.
The court dismissed each count against the eight individual defendants. The Building Owner and Master Association filed cross-motions for summary judgment on counts one, four, five, and six. The circuit court declared all seven amendments unlawful, and permanently enjoined the Master Association from enforcing them. The Master Association appealed.
The Appeals Court reversed the Circuit Court, finding that the Master Association was empowered to amend the master declaration upon the approval of at least 75% of the voting members. The amendments were approved by 75% of the voting members. The Building Owner argued that the amendments, although passed legally, “violate either the master declaration itself or the … principles governing the legality and enforceability of amendments to restrictive covenants.” For an amendment to be enforceable it must be reasonable. The Court “defined ‘reasonable’ as ‘not arbitrary, capricious, or in bad faith’” citing relevant case law and further finding that a “modification of restrictions cannot ‘destroy the general plan of development.’” After carefully examining the amendments, the Court held in various paragraphs that each of the amendments were authorized, reasonable and/or enforceable.
- Follow your documents and the law when amending your association documents;
- If you follow the law, and act reasonably, a court will likely uphold the amendments or acts; and
- The converse is also true, so that if you review your prior actions and find that you didn’t follow the documents or didn’t act reasonably, then you might want to quickly find a way to resolve the issue.da