An entity that ultimately bought the prior interests of the declarant learned the hard and expensive way that not perfectly following the documents can be very costly.
Property owners brought action against declarant and their associations seeking a declaratory judgment that declarant was not a proper successor declarant and requiring the alleged declarant to pay assessments they otherwise would have been exempt from paying. The property owners claimed that the defendant had not validly obtained declarant rights and therefore had wrongfully claimed the unilateral right to appoint the directors of the homeowners’ associations. The property owners also claimed that they did not owe the assessments because: the right to levy assessments was vested in the associations’ boards of directors; the boards were never duly elected or were otherwise illegally constituted; and in the absence of properly constituted boards, the associations lacked authority to impose the assessments and record the liens at issue. At the heart of the issue was a foreclosure on a couple of loans against the original declarant followed by a number of subsequent transfers of the declarant rights and the property. Both parties moved for summary judgment.