Summary

The language and definitions in your governing documents reflect the intentions of the Association.  You need to either follow them or amend them, but NOT ignore them.

Facts

Sunnyside Resort Condominiums is a private resort property located on Lake Gogebic in Gogebic County, Michigan, and governed by the Sunnyside Resort Condominium Association, Inc. (SRCA).  In 2006, the Plaintiffs purchased vacant lots within SRCA with an individual value of $13,000.  Unlike other lots, the Plaintiffs’ lots, among other things, lacked improvements to the property, utilities, and septic systems.

Assessments on Vacant Lots.  Although the Plaintiffs’ lots were free from any structures, Plaintiffs were charged assessment fees despite the association documents essentially providing that the Plaintiffs were not required to pay association assessment fees until a structure was built on the lot.  In part this was due to the fact that the percentages of value for the units were calculated based on several factors including, market value, size, and allocable expenses for maintenance. Plaintiffs stopped paying the monthly assessment fees for their two units in July 2015.
Continue Reading Vacant Land Units Can Have a 0% Percentage Interest

Summary

Earlier this year, I blogged on the case of Johnson v. Board of Directors of Forest Lakes Master Association, 454 P.3d 623 (2019) unpublished (Kansas) and explained how improperly passing and/or filing amendments can be VERY expensive. This is true in every state, and today we learn of another way that amendment errors can be costly.

The Facts

The developer created the condominium in 2008 that authorized the development of 109 units in a seven-year period.  The initial phase consisted of 33 units and through properly filed amendments the developer authorized another 18 units, for a total of 53 units.  Before the expansion time passed, the developer had sold 48 of the 53 units.  The day before the development period was to expire in 2015, the developer recorded two amendments to the deed to add 56 partially completed units.  In the initial 2018 case, the association argued and won, the court finding that “the final number of the units in the Condominium was fixed at 53 and that no additional units could thereafter be phased into the Condominium without the vote of the then existing 53 unit owners…” The association then argued that the unbuilt and partially completed units were part of the common area owned by the owners of the completed units, thereby significantly affecting the five mortgages that existed on these partially completed units.  The five mortgagees and developer took the opposite position, as otherwise the mortgages would be subordinate to the master deed and declaration of trust of the association.  It is undisputed that at the time of the sale of each of the 48 units, the mortgagees released its interest in all the common area.
Continue Reading Improper Amendments Are VERY Expensive

Summary

Your Association should ensure that the language and definitions in governing documents reflect the intentions of the Association.  If they don’t, amend them, don’t just pretend they say something they don’t say

Facts

Sunburst Farms East (the “Association”) is a residential community consisting of four sections with individual lots (Sections 2, 3, 4, and 7).  Each Section had its own deed restrictions embodied in their own Declaration of Covenants, Conditions and Restrictions (“CC&Rs”).  Every property owner in each Section automatically became a member of the Association, which was created to provide water to its members.  Under the CC&Rs the Association could impose assessments on its members, even if they didn’t use the services.  Over time, a majority of the owners in Sections 3, 4 and 7 voted to amend their CC&Rs to revoke mandatory payment obligations, and Section 7 also voted to revoke automatic membership.

Obviously, this created differences between the various Sections, since they now had different rules.  In 2007, all four Sections attempted to amend the existing CC&R’s and stated in the document that all four Sections seek to amend their CC&R’s and the prior CC&R’s are superseded.  After an election, the CC&R’s were recorded because they had been allegedly approved by a majority of property owners in each Section.  In response to a suit brought by owners, the Association filed a suit seeking a declaration that the 2007 CC&R’s were valid.  During the suit, the owners learned that the CC&R’s had not in fact been approved by a majority of the owners in Section 7.  Therefore, these owners argued the 2007 CC&R’s were invalid.
Continue Reading The Language Used in Documents, Amendments and Motions Matters

Facts

In 2016, Plaintiff sent Defendants a letter telling them that the dog-breeding building (“kennel”) they built violated the restrictive covenants of the Texas association.  The restrictions had been recorded in 1981.  The letter stated that the kennel constituted a “noxious or offensive activity.”  Defendants tried sound proofing the kennel in response.  Plaintiff’s then sued seeking a declaration that the restrictions were valid and enforceable.  Defendants pled waiver and abandonment.

Question/Issue for the Court to Answer

Whether or not the restrictions were enforceable.
Continue Reading GOOD BYE: Association Who Fails to Enforce Covenants Loses Right to ENFORCE

Facts

Plaintiffs were two owners (Maples and Brown) at Compass Harbor Village Condominium Association in Maine (the “Association”) who had purchased their respective units sometime in 2007.  The Declarant was an LLC that held more than 50% of the votes (15 of the 24 units) and therefore controlled the board.  For many years the Association common areas were not property maintained in many ways.  In addition, the Association failed to hold meetings, take votes on Association matters, maintain banking or other records and refused to provide financial information to the owners.  The Declarant’s position was that “because it holds a majority of the voting power in the Association and therefore any dispute between it and any of the unit owners would ultimately be decided in its favor.”  Plaintiffs claimed to have lost about $53,000 in value in each of their units because of the actions of the Declarant.
Continue Reading Failing to Maintain and Properly Collect Assessments is a Breach of Fiduciary Duties

Facts

Plaintiff, Harmony Haus and a resident, sued Defendant, Parkstone Property Owners Association (“Association”) under the Fair Housing Act (“FHA”) seeking an injunction and attorney fees for violation of the Civil Rights Act.  Association counter sued alleging breaches of deed restrictions.  Plaintiff is a sober living residence for individuals recovering from alcoholism and drug addiction.  Plaintiff residents come directly from an inpatient treatment center.  Association argued Plaintiff was violating its “single family residential use,” its noise and nuisance provisions and its unsightly vehicle provision.  The board of the Association can enforce any violation with a fine.  Plaintiff’s seek exceptions to the Declaration under the FHA by requesting reasonable accommodation, with the specific accommodation to allow 12 residents and 8 cars to be parked on the street.  The Association contends the 8 cars is unsafe and that 12 residents would create an imposition on community resources.  Plaintiff claims the need for 12 residents to reach “critical mass” for its phasing recovery system, so more established residents can mentor newer ones.
Continue Reading Can a Group Home be Built in a Single Family Association under the FHA – YES

Facts

Plaintiffs live in Ashbrooke Property Owners Association (“Association”) and missed their annual assessment payments of $115 for three straight years.  The Association hired Defendant, Equity Experts, to collect the past due amounts.  Under the Declaration the past due assessments accrued interest at the rate of 18% per annum, plus the Association could charge a late fee and the Owner was “liable to the Association for all costs and attorney’s fees…”  Equity Experts added fees for their constant contact package and their Pre-Foreclosure package in the amount of $750 and $1,495 respectively.  In December of 2013, Defendant advised Plaintiffs that their balance was $3,199.60, but that if they did not pay within 10 days the balance may be at least $6,644.60.  Plaintiffs filed suit seeking class certification because the interest rate charged exceeded the amount allowed under Georgia law and because the demands were in excess of sums allows under the Association documents.
Continue Reading Class Action Status Granted to Association Homeowners Alleging FDCPA Violations

Summary

The Court of Appeals of Washington held that a lot owner was barred from claiming ownership of a strip of land after representing that the land was part of the adjacent lot, building a fence along the supposed boundary, allowing the adjacent lot owner to maintain and landscape up to the fence, abandoning the land, and causing the adjacent lot owner to rely on that representation.
Continue Reading This Land Is My Land, this Land is Your Land – Owner Loses Ownership of Land After Denying It Was Part of His Lot

Facts

David Bagwell was the developer of three homeowners’ associations (HOAs).  David and his wife Susan (the Bagwells), acted as directors of each of the HOAs.  Sister Initiative, LLC (the LLC) loaned money to the HOAs and was owned by Bagwells’ daughters.  Susan Bagwell was the manager of the LLC.  The Bagwells also owned several other businesses that interacted with the HOAs.  In 2010 the LLC loaned the HOAs $120,000, allegedly because of the downturn in the economy.  In 2011 the Bagwells were ousted as directors, and the LLC sued to recover on the loans.  The use of the funds is the heart of the case, as the HOAs argued that the funds were funneled to improper uses.
Continue Reading Association NOT Liable for Loans Made By Developer Related Entity

Facts

The dispute in this case centered on what rights owners of lots that did not have frontage on a lake (“Non-Lake Lot Owners”) had to place a dock in the lake based on the restrictive rights for their homeowner’s association (“HOA”) which were recorded in 1922.  The HOA consisted of 146 lots.  All Non-Lake Lots were granted a perpetual easement over and across seven lakefront outlots for their use and enjoyment, including access to the lake.  Some of the Non-Lake Lot Owners construed this broadly enough that they installed a dock and used one of the outlots for activities unrelated to the water (picnics and such).  Plaintiff, a “Lake Lot Owner”, had a letter sent to the Non-Lake Lot Owner Defendants demanding that they stop using the outlot and remove the dock.  The parties disagreed.  Plaintiff sued.
Continue Reading HOAs & Riparian Rights-Can I Put a Dock Here?