Declarant/Developers of Community Associations love to reserve themselves rights within the Declaration that extend far beyond their Declarant control powers.  This is nothing new.  But when a Homeowners Association puts it foot down, who will end up on top?  It depends on how all the sections in the Declaration read together, and as this case shows, ambiguity does not favor the Declarant.

Facts

In a 2019 case, a court had to interpret the Declaration governing an HOA (subdivision) and determine who was right.  The Developer, after turning over control to the homeowners, sold the final lot to a buyer with a planned home that did not fit the specifications of the Declaration.
Continue Reading Post-Turnover Declarant Rights? Think Again…This One has a Happy Ending for the HOA

Summary

Each owner of a lot in a planned community with multiple subdivisions was required to be a member of the master association – Holly Lake Ranch Association (HLRA).  Some of the owners voted to amend their particular subdivision’s respective deed restrictions.  The effect of which was to add a voting requirement for assessments, mandatory waiver of duplicate fees for additional lots, and restricted HLRA’s lien rights.  In this particular Texas case, Roddy v. Holly Lake Ranch Association, Inc., __ S.E.2d __ (2019), the court found that the amendments were “illegal” and therefore void.  In addition, the court remanded the case to the trial court to determine the reasonableness and necessity of the attorney fees it awarded to HILRA.
Continue Reading Doing Things Wrong can be VERY Costly, Which is Why Using an Experienced Association Attorney Matters

Summary

Declarant owned nine of 10 units, controlled the board and association, failed to have an association bank account, intermingled the assessments that were paid into his business account, never held elections or annual meetings and kept no separate corporate records.  Yet, the Court held that these failures could not be used as an excuse for not paying assessments that were due under the condominium documents.  In other words, you bought into an association, pay your assessments.
Continue Reading Owners are Liable for Assessments, Even When Corporate Formalities Not Perfectly Followed

Summary

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.

The Facts

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.
Continue Reading Do We Have to Perfectly Follow the Declaration or is Close Good Enough?

Summary

When faced with the question of how much is too much for a “reasonable fee” the US Court of Appeals for the 7th Circuit held that it could not answer the question because the right parties were not before the court.

The Facts

Keith Horist owned a condominium in downtown Chicago building’s condominium association. Joshua and Lori Eyman also owned a condominium in Chicago, but at a difference association. Both associations hired Sudler Property Management to manage their day-to-day operations.

In 2017 Horist and the Eymans put their units up for sale and found buyers.
Continue Reading How Much Can an Association Charge for Providing Disclosure Documents as Part of a Sale?

Developers of condominium communities and HOAs often reserve access easement rights within the Declaration/Deed Restrictions for the subdivision, especially when the Developer owns yet-undeveloped neighboring property. But what happens if the Developer forgets to reserve such easement rights specifically within the Declaration or Deed Restrictions? A recent case explores this dilemma, and at least in this case, the HOA owners come out on top.

Facts

In a 2019 case, some lot owners within a subdivision, which had been advertised as a private, gated community, sued the Developer for trying to enforce an access easement he had for the main road within their subdivision. The Developer claimed he needed access to that main road in order to develop the neighboring lots behind the gated community.  The Developer also believed he could grant access to the owners of the neighboring lots through the gated community. 
Continue Reading HOAs Unite! Developer’s Easement Rights are Not Never-Ending

Summary

In Florida, mere ownership of a condominium makes you liable for all assessments which come due while you are an owner AND all assessments of previous owners.

The Facts

Defendant, Fla Trust Services, bought the condominium in question on July 26, 2016 by quit claim deed. The seller was Homes HQ, LLC who had bought it on June 13, 2016 at a judicial sale held as a result of a final judgment of foreclosure obtained by JPMorgan Chase Bank, NA. After Defendant took ownership, the plaintiff association filed suit based on a lien foreclosure and for damages. The parties agreed that the sole issue was whether the was Defendant liable for unpaid assessments back to June 13, 2016 or back to 2007, when the purchasers bought the condominium.
Continue Reading Owner Liable for Prior Owners Assessments – Who Knew?

Summary

A 79-unit condominium association held a meeting to remove the directors from office and elect new ones. The president objected to the meeting, the procedure and the notice, but since the association followed the documents and had more than half of the unit owners vote for the removal, the directors were removed.
Continue Reading Directors Removed from Office – Just Follow the Documents

As Condominium and HOA attorneys, we often receive questions from our clients dealing with all the issues that can get in the way of conducting a successful annual meeting. Most often, it is the issue of not being able to achieve a quorum of owners in attendance—which stymies the Association’s ability to hold Board member elections, approve the budget, and take other important actions to further the HOA’s business for the coming year.  So what happens if an Association’s Bylaws calls for annual board elections, but the Association does not hold elections for a number of years?  Is there a Board? Does the Board have any authority? A recent case addressed these issues, and the court’s findings might surprise you.
Continue Reading If Your Association Fails to Hold Board Elections at an Annual Meeting, Do You Still Have a Board? The Answer May Surprise You…

An AS IS exculpatory clause in a contract does not automatically relieve a party of any liability, especially where that party committed fraud to obtain the exculpatory clause.

The Facts

In both of the cases referenced below, the defendant included an as-is clause in a real estate contract. In Frianco the bank defendant (after discovering that the property that it had foreclosed on had significant water damage, and after paying to have those damages repaired) advised the purchaser of property in the offer contract that “it had little or no direct knowledge as to the condition of the property.” Similarly in Herhold, the defendant first represented to the buyers that they would be able to build a home on property they were selling, despite knowing of significant issues that would make that difficult or impossible. The defendant then included an “AS IS” clause in the real estate purchase agreement that also stated that “neither Seller, Broker nor Agent have made any representation or warranties…”
Continue Reading AS-IS Clause Does Not Foreclose a Fraud Claim