Covenants Conditions and Restrictions

Facts

When you are headed down the wrong path – TURN BACK.  This applies to owners and associations when they act on their belief of what their documents say, but then learn that their understanding may be wrong.  Often parties who make a mistake, or learn that they might have made a mistake, refuse to reevaluate their situation and at least allow turning back to be an option.  Such appears to have been what happened in the recent case of Fritz v. Lake Carroll Property Owners Association, Inc., (2019 unreported case out of Illinois) where the association passed a rule that required inspection and pumping of the owners privately owned septic system every four years and that if an owner failed to follow the rule they would be fined $250 and $25 per day. 
Continue Reading

Eith v. Ketelhut, — Cal.Reptr.3d — (2018)

The Facts

Homeowner bought home in 2003.  In 2005 they planted a vineyard consisting of 600 plants on around .4 acres after obtaining approval of the Board’s Architectural Committee to their landscape plan that included the grape vines.  The CC&R’s (Covenants Conditions and Restrictions) specifically prohibited that “No lot shall be used for any purpose (including any business or commercial activity) other than for a residence of one family…”  The first wine harvest was in 2008 and the owner began selling the wine in 2009.  In a good year he would produce 720 bottles of wine.  Neighbors objected and when the Board did nothing, they filed suit seeking declaratory and injunctive relief claiming that the Board breached its fiduciary duty and to prohibit the owner from operating their business.  At trial the owner admitted that “the sale of wine is a business,” that the vineyard “operates like a business” and that “this was a hobby.”  The owner also testified that he filed IRS Schedule C for the vineyard, which is entitled “Profit or Loss of Business (Sole Proprietor).”  Under the IRS rules you would not file Schedule C if the business was only a hobby 
Continue Reading