Facts

Plaintiffs are property owners in what were originally three separate planned communities known as Mystic Lands.  Defendants are the developer/declarant and its sole shareholder, Shinitzky.  In October of 2006 the Plaintiff and his wife entered into a contract with declarant to purchase Lot 28 in Mystic Ridge.  The Property Information Sheet stated “the streets throughout Mystic Ridge are private and shall be maintained by the … Association.  The initial capital expense for the streets, including the asphalt, shall be bourne (sic) by the Developer.”  Shinitzky said this statement represented the intention of the Developer and that other similar representations meant “asphalt paved roads.”  However the deed described the lot by reference to the plat which stated “ALL INTERIOR ROADS ARE 14’ GRAVEL.”  Developer did pave some of the roads in Mystic Ridge as the development progressed, but in 2013, for the first time, Shinitzky stated in a Property Disclosure Statement that the roads “would be gravel.”
Continue Reading Developers/Declarants Breached Contract by Failing to Pave Roads

Facts

Plaintiff, Ms. Carmichael, is on the board of directors of Commerce Towers Condominium (“Association”).  On the board with her is Mr. Frese and Mr. Vickers.  Mr. Vickers, Mr. Frese and Mr. Tarantino are the officers of the Association. (collectively “Officers”).  All three are also the officers of Tarantino Properties, Inc. (the “Management Company”). Carmichael and other unit owners (collectively “Owners”), individually and on behalf of the Association, sued the Officers and the Management company for breaches of fiduciary duties and for unjust enrichment because the Officers caused the Association to provide for the maintenance and preservation of property that was not part of the Association (the retail space of the buildings).  The Officers and Management Company asserted that the Owners did not have standing to sue on behalf of the Association (a derivative suit).
Continue Reading Self-Dealing by Director is a Breach of Fiduciary Duty (Case 2)

Facts

Plaintiff, Coley, owns a home in an HOA, the Eskaton Village (“Association”).  Two other Eskaton named entities (“Eskaton”) develop and support HOAs.  A five-member board runs the Association, subject to the Declaration.  Eskaton has always controlled three of the five directors on the Association Board because it owns 137 of the 267 units.  The three directors are always employees of Eskaton and are “financially incentivized to run the Association for the benefit of Eskaton.”  In short, the better Eskaton performs the higher their compensation, which is directly related to the expenses of the Association.  Coley, one of the other two directors, filed suit because of various acts by the other directors to benefit their employer at the expense of the Association, including disclosing attorney client privileged communications.
Continue Reading Self-Dealing by Director is a Breach of Fiduciary Duty (Case 1)

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

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

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

Even the best and most established real estate developers can face hard times, especially in the aftermath of recession and economic downturn, as we experienced a few short years ago. Many condominium and subdivision developments found themselves half completed, both in terms of units and homes built, and common area improvements (like streets and curbs) left undone.  Where a new developer comes in to build upon the remaining lots, what responsibilities does he take on?  As related in a recent 2019 case, the answer may be found in the original development agreements with the municipality.
Continue Reading Did Your Developer Go Bankrupt and Leave your Association Holding the Bag? Your Remedy May Lie Within the Developer Agreement

A Court in Colorado recently dealt with a developer who placed a provision in the declaration of a condominium association prohibiting amendment of the declaration – ever – without the declarant’s written consent, and requiring that all construction defect claims be resolved through arbitration (Vallagio at Inverness Residential Condominium Association, Inc. v. Metropolitan Homes, Inc. (395 P.3d 788)).
Continue Reading Developers Sometimes Draft Documents for Their Own Benefit