DD 6/20 Colorado Recognizes "Community by Implication" With Right to Assess

Daily Development for Friday, June 20, 2003
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
dirt@umkc.edu

ASSOCIATIONS; ASSESSMENTS; IMPLIED POWER TO
ASSESS:   Colorado recognizes "implied common interest
communities" with the power to assess properties for funds to maintain
the common areas owned by the association.

Evergreen Highlands Assoc. v. West, 2003 WL 21373175 (6/16/03)

This case is further discussed under the heading. "Servitudes;
Modification; Assessments."  As that discussion indicates, the case
involves a subdivision platted in  the early 1970's.   The plat showed an
elaborate park in the middle of the platted residential lots and stated that
the declarants would convey that park to a homes association, which
indeed they did in the late 1970's.  There was a declaration containing
use restrictions, but the developers never created a scheme of mandatory
assessments to permit the association to raise the funds to maintain the
park and other common elements.

The separate discussion cited above highlights the first part of the case,
in which the court decides that the homeowners, using the power to
amend their declaration, could now create a mandatory assessment
scheme with the power to lien the lots of recalcitrant landowners in order
to raise the money to maintain the common elements.

In the part of the opinion discussed here, the court basically renders moot
the discussion of the validity of the amendments to the declaration, since
it holds that whether or not a declaration provides that an association has
the power to levy assessments, homeowners associations to which
common elements have been conveyed have the implied right to assess
for these purposes.

Although this is a case of first impression in Colorado, the court relies on
a number of cases reaching similar results in other jurisdictions, where
assessments have been upheld for the maintenance of common elements.
The court also cites to authority that arguably would justify an even
broader assessment power.  It also relies heavily on the reasoning of the
Restatement of Servitudes.  The Restatement, as the court notes, states
that associations may have the implied right to impose a lien "to raise the
funds necessary to carry out its purposes."  It also quotes the noted
common interest community commentator Wayne Hyatt, who
characterizes these implied assessment rights as distinct from "dues" for
"memberships."  Hyatt states: "The assessment it not equivalent to
membership dues or some other discretionary charge . . . As long as
legitimate expenses are incurred, the individual member must bear his or
her share."   Despite the approving citation of these authorities, the actual
holding of the case involves only assessments for the maintenance of the
park.

The court notes that Colorado has adopted the Uniform Common Interest
Ownership Act, which of course addresses the right to lien, but the court
rejects the argument that an express right to lien must be created in order
for there to be one, even under the Act.  The court states that a common
interest community arises within the meaning of the Act whenever there
are "documents recorded, however denominated" that identify a situation
in which an implied obligation can arise.  Here, the platting of the park
with the statement that ownership would be conveyed to an association,
the creation of the association, with the responsibility to maintain the
property and the mandate to "determine annual membership or use fees,"
and the deeding to of the park to the association gave rise to this implied
power to assess.  Although the court is vague on the point, it appears then
that the association will be bound by the Uniform Act in the budgeting,
voting, and other particulars by which the assessments will be levied.
This feature was not present in other jurisdictions that have recognized
implied assessment rights.

Comment: What really is new here?  Certainly the language is new.  But
the common law has long recognized that the servient owner of property
subject to an easement has the right to compel the dominant owner - the
benefitted user - to pay for maintenance of the servient property to the
extent that such maintenance is made necessary by the dominant activity.
For instance, parties with easements over a bridge could be compelled to
contribute to bridge repairs proportionate to their proportionate usage.
Implicitly, by the dedication of the plat showing the amenity of the park,
the various lot owners within the subdivision obtained an easement in
that area and thus became subject to a common law obligation of
maintenance.

Of course, it is a big leap from fixing a worn out bridge to paying the pro
rata cost of tennis court and stable maintenance, and an even bigger leap
from paying proportionate to use to paying a uniform assessment,
regardless of usage.  But the presence of the amenity in this case is itself
a benefit to the lot, and the uniform assessment concept certainly makes
the most sense in this context.
In short, although some have viewed the case a breakthrough thinking or,
from the other side as court imposed communism, there really isn't much
separating this case from the ordinary common law of easements.

Comment 2: The feature of blending an "implied assessment scheme"
into the Uniform Common Interest Ownership Act, however, is
something that the editor views as a new and positive development, and
it is one that ought to be emphasized in discussions of this case.

Comment 3: More problematic, in the editor's view, is the possible
extension of this case to situations involving expenditures other than the
maintenance of existing amenities to which the lot owners implicitly
"bought in" when they acquired their parcels.  The editor still views with
suspicion the notion that set of negative land use restrictions in a
subdivision can somehow be ballooned into the creation of a homes
association with a general power to assess to carry out new benefits, such
as, in one case, the paving and maintenance of what had been a dirt road.
Where are the handholds on this slippery slope?

Readers are encouraged to respond to or criticize this posting.

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