Daily Development for
Wednesday, December 4, 1996

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

SERVITUDES; COVENANTS; REAL COVENANTS: A covenant in a subdivision scheme permitting the Declarant to form a homeowner's association with power of assessment to manage streets, roads and recreational facilities is not a covenant that is personal to the Declarant, but runs with the land to subsequent holders of the Declarant's interest. Griffin v. Tall Timbers Development, Inc. 1996 Miss. LEXIS 516 ( Miss. 9/19/96)

The Declarant platted a number of subdivisions and sold a number of lots in a large development area. All of the lots were subject to a declaration of restrictions which provided that the Declarant or its successors or assigns, was responsible for maintaining streets, roads and recreational facilities (at least some of which were commonly owned) and that the Declarant (named) had the right to form a homes associations which could charge dues enforceable by lien, and all lot owners would be required to pay the dues.

Subsequently, before selling out the project, the Declarant sold its interest to another developer, which in turn filed for bankruptcy, and the Declarant's interest passed into the hands of Plaintiff developer. When Plaintiff developer attempted to form the homes association, a number of existing homeowners (who had been paying no assessments for all the amineties) objected and, this lawsuit ensued. Following judgment in favor of developer, the homeowners appealed. The gist of their appeal was that naming the developer specifically as the party with the power to form the homes association constituted the creation of a personal right in that developer to form the association, a right which did not devolve upon subsequent assignees of developer's interest notwithstanding the statement in the covenant declaration that the covenants "ran with the land."

Although the court does not develop the argument, it appears to have been the position of the homeowners that the documents named the developer specifically as the party having the right to form the homeowner's association, while in other sections the documents referred to the developer, "its successors and assigns." The argument was that because the parties conferred the right to form the owner's association specifically and personally to the Declarant, and the Declarant had no further interest to protect, the covenant requiring the homeowners to join the Declarant-formed association was of no further effect.

On appeal: Held: Association right did pass to Plaintiff Developer - homeowners have to join the association.

The court focussed primarily on the argument that the right to form a homeowners association was not the type of right that properly could run with the land. The court pointed out that the Declaration provided specifically that homeowners were to pay for maintenance costs through assessments, but that the only mechanism for collection of these assessments was through the association. It concluded that if, as prior cases had held, an affirmative promise to pay assessments can run with the land, then the right to form an association to collect these assessments a fortiori also must be able to run.

As stated above, the court ignored the glitch in the wording naming the Declarant as the party with formation rights, stressing that elsewhere the document provided specifically that the covenants would run with the land.

Comment 1: The equities clearly drove this case. It would be patently unfair for the plaintiff developer to have extensive maintenance responsibilities and no means of carrying out the established scheme for paying for the costs of meeting these responsibilities. Further, all of the lot owners, including the recalcitrant homeowners, would benefit from the functioning of the scheme.

Comment 2: Although the court did mention these equities, its ruling is based primarily on technical rules. It holds that when covenants run with the land they necessarily pass to successor owners of the benefitted parcel. It is interesting to speculate as to what would have happened if the Declarant's interest had been completely sold out to other homeowners or if several successor developers had taken title to elements of the Declarant's original land. Would any of these parties unilaterally have had the right to force formation of the association, even if for some reason others opposed such a proposal?

This problem highlights only one of many problems that arise when development schemes are not carried out precisely as planned orginally, and courts are required to construe the documents consistent with the apparent overall scheme. The editor would conclude that in this case it is likely that a court would rule that any successor of any parcel of the Declarant would have the right to force formation of the association. If the Declarant had assigned specifically the right and duty to maintain the amenities to one successor, then that successor would have a valid assignment. But if there were no assignment, then the editor's view would be that any homeowner could compel the association, once formed, to undertake these responsibilities. Any other conclusion would destroy vested interests and expectations of parties already existing in the project.

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