There was no DD for January 1, a holiday which the Editor celebrated at the Rose Parade

Daily Development for Friday, January 11, 2001

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

SERVITUDES; AMENDMENTS: Provision in CC&R's pertaining to a residential subdivision that gave owners the right to amend the restrictions by 75% vote does not support the creation through amendment of an owner's association with power to levy assessments when none existed under original set of restrictions.

West v. Evergreen Highlands, 2001 WL 1477882 (Col. App. 11/23/01)

This case appears to state a rather obvious precept, and would not be worthy of special note but for the fact that an early decision in Montana, Windemere Homeowner's Assoc. v. McCue, 990 P.2d 769 (Mont. 1999) (the DD for 10/25/00), in fact stands for the proposition that an association can be formed out of whole cloth under these circumstances. In addition, the recent decision in Florida, Woodside Village Condominium Ass'n, Inc. v. Jahren, No. SC00-1030, 2002 WL 5483 (Fla. Jan. 3, 2002) upholding extensive changes in leasing rights through amendment of the Declaration, also focuses a spotlight on this general question.

The restrictions in this case contained a clause permitting change by vote of less than all the owners of affected properties:

"[these restrictions] shall automatically be continued thereafter for successive periods of ten years each; provided, however, that the owners of seventy-five percent of the lots which are subject to these covenants ... may change or modify any one or more of said restrictions, by executing and acknowledging an appropriate agreement . . ."

The court does not give us the content of the balance of the covenants. More than twenty years after these covenants were first adopted, 75% of the owners approved an amendment that authorized the existing homes association to collect dues and to impose a lien to collect those dues. Plaintiff, a homeowner at the time this amendment was adopted, did not join in the amendment and did not pay the dues. When the association threatened a lien, plaintiff brought this action to declare the amendment invalid. The trial court upheld the amendment and plaintiff appealed.

The Colorado Court of Appeals reversed - rejecting the analysis in Windemere, which had upheld a similar amendment pursuant to language providing that the restrictions in that case would be "waived, abandoned, terminated, modified, altered or changed" by a supermajority of the owners. See also Sunday Canyon Property Owners Ass'n v. Annett, 978 S.W.2d 654 (Tex.App.1998). Clearly the operative terms in Windemere, "change or modify," were also present in this case. But the court concluded that the addition of the additional terms in Windemere supported an interpretation that broader changes were permitted than in the instant case.

The court cited to Colorado authority indicating that covenants should be read narrowly:

"When interpreting an unclear covenant, courts resolve all doubts against the restriction and in favor of free and unrestricted use of the property."

This kind of language, which once was common in cases across the country, has been superceded in many courts, which recognize that community agreements are becoming a way of life in the complex modern society.

But in any event it is questionable whether either the very strained distinction of Windemere or the stated predisposition to a narrow interpretation were even deemed necessary by this court. The court simply viewed amendment in this case as an "addition of new covenants that have no relation to the existing covenants" as opposed to simple changes to the existing covenants. The court cited to a number of recent cases taking a conservative view on the right to amend, most notably Lakeland Property Owners Ass'n v. Larson, 459 N.E.2d 1164, 1167 (Ill.App.Ct.1984), which held that a provision permitting an amendment to "change the said covenants in whole or in part" did not permit the conferring of an assessment right on an existing association.

Comment 1: This case is takes a dramatically different approach from the Windemere decision and, for that matter, from the Florida decision permitting restrictions on leasing rights. It should be noted, however, that the Florida case involved the amendment of a condominium declaration, rather than a set of subdivision restrictions. Arguably courts should read amendment rights in condominiums more broadly, since the complexities of the shared ownership of common elements may require broader flexibility over time. But note that in some cases subdivisions and condominiums can look an "feel" exactly alike - and the interests of the owners can be parallel. It's not the legal format as much as the physical characteristics of the development that makes the difference.

Comment 2: The author heavily criticized Windemere in the DD that reported it, and enthusiastically concurs with the court here. To create an assessment regime where none existed before is creating a whole new community, not simply changing what existed.

Comment 3: Don't forget that body of cases that would justify the imposition and collection of assessments on parties benefitted by association maintenance activities of easement areas and other amenities even as against parties not part of the association and not bound by any express servitude regime. Equity has been stretched to accommodate these tough cases, making it less necessary to permit the warping of the amendment right in cases that are not so tough.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

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