Daily Development for
Monday, October 27, 1997

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
randolphp@umkc.edu

Note that we have two related Pennsylvania cases reported here:

ASSOCIATIONS; ASSESSMENTS; IMPLIED DUTY: Where property owners, who had purchased property in private residential development, had right to travel over development roads and to access lake waters, property owners were liable for payment of dues and assessment fees intended for the maintenance of the development's roads and facilities, even if chain of title makes no mention of community association or obligation to pay dues.

Spinnler Point Colony Association, Inc. v. Nash, 689 A.2d 1026 (Pa.Commw. 1997).

Comment 1: The court apparently views its decision in this case as consistent with the general law, citing a New York decision and dicta in a prior Pennsylvania case. But in the Pennsylvania precedent case the title chain put the landowners on notice that an association with the power to regulate the common areas might be formed at a later time. The court concluded that the power to regulate implicitly includes the right to assess for maintenance.

In the present case, however, there was no reference in the title chain to a homeowner's association. Under these circumstances, the ruling amounts to a flat conclusion that if the landowner has the legal right to benefit from a common amenity, it has the legal obligation to pay for its maintenance.

This is hardly a foregone conclusion well founded in the case law, although, as these pages have indicated in the past, there is some precedent in other jurisdictions.

Comment 2: How far does the implied assessment duty extend? In another recent Pennsylvania case, for example, a court held that an association had an implied right to impose capital improvements even though the declaration indicated it only had the right to assess for maintenance. See the DD for 8/11/97. If the capital improvements relate to the amenities in question, can parties not expressly bound by the declaration be forced to contribute?

Comment 3: The court appears to tie the implied assessment duty to the right of use, not the use itself. There is a big difference in terms of theoretical justification. If one uses an easement in such a way as to cause deterioriation in the useability for others benefitting from the easement, it seems proper to view the heavy user as having an implied duty to restore the useability - to pay for repairs. But what if one benefitting from an easement makes no use of it at all? If use by others causes deterioration, then it would seem proper for those others to pay.

In this case, however, the obligation to pay is imposed as a common obligation that attaches to the benefit. One assumes that the affected property owner formally could forswear permanently any use of the easement, and escape liability. Assume that the amenity is a roadway. Apparently it is not possible for the assessed party to argue that its use creates proportionately less wear and tear on the road than use by others. It must pay its aliquot proportion as determined (within broad limits of "reasonable discretion") by the association.

Comment 4: In any event, do we have "taxation without representation" here? Should the affected landowners be able to argue that they deserve a say in the affairs of the association that sets the assessments? Since the entire right is borne of equity, this equitable right of participation would seem to run parallel with the assessement duty.
ASSOCIATIONS; ASSESSMENTS: Because deed that conveyed four lots in one development into a single lot did not alter the underlying obligations imposed on the separate lots through restrictive covenants, owners of single, large lot were liable to pay dues and assessments on the three former lots.

Wild Acres Lakes Property & Homeowners Association v. Coroneos, 690 A.2d 794 (Pa.Commw. 1997).

Recorded restrictive covenants rendered each lot owner in development liable for dues and assessments imposed on each lot in development. After purchasing four lots in development, property owners refused to pay any separate assessment for three lots after they deeded four lots to themselves and designated the four lots as a single lot. In rejecting the property owners' assertion that they owed dues to the association only on a single lot, the court reasoned that the covenants providing for the assessments and dues were clearly covenants running with the land, and were intended to follow title. The purchase of four lots and the conveyance of the lots to themselves as a single lot did not serve to void the separate lot dues owed by the property owners.

Comment: The court does not state specifically that the owner of the four lots used them for a single family purpose, but the court's ruling would obtain even if this were the case. The assessments were payable per lot, regardless of whether each lot was used as an independent "consuming unit" of the association's services.

In this regard, it is instructive to compare this case to Spinnler Point Colony Association, Inc. v. Nash, 689 A.2d 1026 (Pa.Commw. 1997), where the court held that parties who in fact have the right to use commonly owned facilities are liable to pay for assessments related to the maintenance of those facilities even if they do not have express contractual duty to do so.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1-6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Stacy Walter at the ABA. (312) 988 5260 or stacywalter@staff.abanet.org

Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.