Signed original covenants, now new developer wants to change everything

Ok, I have a somewhat complicated situation. We purchased a home 3 years ago in a new development, we were the first people to purchase and signed a CC&R with the original developer of the neighborhood. A couple of homes were sold and then the original developer sold the remaining property to a new developer. Developer B basically did nothing to maintain the common areas or do anything within the CC&R's. Recently they sold the development to a NEW developer. Developer C is now cleaning up the common areas and building and selling homes. My issues comes with Developer C's ideas on what makes a good CC&R. He has indicated that he will change OUR CC&R to something more along the lines of their other neighborhoods. I have a couple of questions for anyone with info....

- Are we subject to the NEW CC&R when we only signed the original CC&R's 3 years ago? The changes that they would make would basically change the ENTIRE document.

- If Developer B was negligent in any paperwork filing or duties, is that CC&R still valid?

There has never been a single meeting, and the developer still owns the majority of the property so we really want to know where we stand. I'm going to scour my CC&R and South Carolina state law to see if there are any loop holes. My guess is that any paperwork that was supposed to be filed (to the state) was probably not during developer B's time since they completely dropped the ball on our neighborhood.

The CC&R we signed might be considered Void in some circumstances and if that's the case, what happens then?

Of the top of my head, I would say the present owner is the Declarant thus in control and can make the changes they wish to make to the CC&R's and/or Bylaws.

Of course I could be wrong.

You say the new owner is cleaning up the common areas and selling homes. Overall I would think this is best for you even if you do not like the changes. If he improves and stabilizes the HOA, it could aid you in selling and getting out of there if push comes to shove.

Best of luck.

Hi JN:

You need to review your original documents and any Amendments and determine what the developer has the right to change. You purchased based upon a contract and development plan; therefore, are somewhat protected depending on what is in the documents regarding developer rights.

Per Larry’s comment which even though varies by states is a general rule of thumb:

You may need to pull a copy of the Warranty Deeds between the developers as this document may have the lots purchased and the rights assigned by the developer to the next. Otherwise it may be in a separate document filed with the County Records. If the rights were not transferred then Developer C potentially would not be able to exercise any special development rights reserved by Developer A or B as those rights are still owned by them.

You would be subject to any Amendments to your CCR’s which are properly executed and filed as stated in your governing documents or state statutes.

It appears that SC at this time has Horizontal Property statutes. There is a bill being considered to add a homeowner’s association act, but it appears at this time it is caught up in committees.

Horizontal Property Statutes:
http://www.scstatehouse.gov/code/t27c031.php

Proposed Homeowner Association Act:
http://www.scstatehouse.gov/sess119_2011-2012/bills/218.htm

I would potentially disagree with Caveat Emptor. The purchase and sell of goods is covered under Consumer Protection including property.

It depends on the intent of the contract a.k.a. Declaration of CCR’s and plain language expressed. Also, as the Declaration becomes to an extent an implied and expressed warranty regarding the development plan which he is selling to consumers and they in turn have reliance upon. Changes cannot be unreasonable or contravene public policy. A developer potentially would need to be careful after selling to a consumer not to violate fiduciary duty by self serving interests and financially harming others with not method for them to mitigate damages.

http://law.justia.com/cases/south-carolina/court-of-appeals/2011/4779.html

In Queen's Grant II Horizontal Property Regime v. Greenwood Development Corp., 368 S.C. 342, 628 S.E.2d 902 (Ct. App. 2006), our court set forth five conditions which must be met in order for a developer to reserve the right to amend or impose new restrictive covenants running with the land:

(1) the right to amend the covenants or impose new covenants must be unambiguously set forth in the original declaration of covenants; (2) the developer, at the time of the amended or new covenants, must possess a sufficient property interest in the development; (3) the developer must strictly comply with the amendment procedure as set forth in the declaration of covenants; (4) the developer must provide notice of amended or new covenants in strict accordance with the declaration of covenants and as otherwise may be provided by law; and (5) the amended or new covenants must not be unreasonable, indefinite, or contravene public policy.

In Queen's Grant II Horizontal Property Regime v. Greenwood Development Corp. case further states right is to be exercised in a reasonable manner:

http://sc.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20060410_0000260.SC.htm/qx

Moreover, a developer may generally reserve to himself the right to amend restrictive covenants in his sole discretion, and may do so without the consent of the grantee, so long as he exercises that right in a reasonable manner.

Wonder what happened to JN3?

I know, I hate that never knowing it should be a requirement that you fill us in.....lol.

Thanks Tim,
Emma

(just kidding about the requirement...lol)

Our deed restriction section has a paragraph dealing with them transfering any rights to another enity under ASSIGNMENT. Has to be an apprpriate in recorded written INSTRUMENT".
But it also states later or earlier it must be approved by the entire lot owners not 75%, not 50% "ALL" for any changes by another enity. then look if your HOA deed restriction has a clause right to expand paragrapgh and General paragraph and see if the new builders has to abid by the orignal conveants or reach a similar set of deed resrictions. also it has a 10 year clause in the right to expand, our new developer added the entire new plats of land 10 years 4 months under our Deed restriction, hence they had to form a new HOA up and excempt ours from thiers, effecting killing our HOA deed restrictions for not developing the community in that 10 year time frame under our Deed restriction, due to our original HOA had the only rights to expand our community.

there are so many things that can dissolve a HOA that even formed up., esp when new developers does a hostile take over thats where any disgrunted developers will harpoon the new titans, by going in and changing the HOA deed restrictions so their so many loop holes out of them from the new developers..

Guess there's just no way to know who's right on this one. All just each of our own speculation and viewpoint, interesting. Just a bunch of opinionated people aren't we all.....lol.

I am one that agrees that there is a need for a more uniform set of rules nationwide. But there are many to disagree.

If problems were a easier to prevent and solve then they lose $$$$$$.

Thank you Janet,

Sometimes when you say that to people they look at you like your the crazy one. It amazes me that people can't make the connection.

Emma