Covenants but no HOA

Started by NaomiE • 35 replies • 2321 views

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NaomiE (Iowa)
Posts: 20

Posted:

The declarant of the property we own set up covenants and the covenants specify that the declarant deemed it desirable to create an agency to be delegated the power of maintaining the certain private and public areas as well as enforcing the covenants but this agency was never set up. All the property in the development has been sold since 2010 so the declarant no longer owns any property. The covenants have 9 items that state certain things cannot be done without prior approval of the declarant or permission of the declarant. Is the declarant still the declarant even though all property is sold? What now happens to those 9 items? Are they void now? Can the property owners set up an HOA? Can they set up an HOA without the approval of all owners? There is a prevision that allows the owners to amend to covenants by an instrument signed by not less than 67% of the owners. Is creating an HOA an amendment to the covenants or something very different?

RogerB (Colorado)
Posts: 5,067

Posted:

NaomiE, You may want to check with an experienced HOA attorney.

It probably would be up to the homeowners to organized and set up a Homeowners association with Bylaws and get incorporated in the state. Then get the Declarant to assign all responsibilities and authority to the HOA after checking out the transition. I have attached suggested information on transitioning.

📎 Attachments (1):

⏸ Downloads temporarily unavailable

📝1217314844571.doc(23 KB)

NaomiE (Iowa)
Posts: 20

Posted:

Do you need all home owners to agree to the organization of the HOA?

NpS (Pennsylvania)
Posts: 4,216

Posted:

Some background would be helpful.
1. Is there any common area or is all property owned by individual homeowners?
2. Do the docs provide for assessing and collecting fees?
3. What are the 9 restrictions about?

Sikubali jukumu. Read all posts at your own risk.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Naomi

Typically at a defined time, control is passed from the Declarant to the owners. It is often quite vague as to how this it is done. In your case, it sounds like it might not have been done so my initial reactions is the owners can and must pick up the pieces to make it happen.

NaomiE (Iowa)
Posts: 20

Posted:

We have a road agreement to take care of the private road. That part is running smoothly. There are no other common areas all the property is owned by individuals. Actually so is the road it is a nonexclusive ingress egress easement through the affected properties. The only fees to be assessed are road maintenance fees. The 9 restrictions are
1. No tract shall be subdivided without prior approval of declarant.
2. Declarant must approve all homes.
3. No satellite receiver dishes over 2 feet in diameter are permitted without prior approval of declarant.
4. All fencing shall be in the best interest of the entire area and requires prior approval of declarant.
5. No towers of any kind shall be allowed without permission of declarant.
6. All buildings constructed shall be approved by declarant.
7. No tract owner may grant easement or access of any kind to any adjoining property without permission of declarant.
8. Declarant must approve any driveways, roads, dirk work, etc.
9. All lots must be maintained in a manner that is in the keeping with the other unsold lots in the development (there are no more unsold lots) and Declarant reserve the right to maintain said lot in a condition complimentary to the subject property as a whole.

We also have one that states no obnoxious or offensive or nuisance activity shall be carried on upon any tract. Who gets to decide what is obnoxious or offensive or a nuisance?

PitA
Posts: 1,416

Posted:

IMO:

the road is taken care of

all homes have been sold so declarant is out of picture

forget the HOA, why would y'all want one ?

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By JohnC46 on 02/17/2016 6:16 PM
Typically at a defined time, control is passed from the Declarant to the owners. It is often quite vague as to how this it is done. In your case, it sounds like it might not have been done so my initial reactions is the owners can and must pick up the pieces to make it happen.

Is there anything in your docs about transferring control from the developer to the homeowners?

Sikubali jukumu. Read all posts at your own risk.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Naomi,

Iowa has a statute that requires renewing covenants every 21 years. The statute has some very specific requirements about what must be done to renew the covenants plus how and where to record the renewal. I am attaching a copy of an Iowa Court of Appeals decision on that subject.

Depending on when they were recorded, your restrictive covenants may already be expired. Even if they are still valid they seem to benefit only the developer/declarant and, because all lots have been sold, he likely has no further interest in them.

Whether you could amend the current CC&R's to compel membership in an HOA is a tough question. A number of states have adopted a body of law that prohibits imposing additional restrictions on property owners. I do not know if Iowa is one of the states that has ruled on that. You might want to take a look at Dreamland Villa v. Raimey at
http://caselaw.findlaw.com/az-court-of-appeals/1519074.html

That issue could be avoided if 100% of the owners were to agree to new covenants but why would they? There seems to be no common property to maintain, except for the roads covered under their own agreement. Your HOA would likely be duplicating the services available from county or municipal zoning agencies.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Second try with the attachment.

📎 Attachments (1):

⏸ Downloads temporarily unavailable

📄121820279171.pdf(87 KB)

NaomiE (Iowa)
Posts: 20

Posted:

I don't. But there are a few that wan't to tell or think they can tell others what to do with their property. We are zoned agricultural and there are those of us that have animals and those that don't don't like that. Those few that feel they can tell others what to do are talking of getting an HOA and I am trying to find out if that is possible to do if not all of the home owners agree.

NaomiE (Iowa)
Posts: 20

Posted:

Is there anything in your docs about transferring control from the developer to the homeowners?

No there is nothing.

FredS7 (Arizona)
Posts: 927

Posted:

>We also have one that states no obnoxious or offensive or nuisance activity shall be carried on upon any tract. Who gets to decide what is obnoxious or offensive or a nuisance?

In the absence of an HOA, the courts would decide. That is, any owner who believes that there is obnoxious or offensive activity would be able to pursue relief in the courts. At his own expense, of course, but if he prevailed he might receive legal costs from the loser.

Depending on the situation, I would imagine that animals could be considered obnoxious or offensive. Much less likely in farming country I suppose.

PitA
Posts: 1,416

Posted:

ditto

fuh-ged-bout-it

be happy

NpS (Pennsylvania)
Posts: 4,216

Posted:

1. It's zoned agricultural. Nothing in the deed restrictions that limit animals. Putting these 2 things together, I think you can argue that there was never an intent to restrict ag animals.

2. The private road is being maintained and people are sharing the expense. Nothing else for an HOA to take care of. No reason to change what's working.

3. No mechanism to transfer rights from developer to homeowners. Argument can be made that restrictions were only in place for the benefit of the declarant while there were still lots to sell. No reason for anything else now.

4. On the other hand, argument can be made that restrictions were intended to restrict activity after declarant was no longer involved. Someone could go to court and ask that rights of declarant be transferred to homeowners. But that costs money and some people won't agree with the cost or the change.

5. If someone is complaining but isn't taking it to court, they're spinning their wheels. You can either come to an agreement among yourselves or go to court. Too many loose ends in what you've got. No cut and dried answers.

Sikubali jukumu. Read all posts at your own risk.

PitA
Posts: 1,416

Posted:

to repeat:

Quote:

Posted By PitA on 02/18/2016 7:19 AM
ditto

fuh-ged-bout-it

be happy

NaomiE (Iowa)
Posts: 20

Posted:

Quote:

Posted By PitA on 02/18/2016 7:19 AM
ditto

fuh-ged-bout-it

be happy

Would love to for get about it. We are happy and 5 of the nine families in the development are also but there are always those that seem to not be happy with things unless they are able to control them. Yes we are going to see a lawyer but I wanted to know as much as I could about the situation before we went.

NaomiE (Iowa)
Posts: 20

Posted:

Quote:

Posted By NpS on 02/18/2016 7:50 AM
1. It's zoned agricultural. Nothing in the deed restrictions that limit animals. Putting these 2 things together, I think you can argue that there was never an intent to restrict ag animals.

5. If someone is complaining but isn't taking it to court, they're spinning their wheels. You can either come to an agreement among yourselves or go to court. Too many loose ends in what you've got. No cut and dried answers.

There is a restriction that states no commercial dog kennels, commercial livestock poultry or foul operations shall be permitted. There is no definition of commercial livestock in Iowa. When I asked the declarant about this before we bought the land (in 2004) he stated he didn't want someone putting a feedlot or confinement operation on the properties. There is a definition of both of these in he county zoning law. We do not met either of these definitions.

Thanks for your help I know there is a lot of gray area in this. I wanted to try and get some understanding of these issues before having to resort to going to a lawyer. Positive a law suit against us is in the works.

NpS (Pennsylvania)
Posts: 4,216

Posted:

Quote:

Posted By NaomiE on 02/18/2016 9:34 AM
There is a definition of both of these in he county zoning law.

If nothing specific in the docs, county zoning law definitions will probably be applied. Ask your lawyer.

Sikubali jukumu. Read all posts at your own risk.

JeffT2 (Iowa)
Posts: 880

Posted:

It is hard for me to imagine that any judge in Iowa is going to rule that animals on ag land are a nuisance. They can't even get that for huge hog operations.

On the other hand, you should do everything you can to keep it clean and nice, and as non-commercial as possible. Just saying.

How many animals do you have? Are you making money?

You may want to get ahead of the lawsuit by making an instrument allowing a small number of animals, and getting 67% to sign it. Promote it door to door as freedom.

You may want to start the HOA yourself, and get on the board to exercise some control.

NaomiE (Iowa)
Posts: 20

Posted:

Quote:

Posted By JeffT2 on 02/18/2016 10:38 AM
It is hard for me to imagine that any judge in Iowa is going to rule that animals on ag land are a nuisance. They can't even get that for huge hog operations.

On the other hand, you should do everything you can to keep it clean and nice, and as non-commercial as possible. Just saying.

How many animals do you have? Are you making money?

You may want to get ahead of the lawsuit by making an instrument allowing a small number of animals, and getting 67% to sign it. Promote it door to door as freedom.

You may want to start the HOA yourself, and get on the board to exercise some control.

We have 4 to 7 animals at a time. These are raised by us for food. We do sell off any extra animals that the breeding process may create because we don't want to take care of more than the 4-7. We do not make a profit off the animals. I should mention that we live on almost 9 acres and we are the smallest property of the 9 properties. At the moment no one can get the 67% needed to amend the covenants it is pretty well split down the middle right now.

NaomiE (Iowa)
Posts: 20

Posted:

Can an HOA be set up without approval of all owners?

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By NaomiE on 02/18/2016 2:28 PM
Can an HOA be set up without approval of all owners?

Interesting question. My first blush is that there was some sort/form of HOA. Granted it was controlled by the Declarant but it was there thus I think a case could be made for the owners to assume control even if all do not agree.

NaomiE (Iowa)
Posts: 20

Posted:

Quote:

Posted By JohnC46 on 02/18/2016 3:30 PM

Posted By NaomiE on 02/18/2016 2:28 PM
Can an HOA be set up without approval of all owners?

How do I go about finding out if some sort/form of an HOA was in effect under the declarant? To ask him would be difficult he has made it pretty clear he wants nothing to do with these properties anymore. Are there guidelines he would have had to follow to set something up? We had to set up the road association because he never did that either.

BanksS
Posts: 403

Posted:

Naomi,

Welcome fellow Iowan. Do your covenants state that when all lots are sold, the development will be turned over to the owners in the form of an HOA?

My covenants do state that but have since expired per Larry's posts.

I had an unfortunate experience with my defunct HOA but won't bore you with the details. My personal opinion is if the covenants state that the developer will turn over the properties to the owners by way of an HOA then the HOA is mandatory and you owners have to abide by those covenants and form one with bylaws and rules, a board of directors, etc. Forming a nonprofit would be recommended. My personal opinion only so I would suggest consulting an attorney with your covenants in hand.

Expired covenants are a different circumstance. If the covenants have not been renewed within 21 years and the homeowners wish to form an HOA then there must be 100% agreement from the owners.

I agree with you that there are usually folks in a neighborhood who want to control others. Personally limited control works best for my lifestyle. I do not want others telling me what I can and cannot do with my property.

Again, I think it would be worth consulting an attorney.

NaomiE (Iowa)
Posts: 20

Posted:

Quote:

Posted By BanksS on 02/18/2016 4:57 PM
Naomi,

Welcome fellow Iowan. Do your covenants state that when all lots are sold, the development will be turned over to the owners in the form of an HOA?

I agree with you that there are usually folks in a neighborhood who want to control others. Personally limited control works best for my lifestyle. I do not want others telling me what I can and cannot do with my property.

Again, I think it would be worth consulting an attorney.

Thanks for the welcome. The covenant states...Whereas, Declarants have deemed it desirable for the efficient preservation of the values and amenities in the community to create an agency to which should be delegated and assigned the power of maintaining the certain public and private areas, amenities and open spaces, administering and enforcing the covenants and disbursing the assessments and charges created by this Declaration.

The Declarant never set one up or delegated any powers to one. Also we do not have any public areas or open spaces that are owned collectively. All property is owned by individuals. Even the road in the road agreement is a nonexclusive easement for ingress egress over the servient properties.

One of the parts of the covenants is a Road Agreement that called for the establishment of a Road Association to collect dues for maintaining the road. But the road agreement part is very specific about what the road association can do and enforcing the covenants is not one of them. On this count the road agreement states that a non-profit corporation designated Road Association shall be formed and each tract owner shall pay each year an assessment determined by a 4 member board elected by the lot owners. The first board shall be elected as soon as 4 lots are sold and you become a member of the road association with voting rights when you buy a property.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Posted By NaomiE on 02/17/2016 9:36 PM

We also have one that states no obnoxious or offensive or nuisance activity shall be car

Honestly, the person who it bothers is the one who decides.

Once that occurs, the two parties either come to an agreement or take the issue before a third party with the authority to make a ruling on the issue.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By NaomiE on 02/17/2016 9:36 PM

We also have one that states no obnoxious or offensive or nuisance activity shall be car

Honestly, the person who it bothers is the one who decides.

Once that occurs, the two parties either come to an agreement or take the issue before a third party with the authority to make a ruling on the issue.

NaomiE (Iowa)
Posts: 20

Posted:

Quote:

Posted By TimB4 on 02/18/2016 7:46 PM

Posted By NaomiE on 02/17/2016 9:36 PM

We also have one that states no obnoxious or offensive or nuisance activity shall be car

Honestly, the person who it bothers is the one who decides.

Once that occurs, the two parties either come to an agreement or take the issue before a third party with the authority to make a ruling on the issue.

Once the ruling is made that something is obnoxious, offensive, or a nuisance is it now binding on all parties subject to the covenants?

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By NaomiE on 02/18/2016 9:08 PM
Once the ruling is made that something is obnoxious, offensive, or a nuisance is it now binding on all parties subject to the covenants?

Usually a ruling from a court would be binding only on those who are parties to the action.

BobD4 (up north)
Posts: 1,002

Posted:

NaomiE (Iowa) : Your answers suggest - respectfully - that your central concern is guessing how much some other homeowners may have lawful power, in order to halt or to limit your animal husbandry or whatever.

If I am incorrect about that, sorry.

But I presume that it is not yourselves but some other owners who are looking at whether setting up an Owners Association might allow your own animal activities to become targetted or limited by HOA actions. If wrong, again sorry.

You have not provided a date of the subdivision being registered nor a commencement for calculation of a 'marketable record title' type sunsetting/ deadline , 21 years etc above . ( check out several of the Florida MRTA topics here to get a feeling how that might work albeit from a different jurisdiction )

You also have not indicated whether or not the developer is a defunct corporation nor wound down etc. If instead a person or still a non-defunct corporation, this raises the possibility that even without owning any residual lots, that developer might ? / could ? be persuaded by other complainants to complete the covenants by setting up a HOA as you may fear.

You should discuss with your upcoming lawyer that generally restrictive covenants might alternatively be subject to enforcement litigation directly between benefitting/burdened end user lot owners ie covenantor v covenantee. ie couple other owners may try to personally and privately get compliance (court) order against whatever bugs them . . .

Worth listening to your upcoming professional legal advisor about those aspects.

Maybe worth also asking how the road governance entity - ? unincorporated ? - is dealing with occupiers liability issues involving that road's safe maintenance / trying to limit claims / getting liability insurance etc . . .

NaomiE (Iowa)
Posts: 20

Posted:

Quote:

Posted By BobD4 on 02/21/2016 8:51 AM
NaomiE (Iowa) : Your answers suggest - respectfully - that your central concern is guessing how much some other homeowners may have lawful power, in order to halt or to limit your animal husbandry or whatever.

If I am incorrect about that, sorry.

But I presume that it is not yourselves but some other owners who are looking at whether setting up an Owners Association might allow your own animal activities to become targetted or limited by HOA actions. If wrong, again sorry.

You have not provided a date of the subdivision being registered nor a commencement for calculation of a 'marketable record title' type sunsetting/ deadline , 21 years etc above . ( check out several of the Florida MRTA topics here to get a feeling how that might work albeit from a different jurisdiction )

You also have not indicated whether or not the developer is a defunct corporation nor wound down etc. If instead a person or still a non-defunct corporation, this raises the possibility that even without owning any residual lots, that developer might ? / could ? be persuaded by other complainants to complete the covenants by setting up a HOA as you may fear.

You should discuss with your upcoming lawyer that generally restrictive covenants might alternatively be subject to enforcement litigation directly between benefitting/burdened end user lot owners ie covenantor v covenantee. ie couple other owners may try to personally and privately get compliance (court) order against whatever bugs them . . .

Worth listening to your upcoming professional legal advisor about those aspects.

Maybe worth also asking how the road governance entity - ? unincorporated ? - is dealing with occupiers liability issues involving that road's safe maintenance / trying to limit claims / getting liability insurance etc . . .

NaomiE (Iowa)
Posts: 20

Posted:

Quote:

Posted By NaomiE on 02/21/2016 7:50 PM

Yes my concern is how much they can limit what we are doing on our property. Our covenants are very vague and we have done nothing, so far, that I did not previously talk about with the declarant before purchasing the property. It was acknowledged by all of us that the declarant didn't want to have anything to do with approving anything or disallowing anything up here. He is a farmer himself and boasted when we bought that he got this property divided up before the zoning law in our county changed so that the properties here would still be zoned agricultural. I do not want an HOA that is correct. I do not believe he is defunct in anyway and assume he could set up the HOA. I do not think he would do that unless forced to. The covenants state that if you fell someone is violating them that your recourse is to bring litigation.

Could you explain more about the road governance? We are an unincorporated non profit. We do not have liability insurance. What would this mean if someone got in an accident on our road. Would we each be liable and what does that mean versus having liability insurance as an association? We each pay an accessed fee each year for maintenance/snow removal for the road.

BobD4 (up north)
Posts: 1,002

Posted:

Quote:

Posted By NaomiE on 02/21/2016 8:07 PM

Posted By NaomiE on 02/21/2016 7:50 PM

BobD4 (up north)
Posts: 1,002

Posted:

Quote:

Posted By NaomiE on 02/21/2016 7:50 PM . . . . Could you explain more about the road governance? We are an unincorporated non profit. We do not have liability insurance. What would this mean if someone got in an accident on our road. Would we each be liable and what does that mean versus having liability insurance as an association? We each pay an accessed fee each year for maintenance/snow removal for the road.

With your lawyer you ( & other owners ) respectfully might also be well served to review whatever Iowa standard of occupiers' liability is imposed personally on you & your other unincorporated owners, as to loss or injury involving your private roads.

The issue is adequate liability insurance, and the extent your personal coverage may contribute since you say there is NO collective insurance policy. Such loss or injury could be suffered by visitors, trespassers, deliverors etc.

( In my own jurisdiction loss or injury suffered by condo owners on condo common elements, is judicially also treated as an 'occupiers liability' exposure even though owners are not directly within the visitor class. Signage or entry for crime in my jurisdiction lowers but does not eliminate liability for injury or loss )

That review would worthwhile address just how much coverage should have been maintained by an incorporated road owning & maintaining body. But since there is no common policy purchased by your unincorporated group, then personally just how much coverage should an individual owner maintain ?

Expect to find that "joint & several liability" may be the default for an unincorporated common element/common road occupier if such - not technically owning the road - cannot buy insurance.

An injured or loss-suffering party may then be able to chose the deepest private pockets to be made whole again from amongst your group.

Your lawyer may recommend that you annually confirm such in writing to your own insurer and get its specific extension of coverage ( as I do - that my own unincorporated HOA exposes myself with others jointly & severally to claims involving our private roads & huge lakefront, all owned as tenants in common. )

Hiring road maintainers ? My own experience with hired rural, smalltown, even urban smallscale private road maintainers, has been that they may have neither coverage for clients, or not enough to back up indemnity that they claim they will bring to shield those who hire them . . .

Hope this helps. Others at this Forum will likely be quite willing to share lots of valuable experience with private road liability issues.

BobD4 (up north)
Posts: 1,002

Posted:

The various comments above should be read in light of the same OP's topic "Road association overreach"
http://www.hoatalk.com/Forum/tabid/55/forumid/1/tpage/1/view/topic/postid/209126/Default.aspx#209221

Her later research may indicate an incorporated status.

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