Defects in legal documents

TomR4 (Indiana)
Posts: 6

Posted:

A friend lives in a subdivision with a HOA. He expressed concern that the board of the HOA were not aggressive enough in enforcing the "covenants". He asked for my advice.

I suggested that his best options were either to try and elect a new board that had more interest in enforcing the "covenants" or taking the offenders to court himself. I suggested that before taking any action that he should review the legal documents (Declaration of Covenants, Articles of Incorporation of the HOA, Bylaws of the HOA, and other relevant documents). My friend seemed clueless about legal documents, so I offer to show him how/where to obtain the documents and explain how they related.

My friend's subdivision was started about 15 years ago during the real estate boom. It was developed in three sections by a LLC. The Declaration of Covenants was executed and recorded soon after the plat for section one was recorded. The Declaration was for section one (the only section that was platted at the time), but contained language that sections two and three would also be covered by the covenants when the plats were recorded. The declaration stated that a HOA with a specific name would be incorporated to manage the common areas, enforce the covenants, handle financial matters, etc. The Declaration contained a statement that the Developer was the fee simple owner of the land in all three sections. I'm not a lawyer, but the language seemed reasonable. The developer apparently did not survive the economic downturn, and is now out of the picture.

A search of the Secretary of State's records did not show businesses with the names listed in the Declaration of Covenants. A HOA was incorporated, but it's name was slightly different than the name specified in the Declaration of Covenants. The name of the developer LLC registered with the Secretary of State was spelled slightly differently that what was on the recorded Plat and Declaration of Covenants.

A search of the County Recorder's records showed the name of the deeds (when the developer purchased the raw land and when lots were sold ) matched the name on the Secretary of State's records---not the name on the recorded Plat and Declaration of Covenants. There were multiple deeds relating to the developer's purchase of the raw land. The dates on the deeds indicated that the developer purchased that land which was eventually platted as sections two and three AFTER the declaration of covenants was executed and recorded.

My friend lives in section two of the subdivision. The recorded "covenants" did not include those which my friend believed were being violated. I presume that my friend incorrectly identified HOA rules as "covenants". The recorded covenants did not give the HOA broad authority to make rules, but did give authority to make rules related to the enforcement of enumerated covenants. One such covenant prohibited nuisances on any lot---with the board having the sole authority to determine what constituted a nuisance. (e.g., the board could decide that parking of boats and/or trailers in driveways was a "nuisance". That would seem to justify a rule the prohibited parking of boats and trailers in driveways.)

Has anyone had experience with similar defects? So far the defects do not seem to have hindered the HOA's ability to collect dues to pay for common area maintenance, street lights, snow plowing, etc. However, if the HOA is involved in some legal action at a future time, the opposing party might discover the defects and claim that the covenants are invalid and the HOA has no authority. Is there a PRACTICAL method to correct these defects? (I understand that creating new covenants is a nearly impossible task.)

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By TomR4 on 12/30/2016 7:57 AM
A friend lives in a subdivision with a HOA. He expressed concern that the board of the HOA were not aggressive enough in enforcing the "covenants". He asked for my advice.

I suggested that his best options were either to try and elect a new board that had more interest in enforcing the "covenants" or taking the offenders to court himself. I suggested that before taking any action that he should review the legal documents (Declaration of Covenants, Articles of Incorporation of the HOA, Bylaws of the HOA, and other relevant documents). My friend seemed clueless about legal documents, so I offer to show him how/where to obtain the documents and explain how they related.

Not a good way to start. Your friend wants strict enforcement of restrictions without knowing what those restrictions are.

Quote:

My friend's subdivision was started about 15 years ago during the real estate boom. It was developed in three sections by a LLC. The Declaration of Covenants was executed and recorded soon after the plat for section one was recorded. The Declaration was for section one (the only section that was platted at the time), but contained language that sections two and three would also be covered by the covenants when the plats were recorded. The declaration stated that a HOA with a specific name would be incorporated to manage the common areas, enforce the covenants, handle financial matters, etc. The Declaration contained a statement that the Developer was the fee simple owner of the land in all three sections. I'm not a lawyer, but the language seemed reasonable. The developer apparently did not survive the economic downturn, and is now out of the picture.

A search of the Secretary of State's records did not show businesses with the names listed in the Declaration of Covenants. A HOA was incorporated, but it's name was slightly different than the name specified in the Declaration of Covenants. The name of the developer LLC registered with the Secretary of State was spelled slightly differently that what was on the recorded Plat and Declaration of Covenants.

A search of the County Recorder's records showed the name of the deeds (when the developer purchased the raw land and when lots were sold ) matched the name on the Secretary of State's records---not the name on the recorded Plat and Declaration of Covenants. There were multiple deeds relating to the developer's purchase of the raw land. The dates on the deeds indicated that the developer purchased that land which was eventually platted as sections two and three AFTER the declaration of covenants was executed and recorded.

The law generally recognizes that not all documents are created precisely and refers to misspellings and other errata as "scrivners' errors." Unless a party can prove that he was materially harmed in some way by the error the courts will usually treat it as if it does not exist. The Declarant's statement that he owned all three sections even though he did not acquire title until a later date is likewise a harmless error. It is a common practice for developers to enter into trust agreements with a third party to develop property and it is not always easy to find a record of those agreements. But even if the developer's statement was not technically true at the time it was made it would be up to your friend to prove that he was somehow harmed.

Quote:

My friend lives in section two of the subdivision. The recorded "covenants" did not include those which my friend believed were being violated. I presume that my friend incorrectly identified HOA rules as "covenants". The recorded covenants did not give the HOA broad authority to make rules, but did give authority to make rules related to the enforcement of enumerated covenants. One such covenant prohibited nuisances on any lot---with the board having the sole authority to determine what constituted a nuisance. (e.g., the board could decide that parking of boats and/or trailers in driveways was a "nuisance". That would seem to justify a rule the prohibited parking of boats and trailers in driveways.)

The courts have ruled consistently that restrictions on the use of property must be stated clearly and without ambiguity. When conditions are enumerated, the courts have also held that additional conditions may not be added unless expressly permitted. The HOA would normally have no power to prohibit parking a boat if the CC&R's do not prohibit it. Claiming that the boat is a nuisance is over-reaching. The courts - and not the board - would have final authority over nuisances.

Quote:

Has anyone had experience with similar defects? So far the defects do not seem to have hindered the HOA's ability to collect dues to pay for common area maintenance, street lights, snow plowing, etc. However, if the HOA is involved in some legal action at a future time, the opposing party might discover the defects and claim that the covenants are invalid and the HOA has no authority. Is there a PRACTICAL method to correct these defects? (I understand that creating new covenants is a nearly impossible task.)

Some documents may be restated to correct scrivners' errors. The Board of Directors could probably record a restated Declaration but why bother? Amending the plat fifteen years after-the-fact would be interesting as it would likely require a licensed surveyor to do the work. As a practical matter, what was done is done. It has gone on for years without anyone expressing concern or challenging the documents. To many of us, this would be a dead issue.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By TomR4 on 12/30/2016 7:57 AM

My friend lives in section two of the subdivision. The recorded "covenants" did not include those which my friend believed were being violated. I presume that my friend incorrectly identified HOA rules as "covenants". The recorded covenants did not give the HOA broad authority to make rules, but did give authority to make rules related to the enforcement of enumerated covenants. One such covenant prohibited nuisances on any lot---with the board having the sole authority to determine what constituted a nuisance. (e.g., the board could decide that parking of boats and/or trailers in driveways was a "nuisance". That would seem to justify a rule the prohibited parking of boats and trailers in driveways.)

1.
Instead of "legal documents," the phrase you want to use here is "governing documents." In HOA parlance, "governing documents" refer to the Declaration, Bylaws, "Covenants, Conditions and Restrictions," "Rules & Regulations" and similar.

2.
I concur with Larry that the courts are not going to throw out covenants et cetera because of immaterial mistakes. To correct the Declaration, covenants, et cetera, look at their respective sections on amending. HOAs are often successful in getting the minimum vote to make such minor changes, since disputes over these changes are unlikely.

3.
I also agree with Larry that while the governing documents may seem to say a board can do anything it wants, case law is clear that this is not so. Some covenants are ambiguous. When this happens, the courts want to see "fair and reasonable." "Nuisance" has a pretty formal legal definition. Statutes often define it. Here's one definition that might be a good starting point for boards or HOA members bothered by some activity on HOA property:

Nuisance
The unreasonable, unwarranted and/or unlawful use of property, which causes inconvenience or damage to others, either to individuals and/or to the general public. Nuisances can include noxious smells, noise, burning, misdirection of water onto other property, illegal gambling, unauthorized collections of rusting autos, indecent signs and pictures on businesses and a host of bothersome activities. Where illegal they can be abated (changed, repaired or improved) by criminal or quasi-criminal charges. If a nuisance interferes with another person's quiet or peaceful or pleasant use of his/her property, it may be the basis for a lawsuit for damages and/or an injunction ordering the person or entity causing the nuisance to desist (stop) or limit the activity (such as closing down an activity in the evening).

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By TomR4 on 12/30/2016 7:57 AM

My friend lives in section two of the subdivision. The recorded "covenants" did not include those which my friend believed were being violated. I presume that my friend incorrectly identified HOA rules as "covenants". The recorded covenants did not give the HOA broad authority to make rules, but did give authority to make rules related to the enforcement of enumerated covenants. One such covenant prohibited nuisances on any lot---with the board having the sole authority to determine what constituted a nuisance. (e.g., the board could decide that parking of boats and/or trailers in driveways was a "nuisance". That would seem to justify a rule the prohibited parking of boats and trailers in driveways.)

1.
Instead of "legal documents," the phrase you want to use here is "governing documents." In HOA parlance, "governing documents" refer to the Declaration, Bylaws, "Covenants, Conditions and Restrictions," "Rules & Regulations" and similar.

2.
I concur with Larry that the courts are not going to throw out covenants et cetera because of immaterial mistakes. To correct the Declaration, covenants, et cetera, look at their respective sections on amending. HOAs are often successful in getting the minimum vote to make such minor changes, since disputes over these changes are unlikely.

3.
I also agree with Larry that while the governing documents may seem to say a board can do anything it wants, case law is clear that this is not so. Some covenants are ambiguous. When this happens, the courts want to see "fair and reasonable." "Nuisance" has a pretty formal legal definition. Statutes often define it. Here's one definition that might be a good starting point for boards or HOA members bothered by some activity on HOA property:

Nuisance
The unreasonable, unwarranted and/or unlawful use of property, which causes inconvenience or damage to others, either to individuals and/or to the general public. Nuisances can include noxious smells, noise, burning, misdirection of water onto other property, illegal gambling, unauthorized collections of rusting autos, indecent signs and pictures on businesses and a host of bothersome activities. Where illegal they can be abated (changed, repaired or improved) by criminal or quasi-criminal charges. If a nuisance interferes with another person's quiet or peaceful or pleasant use of his/her property, it may be the basis for a lawsuit for damages and/or an injunction ordering the person or entity causing the nuisance to desist (stop) or limit the activity (such as closing down an activity in the evening).

KerryL1 (California)
Posts: 14,550

Posted:

Both Larry's & Augustin' replies make a lot of sense, Tom

Say, Augustin, can you provide the source of the nuisance definition? It might helpful here in our HOA at this time. Thanks

AugustinD
Posts: 5,144

Posted:

Hi Kerry, the definition I quoted is from http://dictionary.law.com/Default.aspx?selected=1358 . I would call it an introduction to the concept.

This California statute http://law.justia.com/codes/california/2011/pen/part-1/369a-402c/[370.]/ defines "public nuisance" as:

"Anything which is injurious to health, or is indecent, or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property by an entire community or neighborhood, or by any considerable number of persons, or unlawfully obstructs the free passage or use, in the customary manner, of any navigable lake, or river, bay, stream, canal, or basin, or any public park, square, street, or highway, is a public nuisance."

I see California has at least two criminal statutes on the subject:
http://law.justia.com/codes/california/2011/pen/part-1/369a-402c/373a
http://law.justia.com/codes/california/2011/pen/part-1/369a-402c/372

I think you should also check your city's municipal code. My city has an ordinance prohibiting both public nuisance and, interestingly, private nuisance. My city's ordinance elaborates, as best as can be done, about what "nuisance" is.

I started studying this when I became aware of tree roots at my condo causing sewer line backups. I found court cases often refer to such instances as "nuisances," often with success for the party whose building foundation, piping et cetera was being damaged by a neighbor's tree roots crossing a property line. It makes sense to me. At my conod, I started talking about how the situation appears to be as much a nuisance situation as any tree root lawsuit I have read about. To interested members I have quoted the city ordinance and my state's statute on the subject, wondering if the condo was in violation of these. Even if no legal action is taken, I think such talk is consciousness-raising that might help remind people of what their responsibilities are to their neighbors, and the law does take nuisances seriously, so all HOA members and boards should as well.

My condo HOA's Declaration also uses the word "nuisance" in a few places but leaves it up to the board to define. Which is fine. The board has to be reasonable and fair on the matter, according to case law.

SheliaH (Indiana)
Posts: 6,964

Posted:

As others have said, the errors in the paperwork seem to be minor – I don’t know if a judge would say the HOA didn’t have authority to do something because of misspellings in the documents filed with the secretary of state vs. the county recorder.

How is it that your friend has lived in this community for 15 years and doesn’t seem to have a handle on how the HOA operates? I understand the documents may be sketchy – apparently, he brought his home the same time I did (2001) and frankly there wasn’t much HOA specific law at that time (I found that out after joining my own HOA board). In 2009, the state legislature enacted a law that addressed some issues and it’s been amended in a few spots since then.

However, this may not help your friend because most of it applies to HOAs established on or after July 1 2009 (unless a majority of homeowners in an established community vote to run its HOA according to the statute). If you and/or your friend wants to read the law anyway, the state legislature has a website and it has links to the Indiana Code – you’ll want to read IN 32-25-5.

In the meantime, has your friend expressed his concerns with the board? If so, what was the response? Has he read board meeting minutes to see what the community’s current issues are? Rules enforcement is important, but it may be finances are taking up most of the board’s attention.

Since the board can’t do everything (they have lives outside the association, remember?), it would appear it could use a rule enforcement committee that could review the current rules (or lack thereof) and make recommendations to the board. If a committee already exists, your friend should consider volunteering for it – if there isn’t one, perhaps he and a few like-minded neighbors could offer their services and the board could charter the committee.

This committee could start by identifying what the major issues are. A homeowner poll would help to see what people are really bugged about (late night noise, dog poop, etc.) From there, do some brainstorming on what rules need to be enacted or amended to deal with those issues, and consider how they’ll be enforced and who will enforce them, etc. All of this is more involved, I know, but it’s usually easier to offer solutions to the problem rather than running to court. But that’s just me.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

TomR4 (Indiana)
Posts: 6

Posted:

Thanks for the quick responses. They are very helpful.

For clarification, I reviewed all the documents that I could find online without paying a fee. Since I'm not a member of my friends HOA, I didn't have access to its bylaws, minutes of meetings, rules, etc. I did have access to some deeds and other non-governing documents.

My friend is a geezer like myself. He has little recollection of what documents he may have seen/received over a decade ago. The "covenants" to which he referred was a several page list of do's and don'ts's given to him by his builder many years ago. I believe that the list was titled "covenants", but it was not the formal Declaration of Covenants filed with the county recorder.

The HOA has apparently been less than active for many years. It was obviously controlled by the developer during it's first few years. I understand that there were several years during which no meetings were held and other years when there was not a quorum at the meetings. The board has not been responsive in recent years and my friend would like to change that. It's comforting to know that the courts would view the deficiencies in the governing documents as scrivener's errors.

SheliaH (Indiana)
Posts: 6,964

Posted:

If the board hasn't been responsive, it may be because no one's brought up any problems of any kind. Sometimes people go out of sight and out of mind if assessments are being paid and services are being provided. Unfortunately, this type of indifference can lead to trouble when rules aren't being enforced and are causing problems - no one knows who to complain to, and even if they did, it may be unclear what the board can/should do.

Leaving aside the rules enforcement issue for a moment, your friend needs to find out what the HOA's status is. If he's paying association fees, those have to be going somewhere and paying for something - start by contacting the management company, if there is one. The management company works for the board, so someone has to be giving the property manager instructions. Ditto if the community is self-managed - for example, who hires the snow removal people?

Has your friend talked to any neighbors to see what they know about the HOA, if anything? He may find he'll need to talk to a lot of people to find out, and if NO ONE has a clue, it'll be time for someone (like your friend) to call a communitywide meeting where people can brainstorm what they want to do about the HOA. If you want to dissolve it, it won't be as simple as everyone stopping to pay fees - you'll need to check if the HOA has any common areas (e.g. streets) and figure out what to do with them, because someone will have to be responsible for maintenance. If you want the streets to be turned over to the city, that may be the start of a long and not at all cheap process.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius