Attorney says active Declarant can change CCRs at any time

I looked at the new, 2019 law (Montana Code 70-17-901) at https://leg.mt.gov/bills/mca/title_0700/chapter_0170/part_0090/section_0010/0700-0170-0090-0010.html

Discussion also appears at:
https://independentamericancommunities.com/2019/04/19/montana-hoa-legislation-protects-private-property-rights/.

First, it's true that the Declarant typically has the right to amend the CC&Rs at any time //within reason//. However, in general for any amendment that, once recorded, might yield a violation on account of some expensive xyz already in place, where considerable expense or loss would be necessary to eliminate xyz, grandfathering is usual.

Second, in my opinion the new law does apply here and the Declarant cannot impose restrictions more onerous than the restrictions in place when owners first bought. I say this because of the 2019 law's definition of what a homeowners' association is.

Third, the Declarant's attorney is obliged to advocate strictly on behalf of his/her client. If the Declarant wants to argue that the new law does not apply because of ____ (fill in the blank), then the attorney will do so. Attorneys often act as well-paid prostitutes, and this is usually entirely legal.

Fourth, you have to get your own attorney to tell the Declarant's attorney to buzz off.

Fifth, I advise that owners read MCA 70-17-901 carefully. Take note of the steps current owners must take to preserve their rights to legally disregard the more onerous restrictions.

Sixth, with only one lot left, what is this Declarant up to? Hmm.

It may be helpful to know what prompted the legislature to pass the bill in 2019. That may help determine whether or not the Declarant also must abide by the law. (I'm assuming that the bill wasn't vetoed and that it did become law.)

I'll just note that if the law was intended to include the Declarant, then it would prevent Declarants from reacting to economic hardship. While this doesn't happen all the time, back during the Great Recession many developers had to change course in communities that were partially completed. They changed the types of homes they built, re-platted communities for smaller lots, changed or eliminated plans to build amenities, sold off lots altogether, etc. Some communities experienced significant changes from what the original buyers believed they were buying.

So it would not surprise me at all if the new law does not apply to Declarants. The entire new home building industry would have howled if their hands had been tied in this way, and I'd have expected lawsuits challenging the law.

(That said, I wonder why the Declarant is holding onto one lot. There are carrying costs involved. Is he planning to build a house for himself? The new home builder that I work for wants to finish their communities, close the books, and move on to other projects.)

In other words, if some new and innovative use of property comes along that the membership unanimously agrees they don't want, they can't amend their CC&Rs to prevent this from happening to them or future owners.

I can think of at least one example off the top of my head. Some years from now, after unrelenting droughts, a few enterprising souls want to install some new technology on their property that allows them to capture whatever rain falls on their property. Or that pulls water out of the ground for themselves. The neighbors howl - they want to amend the CC&Rs to prevent Good ol' Joe from hogging all the water for himself. Nope, no can do, because the CC&Rs in effect when Good ol' Joe bought his home don't say that he can't do this.

The other big problem is that members don't buy homes at the same time. So "more onerous restrictions" has a time- and location-dependent definition - which seems contradictory to the notions of covenants running with the land and applying to all members of an association.

Cathy's Rant #3: nobody thinks about how their decisions will play out over time.

I have not turned up any history on this 2019 Montana law that refers to Declarants. But this interesting (to me) history does come up.

The Red Lodge, Montana subdivision had covenants that permit short term rentals (STRs). Someone bought a home in Red Lodge with the express intention of using it, in part, as a VRBO. Subsequently the owners voted to amend the CC&Rs. The amendment completely banned STRs. The owner lawyered up.

Supposedly this owner was or is in litigation with the HOA over this. The owner and her lawyer wrote the proposed legislation and I guess helped get it passed.

Of note: Montana courts appear to have taken the stand that even VRBO use is "residential use" and not "commercial use." In 2020 the Montana Supreme Court even quoted prior court rulings on this subject:

As the Montana Supreme Court said almost two decades ago, "...if it looks like a duck, walks like a duck and quacks like a duck, it must be a duck. We would only add that it must be a duck even if it is holding a piece of paper that says it is a chicken." Wild v. Fregein Construction (2003), 315 Mont. 425, 63 P.3d 855, ¶31. No matter how the Plaintiffs try to characterize the use, the fact is Brown Drake's home is used as a dwelling by everyone who uses it. There is no difference between a family of four renting the property for a week to fish and Cindi
Bratvold's knitting group using the property for a week. The essential nature of the use remains the same. The semantics of how the persons may be labeled by others (i.e. "tenant" or "friend") do not change the character of the use. A rose by any other name is still a rose. Residential use by a friend or residential use by a shortterm tenant is still residential use. The use is allowed in either case."

See https://juddocumentservice.mt.gov/getDocByCTrackId?DocId=327148 I have not studied this 2020 Montana Supreme Court decision at length. So far it appears to favor landlords heavily, but with what I think many of us consider good law: Changing the allowed uses of a home such that this has a heavy financial impact to an owner is not fair.

The Community Associations Institute (CAI) vehemently opposed the Montana bill (before it became law) and blubbered on and on a bunch of nonsense and outright lies (IMO). See https://www.globenewswire.com/en/news-release/2019/04/03/1796514/0/en/MONTANA-STATE-LEGISLATURE-MOVES-BILL-THAT-WILL-CREATE-CHAOS-LAWSUITS-AND-INCREASE-COSTS-ON-RESIDENTS-IN-CONDOMINIUM-AND-HOMEOWNERS-ASSOCIATIONS.html

Note that the 2019 law expands on exactly what sort of amendments are at risk for being nullified by an owner, as follows:

"Types of use" means the following lawful types of use of the real property:

(i) use for residential, agricultural, or commercial purposes, unless the use was impermissible according to the written or recorded restrictions;

(ii) the ability to rent the real property, including the land and structures on the real property, for any amount of time; and

(iii) the ability to otherwise develop the real property in accordance with applicable federal, state, and local laws, ordinances, and regulations, unless the ability was impermissible according to the written or recorded restrictions.

So the board wants the Declarant to further restrict CCRs? Presumably the board wants this to get around the law that says "A homeowners' association may not enter into, amend, or enforce a covenant, condition, or restriction in such a way that imposes more onerous restrictions …"

However, notice that the laws says that the HOA "may not … enforce a covenant..."

So even if the Declarant does further restrict your CCRs, the HOA may not enforce them. So going to the Declarant does not do any good if the new restrictions cannot be enforced.

Notice (in the law) that this situation primarily affects current owners. Future owners will be bound by new restrictions (for the most part), so you can change your documents and it will apply to future owners.