Badly Written Covenants may leave the Association with little to no authority. This may be the case here?

Started by TimB4 • 16 replies • 297 views

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TimB4 (Tennessee)
Posts: 21,062

Posted:

As some of you are aware, I volunteered to serve on the board of my new HOA (served for 8+ years with my previous HOA).

The Declarant/Developer is no longer in the picture.

One of the things the Association does (like most Associations) is approve building plans and exterior changes.

However, the covenants specify:

Architectural Control: Prior to construction, house plans and all other improvements must be submitted in duplicate to the Developer, and or its heirs and assigns, for this review. The Developer, and or its heirs and assigns, shall have sole and exclusive right to approve plans for aesthetic reasons, not structural.

Later in the document:

An Association shall be formed with all residences [lots] belonging to said association. The Association is for the purpose of maintaining common areas, easements and right of way designated by the developer for all residents use and enjoyment, such as, but not limited to, the entrance sign and landscaped areas, including lighting, irrigation.

It should also be noted that the declaration also allows the HOA to enforce the covenants.

The Association is of the opinion that they are the assigns of the Developer.
I have asked the question, what is that opinion based upon. However, I do not have their response yet.

I've done some research. see:

CAN DECLARANT’S RIGHTS BE ASSIGNED? TN attorney blog.
Condominium Statutes, Tennessee Code § 66-27-404, addresses this but it is not directly applicable to HOAs. However, I expect it would be considered by the courts. (the actual statute is under lexis nexus).

I am of the opinion, but welcome yours

Absence of any language within the Covenants giving the Association authority, if there is no written document or legal opinion giving the Association declarant/developer rights, does the Association have the authority to review and approve/deny building plans or modification (aka exterior changes)?

I'm not talking about enforcement, I'm asking about approving/denying plans/exterior changes prior to enforcement actions.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By TimB4 on 10/11/2023 2:39 PM
The Association is of the opinion that they are the assigns of the Developer.

I read your nice, Tennessee specific citation. I also did some other reading on this recently.

I continue to believe the Association is not "the assigns" of the developer.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Do you Covenants have anything to say about an ARC and its power? If so, this my grant the association the authority to control

CathyA3 (Ohio)
Posts: 6,299

Posted:

Also look to see if there is are sections that addresses exterior modifications to homes or homeowner's responsibilities for maintaining their home.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By JohnC46 on 10/12/2023 9:49 AM
Do you Covenants have anything to say about an ARC and its power? If so, this my grant the association the authority to control

Unfortunately, no.
Zero mention of an architectural review board/committee at all.

Again, very very poorly written document

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By CathyA3 on 10/12/2023 11:36 AM
Also look to see if there is are sections that addresses exterior modifications to homes or homeowner's responsibilities for maintaining their home.

Nothing.

Cathy, I'm willing to share if you want to take a look.
Email me: [email protected]

TimB4 (Tennessee)
Posts: 21,062

Posted:

Update: The Board is of the understanding that the Developer verbally assigned their rights.
Fortunately, the developer is still in business. I'm trying to set up a meeting to see if I can get a memo certifying this verbal approval.

Then, I'll attempt to have the covenants amended to replace everywhere it says developer with Association.

Best I can come up with.

KerryL1 (California)
Posts: 14,550

Posted:

To whom did the developer "assign their rights?"

TimB4 (Tennessee)
Posts: 21,062

Posted:

In writing - to nobody that I am aware of.

Verbally - I am told - to the Association.

My understanding is that the developer wanted nothing to do with the Association or approving/disapproving plans. However, the covenants required an Association to be formed. Therefore, to my understanding, the owners formed one, incorporated it and ran it from the beginning.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By TimB4 on 10/12/2023 2:30 PM
Update: The Board is of the understanding that the Developer verbally assigned their rights.

I am going to be glib and say it: That's hysterical.

I am aware that certain oral contracts can be enforceable. But I believe the evidence that is necessary to declare an oral agreement to be a bona fide "contract" takes a lot.

Quote:

Posted By TimB4 on 10/12/2023 2:30 PM
Fortunately, the developer is still in business. I'm trying to set up a meeting to see if I can get a memo certifying this verbal approval.

Like a witness's statement? As in the developer says, "In approximately the year 2007, while the Declarant (the xyz LLC) was still legally in control but as turnover was under way, the Declarant declares the HOA to be the Declarant's assigns."

Even if this statement was in writing back in say 2007, I think it is too vague to count. I thought that, when rights are assigned, the rights are supposed to be delineated and not general.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By ElleN on 10/12/2023 4:21 PM

Even if this statement was in writing back in say 2007, I think it is too vague to count. I thought that, when rights are assigned, the rights are supposed to be delineated and not general.

Additionally, to my understanding, recorded with the county clerk in TN.

I'm trying to come up with something if someone actually reads the documents and discovers what I have discovered.
Fortunately, it is common for HOAs to review and approve/disapprove plans and exterior changes and most people go with what is common vs. verifying.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By TimB4 on 10/12/2023 5:11 PM

Additionally, to my understanding, recorded with the county clerk in TN.

This more than rings a bell, from skimming through the case law.

I mean, otherwise, the board and former declarant are just freely amending, though without following the procedures for amending, and so the amendments are not enforceable.

How is someone buying a lot and home at this HOA supposed to know whether the HOA can require ARC applications et cetera, except by reading the recorded covenants and all else that is recorded?

On the positive side, I will toss this in: A long history of doing xyz, presumably as part of a "contract," with no one objecting, can make xyz a contractual term. It's called 'amendment by acquiescence' or similar. Maybe this is a good thing for now.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By TimB4 on 10/12/2023 2:26 PM

Posted By JohnC46 on 10/12/2023 9:49 AM
Do you Covenants have anything to say about an ARC and its power? If so, this my grant the association the authority to control

Unfortunately, no.
Zero mention of an architectural review board/committee at all.

Again, very very poorly written document

Tim

While there may not be reference defining as ARB is there reference to the BOD maintaining "community standards"?

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By JohnC46 on 10/12/2023 10:51 PM

Tim

While there may not be reference defining as ARB is there reference to the BOD maintaining "community standards"?

No.

Other then what I posted above about the purpose of the Association, the only other reference to the Association is:
Assessments of a set amount are to be paid to the Association.
The Association may enforce the covenants.

That is all.

JaneL2 (Texas)
Posts: 175

Posted:

I don't know if this would help but, maybe it can answer some questions

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TimB4 (Tennessee)
Posts: 21,062

Posted:

Thanks Jane.

BillD16 (Texas)
Posts: 974

Posted:

How about considering the Association as an "heir"?

I've no idea whether there's any law to support it, but I'm not finding it a huge stretch to consider the Association as an "heir" of the Developer. Feel free to ignore me - I'm just bringing it up because I haven't seen anyone else do it yet, and the text says "heirs and assigns", not just "assigns".

Bill

HOA Board ex-President
Austin, Texas USA

“You can’t put too much water in a nuclear reactor”

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