September 2012
In This Issue:
Title to Unexercised Declarant Rights Passes to Association
Renovations Violate Restrictive Covenants
Injury Claim Not Barred by Snow and Ice Removal Act
Officers Must Be Elected by Members’ Weighted Vote
Declarant Retains Control of Unassigned Parking
POA Can’t Collect Assessments to Maintain Rec. Facilities
Out Parcel Owner Proves Easement over HOA’s Private Roads
Owner Not Entitled to Examine Election Ballots
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Title to Unexercised Declarant Rights Passes to Association

Alessi v. Bowen Court Condominium, No. 2010-436-Appeal, R.I. Supr. Ct., June 4, 2012

Covenants Enforcement: A purchaser who acquired a time-restricted right to exclude his parcel from a condominium project failed to exercise that right and therefore forfeited title to the property, which passed to the condominium association.

Bowen Court Associates (declarant) created Bowen Court Condominium (association) in January 1989 by recorded declaration. The declarant submitted approximately 6.7 acres of land in East Providence, R.I., to the condominium project. In addition, the declarant retained the right to withdraw a portion of the land from the condominium for 10 years.

In 1990, the declarant obtained a mortgage from Rhode Island Central Credit Union, securing its interest in the withdrawable condominium property. The Credit Union foreclosed on the property in June 1992. Shortly thereafter, the Credit Union transferred its interest in the property to the Rhode Island Depositors Economic Protection Corporation (DEPCO). In January 1994, Joseph Alessi purchased DEPCO’s interest in the property for approximately $52,000.

Significantly, none of the interested parties—the Credit Union, DEPCO or Alessi–sought to withdraw the property from the condominium or otherwise exercise any declarant rights after acquiring title to the property.

In January 2003, Alessi sued the association, seeking a judgment to quiet title (an action to award the property title to the plaintiff) on the withdrawable property. The association counterclaimed, seeking to quiet title in its favor. Both parties filed motions for summary judgment (a determination made by a court without a trial).

Alessi contended the association erroneously refused to exclude the withdrawable land from the condominium, in accordance with the Rhode Island Condominium Act (act). He asserted that, pursuant to the act, after a foreclosure “the person taking title thereto has the right to require from the association, upon request, an amendment excluding the real estate from the condominium.” Therefore, he had retained the right to exclude the withdrawable land from the condominium despite the fact that the 10-year period for doing so had expired. Alessi argued that his reservation to withdraw the property derived from the mortgagee’s statutory right (a right authorized by a statute or law) to require exclusion upon foreclosure, not from the declarant’s 10-year reservation period. He alleged that rights of a mortgagee upon foreclosure are different from declarant rights. He argued that the act doesn’t mention anything about time limitations on a mortgagee’s right to demand that the property be excluded.

The trial court ruled in the association’s favor, noting that the act only applied to “withdrawable real estate” and the parcel in question was withdrawable for only a specific period of time: 10 years after the declaration was recorded, which had already passed. For a third party to be awarded special declarant rights, that party must record an instrument (a written legal document) providing evidence that those rights had been transferred. Because neither Alessi nor his predecessors in title had requested for special declarant rights, as required by the act, the parcel ceased to be withdrawable real estate, and any right to withdraw the parcel terminated at the time of the foreclosure sale. Alessi appealed.

On appeal, Alessi contended that the deed from the declarant to the Credit Union granted not only a lien interest in the property, but also a statutory right to require the land’s exclusion from the condominium after foreclosure. He argued that the association’s interpretation of the statute erroneously imposed a 10-year limitation on the right created by the act. He asserted the trial court erred in refusing to infer that the act created a separate statutory right for title-holding mortgagees (apart from a declarant’s developmental rights) which, he argued, allowed him to exclude the parcel from the condominium at any time.  

It was undisputed that neither the Credit Union, upon foreclosure, nor Alessi, when he purchased the property, exercised the right to exclude the parcel. Because Alessi did not seek to exclude the parcel until after the 10-year limitation period had passed, the appeals court held that under the terms of the declaration the parcel was no longer withdrawable.

The court noted that the right to exclude the property expired no later than January 1999. Alessi purchased the property in 1994 and offered no explanation for his failure to exclude the parcel in the nearly five years between the time he took title and the right to withdraw expired.

The court was satisfied that its decision struck the appropriate balance between the interests of the condominium unit owners—who had a right to rely on the 10-year limitation to withdraw the real estate—and the successor to the mortgagee, Alessi, who could have required the association to exclude the parcel but failed to exercise his rights in a timely fashion.

The court observed that because the act is a consumer protection vehicle, it has a beneficial purpose of protecting the expectations of unit owners. An unlimited right to exclude real estate from the condominium would frustrate the justified expectations of the unit owners, who reasonably relied on the 10-year limitation to withdrawal rights set forth in the declaration.

The appeals court affirmed the trial court’s judgment.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

Renovations Violate Restrictive Covenants

Cathedral Hill Tower Condominium Association v. Garbar, No. A124711, Calif. App. Ct., June 29, 2012

Architectural Control/Covenants Enforcement: A California appeals court found that renovations that encroached on a condominium’s common area violated its restrictive covenants.

Larisa Garbar purchased a unit in Cathedral Hill Tower—a 25-story condominium tower in San Francisco, Calif.—in 2001 and began extensive renovations, including installing hardwood floor in the unit and ceramic tile on the balcony. She removed the original ceiling and constructed a raised architectural ceiling.

Cathedral Hill Tower Condominium Association (association) notified Garbar that she must stop work immediately and submit her renovation plans to the board for review, as required by the condominium declaration. Subsequently, the board notified her that it appeared her new ceiling might encroach on the common area.

Garbar moved into the unit in November 2001, and the parties continued to discuss the encroachment issue, as well as Garbar’s complaints that the mechanical room above her generated excessive heat and noise in her unit. In 2003, a dispute arose regarding the association’s plan to waterproof the building.

In 2004, the association sued Garbar, alleging she violated the declaration by refusing to grant the association access to her unit for the waterproofing work and by failing to obtain board approval for her renovations. Garbar filed a cross-complaint against the association for damages, alleging nuisance, negligence, invasion of privacy and intentional infliction of emotional distress.

Garbar claimed that the board failed to consistently enforce the renovation approval requirement, and its enforcement action against her was selective and arbitrary. She denied encroaching upon the common area, claiming her unit’s boundary extended to a concrete slab that separated the unit from the floor above.

The trial court concluded that the area above the original sheetrock ceiling in Garbar’s unit was common area and by removing that ceiling and extending the interior of her unit upward, she had encroached on the common area. It also concluded that approval was required for Garbar’s renovations and she had failed to obtain it. The court found no evidence that the board was aware of work in the common area until after August 2001, and no evidence that Garbar was misled by the association. The court denied the association’s request for an injunction (a court order mandating a party to do something) requiring Garbar to restore the original ceiling, but held that the association could use the common area above the pre-existing ceiling for maintenance, repair, and utility or other installations. Further, if Garbar’s work destroyed or altered the common area’s structural ceiling, the court held that Garbar was responsible for any resulting damage. The court did not order Garbar to remove her hardwood floors. Both parties appealed.

On appeal, Garbar argued that the trial court erred by prohibiting the re-installation of tile on her balcony. The association argued that it had the authority to enforce the restrictive covenants relative to the waterproofing project.

The association provided evidence that the condominium sustained damage over the years from water intrusion. In 2003, the unit owners approved a $3 million waterproofing project and retained a general contractor to perform the work. A dispute arose with Garbar when she sought to re-tile her balcony after the project’s completion.

The contractor explained to the court that tile couldn’t be placed over the waterproofing membrane, and he provided letters from the manufacturer stating the warranties would be voided if such material was installed. Further, the restrictive covenants prohibited balcony tile.

Garbar presented evidence indicating that the waterproofing membrane was compatible with tile, and that installing tile on the balcony would actually provide additional protection.

The appeals court found that the association’s declaration gave the board discretion to restrict installation of balcony tile and that the board’s decision was insulated from judicial scrutiny. It further concluded that the declaration was clear and explicit, and reflected an intention to give the board discretion to decide what items could be attached to the balcony surfaces. In sum, the trial court correctly held that the declaration allowed the board to decide whether Garbar could re-tile her balcony when the waterproofing was complete.

The court concluded that the board had conducted a reasonable investigation, followed its experts’ recommendations and acted in good faith for the benefit of the association and its members to prevent leaks and protect the condominium’s structural integrity. Accordingly, the trial court properly held that the space above Garbar’s ceilings was common area.

The association argued that the trial court erred in allowing Garbar to retain the remodeled ceiling that encroached on the common area. However, the appeals court held that the trial court acted within its discretion in finding that the association’s hardship from leaving the new ceilings in place was outweighed by the hardship caused to Garbar by its removal.

Garbar argued it was an abuse of discretion to essentially grant the association a license to destroy her ceiling and any proximate area in her unit. The appeals court observed that the trial court’s statement indicated that the association could use the space only if it had a genuine need to do so in performing necessary maintenance, repairs or installations; the trial court did not excuse the association from liability for damages to Garbar’s unit.  

The trial court’s judgment was affirmed with minor modifications.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Injury Claim Not Barred by Snow and Ice Removal Act

Gallagher v. The Union Square Condominium Homeowner’s Association, No. 2-09-0271, Ill. App. Ct., Jan. 27, 2010

State and Local Legislation and Regulations: An Illinois appeals court reversed a ruling that had dismissed a unit owner’s complaint against a condominium association for liability for injuries he sustained when he slipped on ice in his driveway.

Kevin Gallagher owns and resides in one of the units in Union Square Condominium, located in Lake County, Ill. The Union Square Condominium Homeowner’s Association (association) is responsible for maintaining the common areas and retains a landscaping company, which provides snow removal services. Included in the common areas is the driveway leading to Gallagher’s garage.

In February 2008, significant snowfalls resulted in an accumulation of snow on Gallagher’s driveway. The association’s contractor plowed a single, narrow path up the middle of Gallagher’s driveway, creating a snow mound in front of his garage door. This mound prevented access to any other pedestrian route between the street and the garage, and forced Gallagher to use the plowed path to reach the garage. The plowing created a sheer, packed-ice surface that was covered and obscured by fresh snow. The path was not salted or sanded, nor was any warning posted regarding the condition of the driveway.

When Gallagher arrived at his unit on Feb. 6, 2008, he discovered that he could not drive his car to his garage via the plowed path. Therefore, he parked his car on the street and walked toward his garage to determine how he could get his car into his garage. While walking on the plowed path, he slipped and fell, sustaining severe injuries.

Gallagher sued the association and its contractor, alleging they were negligent for not making sure the driveway was free of snow and ice. The trial court dismissed his complaint in its entirety, holding that it was barred by the Illinois Snow and Ice Removal Act (act). Gallagher appealed.

In his appeal, Gallagher argued the act did not apply when a person falls on a driveway. Moreover, he maintained that his complaint contained premises and liability claims that should not have been dismissed, even if the act applied.

The act provides:

Any owner, lessor, occupant or other person in charge of any residential property, or any agent of or other person engaged by any such party, who removes or attempts to remove snow or ice from sidewalks abutting the property shall not be liable for any personal injuries allegedly caused by the snowy or icy condition of the sidewalk resulting from his or her acts or omissions unless the alleged misconduct was willful or wanton.

This immunity from liability is intended to further the public policy and purpose of the act, as stated in Section 1:

It is declared to be the public policy of this State that owners and others residing in residential units be encouraged to clean the sidewalks abutting their residences of snow and ice. The General Assembly, therefore, determines that it is undesirable for any person to be found liable for damages due to his or her efforts in the removal of snow or ice from such sidewalks, except for acts which amount to clear wrongdoing, as described in Section 2 of this Act.

Gallagher asserted that the act did not apply to his claims because it immunized defendants against only those injuries sustained on sidewalks and not those sustained on driveways. The association argued that because Gallagher was walking on the driveway when he fell, and because the driveway was the primary means of ingress and egress to and from his unit, the driveway was sufficiently like a sidewalk within the scope of the act.

The court determined that the act’s plain language does not provide immunity for injuries sustained on driveways. While the term “sidewalk” is generally understood to be a walk for foot passengers, a driveway is commonly understood to be a surface for driving motor vehicles from a street to a private building.

The court noted that under common law, a property owner may be liable if he aggravates or causes an unnatural accumulation of snow or ice or if he volunteers to remove snow and ice but is negligent in doing so. In addition, a snow-removal contractor may be liable to a third party if it is negligent in removing the snow and ice, or if it aggravates an unnatural accumulation of snow and ice.

The court therefore limited the act’s application to injuries to those suffered on sidewalks. It found the trial court erred when it dismissed Gallagher’s complaint on the basis that his claims were barred by the act.

The trial court’s judgment was reversed and the case was remanded (sent back to the lower court) for further proceedings.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Officers Must Be Elected by Members’ Weighted Vote

Heron at Destin West Beach & Bay Resort Condominium Association, Inc. v. Osprey at Destin West Beach & Bay Resort Condominium Association, Inc., No. 1D11-3305, Fla. App. Ct., July 3, 2012

Association Operations/Covenants Enforcement: A Florida appeals court ruled that Florida’s nonprofit corporation statute did not prevent a master condominium association from adhering to a weighted voting procedure set forth in its governing documents to elect its officers.

Heron at Destin West Beach & Bay Resort Condominium Association, Inc. (Heron) and Osprey at Destin West Beach & Bay Resort Condominium Association, Inc. (Osprey) are two of five associations that are members of a master association located in Destin, Fla.

The developer controlled the master association until November 2009, when control was turned over to the board of directors. The board comprised the five member-associations’ presidents in accordance with the governing documents.

One of the board’s first actions was to elect officers. Two of the five board members were nominated for the office of president: James Peters, president of Osprey, and Judith Rawson, president of Heron. During the voting, a dispute arose over how the votes would be tallied. Rawson asserted that each board member should be given a weighted vote based on the number of total units in his or her respective associations. Peters contended that the officers were to be elected by a majority of the board, with one vote allotted to each board member.

After the board voted, Rawson received two votes, and Peters received three votes. Rawson, however, received a majority of the votes of individual units under the weighted voting procedure, and she declared herself president. Peters refused to recognize Rawson as president. Peters and the Osprey directors sued Rawson and Heron, asking the court to rule that the officers’ election was subject to a one-vote-per-director voting procedure.

Heron asserted that the Florida Condominium Act expressly allowed weighted voting when electing condominium association officers. Osprey responded that the Condominium Act did not dictate the necessary procedures to elect condominium association officers; rather the Florida Not For Profit Corporation Act controlled those procedures and prohibited weighted voting.

The trial court ruled in Osprey’s favor. It found that the state’s nonprofit corporation statute didn’t permit weighted voting. Heron appealed.

The appeals court observed that Florida condominium associations derive their authority from their declarations, which are unquestionably controlled by the Condominium Act. If a master association meets the definition of “association” found in the Condominium Act, it is subject to that statute; otherwise, it is only subject to the nonprofit corporation statute.

The declaration acts as an association’s constitution and strictly governs the relationships among the members and the association. If a conflict arises among the governing documents, the declaration is used to determine the proper course to resolve the conflict. In this case, the governing documents themselves state that the articles of incorporation were created to “enforce” the master declaration, and the bylaws were formed to implement the articles of incorporation and the master declaration.

The articles state that all unit owners are members of one of the condominium associations, and the condominium associations are members of the master association through an elected representative (the association’s president), who serves as a director on the board of the master association. The representative gets one vote per unit to cast as he or she sees fit in any voting process. Specifically, the master declaration provides that “Class ‘A’ Members shall be entitled to one (1) vote for each Unit (excluding Cabana Units) the Class ‘A’ Member represents in the Master Association.”

The Condominium Act provides that “. . . decisions shall be made by owners of a majority of the voting interests represented at a meeting at which a quorum is present.”

The Not For Profit Corporation Act states: “If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the board of directors unless the articles of incorporation or the bylaws require the vote of a greater number of directors.”

The appeals court concluded, given the structure of this master association, the definition of “association” under the Condominium Act was met. Further, the Condominium Act contemplated allowing various voting schemes to be laid out in the condominium documents, and the Not For Profit Corporation Act did not preclude the master declaration from adopting the weighted voting procedure.

Based on the clear intention set forth in the master declaration (that each director was allowed to cast the same number of votes as units in his or her respective condominium), the appeals court reversed the trial court’s judgment and remanded the case for judgment in Heron’s favor.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Declarant Retains Control of Unassigned Parking

MetroClub Condominium Association v. 201-59 North Eighth Street Associates, L.P., No. 2621 EDA 2011, Pa. Super. Ct., June 12, 2012

Developmental Rights/Covenants Enforcement: A Pennsylvania appeals court ruled that a condominium developer retained control of unassigned parking spaces as long as it owned any unit in the condominium.

MetroClub Condominium is a residential development in Philadelphia, Pa., created in 2005 by 201-59 North Eighth Street Associates, L.P. (declarant). It includes an adjacent enclosed parking lot.

The declaration gives control of unallocated parking spaces to the declarant so that it can assign those spaces to unit owners or lease them to other persons. In 2010, MetroClub Condominium Association (association) sued the declarant, seeking a judicial declaration (official ruling made by a judge) that the declarant’s control of the parking spaces ceased when the declarant control period expired.

The trial court ruled in the declarant’s favor, finding that the declaration clearly stated the declarant would have continued control of the parking spaces as long as it owned any unit in the development. The association appealed.

The association claimed that the declaration acted as a contract between the declarant and the association. The court pointed out that the declaration was recorded specifically to create the condominium pursuant to the Pennsylvania Uniform Condominium Act (act) and was signed only by the declarant. The act recognizes the declaration as the governing instrument of the condominium. The court overruled the association’s claim that the declaration constituted a contract between the declarant and the association.

The association argued that Section 5.03 of the declaration was inconsistent with public policy and therefore void. Section 5.03 provides in part:

(d) Allocation to Declarant. As long as Declarant owns any Units, Declarant may assign and allocate to Units it owns Assigned Parking Spaces not allocated to other Units, regardless of (and without Declarant being subject to) an otherwise applicable limit [sic] herein on the maximum or minimum number of Assigned Parking Spaces that may be allocated to a particular Unit.


(h) Leasing Assigned Parking Spaces. Declarant (for so long as it owns any Unit) may lease any Assigned Parking Space not assigned as Limited Common Element [sic] appurtenant to a particular Unit to any Person, for such term and upon such conditions as Declarant, in its sole discretion, determines.

The declarant owned 17 units in MetroClub and maintained control over 41 parking spaces that had not been assigned or allocated to a particular unit. The declarant leased 34 of these spaces and retained the income.

The declaration provided that the declarant would continue to control the association’s board (by appointing a majority of the directors) from the time the declaration was recorded until 75 percent of the units were sold, which occurred in June 2007. After the declarant’s control period expired, the association’s affairs were conducted exclusively by the board elected by the unit owners.

The association argued that the declarant breached its obligation to act in good faith by refusing to relinquish control of the unallocated parking spaces. The declarant asserted its continued right to allocate parking spaces was in accordance with the declaration, despite the fact that it no longer controlled the association’s board.

The appeals court found that nothing in the act could reasonably be interpreted to mean that control of the parking spaces shifted to the association when the declarant no longer controlled a majority of the association’s board. If control of the assigned parking spaces had shifted to the association when the declarant control period expired, with the declarant still owning 25 percent of the units, the declarant would no longer have the authority to assign any parking spaces to new unit purchasers.

The court determined that the declaration complied with the act. It permitted the declarant to reserve to itself the power to allocate parking spaces, and nothing in the statute prohibited the declarant from continuing to exercise this power after the declarant ceased to control the board. The court also found that the act did not prohibit the declarant from leasing unallocated spaces while it attempted to sell the remaining units.

The association argued that the declarant was being unjustly enriched as it continued to financially benefit from 41 parking spaces to the detriment of all the other unit owners. The court observed, however, that in conjunction with the units owned, a common expense liability was assessed against the declarant in accordance with its percentage interest in the units. The declarant was obligated to pay its assessed fees and shares of the common expenses in accordance with those provisions. Accordingly, the declarant was paying for any benefit it received as a result of its control of the unallocated spaces.

The appeals court affirmed the trial court’s ruling in favor of the declarant.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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POA Can’t Collect Assessments to Maintain Rec. Facilities

Rybarchyk v. Pocono Summit Lake Property Owners Association, Inc., No. 2370 C.D. 2011, Pa. Commw. Ct., July 24, 2012

Assessments/State and Local Legislation and Regulations: A Pennsylvania appeals court upheld a trial court ruling that a voluntary property owners association was not entitled to collect assessments from nonmembers to pay costs of maintaining the subdivision’s recreational facilities.

Pocono Summit Lake Subdivision in Coolbaugh Township, Pa., was developed in 1955. The lot deeds contained uniform covenants and a provision that each purchaser was allowed to use Pocono Lake for recreational purposes. 

In 1959, a group of homeowners formed the Pocono Summit Lake Property Owners Association, Inc. (association) and solicited voluntary memberships from other lot owners. The developer granted the group permission to construct a clubhouse with voluntary contributions.

In 1962, the developer conveyed three parcels of undeveloped land to the association. That same year, the developer conveyed Pocono Lake to Sundance Valley Lake Corporation, who conveyed it to the association 17 years later.

In 2009, the association began imposing mandatory monthly assessments and late charges against all the homeowners. Alan Rybarchyk, a homeowner in the community who was not a member of the association, sued the association, seeking an order to prohibit the association from levying the assessments.

The association contended that Pocono Summit was a “planned community,” as defined in the Uniform Planned Community Act (act), and the lake, beach and clubhouse areas were “common areas” within the meaning of the act. Therefore, it was authorized to collect assessments from all of the homeowners to pay for common expenses.

Rybarchyk argued that the subdivision was not a “planned community” under the act. He asserted that nothing in the deeds indicated or even suggested that the developer would convey any common areas to the association. In fact, no “common areas” existed prior to the association’s creation in 1959. Further, the association was created and functioned as a private club for decades before attempting to assess all property owners.

The court ruled in Rybarchyk’s favor and prohibited the association from assessing all owners for maintenance of the beach and pavilion areas, which, the court concluded, were owned by the association. The association appealed.

The act defines a “planned community” as:

Real estate with respect to which a person, by virtue of ownership of an interest in any portion of the real estate, is or may become obligated by covenant, easement or agreement imposed on the owner’s interest to pay any amount for real property taxes, insurance, maintenance, repair, improvement, management, administration or regulation of any part of the real estate other than the portion or interest owned solely by the person. . .

Each deed conveyed a “right and privilege of boating, bathing, fishing, and ice skating in the Lake.” Nothing in the deeds obligated owners to pay for the maintenance of any part of the subdivision other than on lots they owned exclusively.

The subdivision did not contain “common areas” that were collectively owned by the unit owners via a mandatory membership in the homeowners association. In fact, the association was created as a private club with a voluntary membership. Further, non-member homeowners had been denied access to the alleged common areas in the past.

Rybarchyk noted that the developer sold the lake to a private company in 1962, despite the fact that the association was already in existence; the association did not acquire title until 1979, approximately 20 years after the association was incorporated. Accordingly, when the subdivision was created, it was not intended to be a planned community with common areas managed by an association.

The act defines “unit owners’ association” as follows:

A unit owners’ association shall be organized no later than the date the first unit in the planned community is conveyed to a person other than a successor declarant. The membership of the association at all times shall consist exclusively of all the unit owners . . . (Emphasis added.)

It was undisputed that the association was not created at the time the first unit was sold. Further, it did not at all times consist exclusively of all the homeowners. The association’s bylaws provided that “honorary members” were not required to be homeowners.

Accordingly, the court found that the trial court correctly concluded that Pocono Summit was not a “planned community” under the act; thus, nonmembers were not obligated to pay assessments for the maintenance of property owned by the association.

The trial court’s order was affirmed.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Out Parcel Owner Proves Easement over HOA’s Private Roads

Sandie, LLC v. The Plantations Owners Association, Inc., No. 6048-VCG, Del. Chancery Ct., July 25, 2012

Developmental Rights/Covenants Enforcement: The owner of recreational facilities within a subdivision established an access easement over the homeowners association’s private roads, created for its customers and employees.

The Plantations is a condominium and housing development in Belltown, Del. When the developer created the subdivision in 1986, it retained ownership of a 4.3 acre parcel of land in the subdivision and constructed recreation facilities there, including a pool, tennis courts and a gym. The facilities were made available to residents of The Plantations and to the general public.

In creating the recreation area, the developer failed to reserve an express easement (a written right for one party to go onto another party's property so as to have access to a specified area) to the public road. Because of this, the owners of the recreation area and customers of the health facility had to access the property by going over land owned by The Plantations Owners Association, Inc. (association). The association owns and maintains the common areas of The Plantations, including the roads and parking areas. Most health facility customers do not own property in The Plantations and are not members of the association.

The recreation area, which is still in use as a health facility, is now owned by Sandie, LLC. In the past, the association and the recreation area owners were able to come to terms on an agreement to access facilities on the recreation area and the adjacent parking lot and storage shed. Sandie and the association, however, were unable to reach such an agreement. Sandie sued the association, seeking to establish an access easement over the association’s private roads and  parking lot adjacent to the recreation area. Sandie also asserted that it was not obligated to contribute to the upkeep of the property comprising the easement. Both parties filed cross motions for summary judgment (a determination made by a court without a trial).

The parties did not dispute that Sandie had an implied easement over the primary access road to the recreation area, be it one of necessity or through a quasi-easement or otherwise. Rather, they disputed whether the implied terms of the easement obligated Sandie to contribute to the road’s maintenance and to what extent Sandie and its customers could use other private roads to access the rear parking lot.

An easement is generally created by express grant or reservation (easement created by legal document), by implication (easement created due to the particular facts and circumstances) or by prescription (easement created by use of the land without owner’s permission, and becomes an official easement after a certain amount of time). Nothing in the record supported an express easement or a prescriptive easement. Nevertheless, an easement may be created by implication if the surrounding circumstances indicate that the parties intended to convey an easement, but failed to expressly do so, in which case the party seeking the easement must prove such intent by clear and convincing evidence.

From the time the recreation facilities were completed by the developer until they were conveyed to Sandie, the only access to the rear parking lot was by private roads owned by the association. It was apparent to the court from the location of the roads and the existing structures that they were intended to provide the owner of the recreation parcel with a means of accessing the rear parking lot and storage shed. Moreover, the roads were not only adjacent to the recreation area, but, in fact, occupied a portion of the parcel. Therefore, the court concluded that the right to use the roads to access the rear parking lot was intended to be part of the implied easement that the parties agreed existed over the private access road.

The court found nothing in the condominium documents that addressed the question of what contribution, if any, Sandie was to make to the maintenance costs of the roads. In equity, those entitled to use land subject to an easement have obligations for maintenance proportional to their use. The court concluded that the record was insufficient to enable the court to assign obligations.

The court concluded that Sandie had established an easement to use the private roads of The Plantations to conduct its business, but the question of the extent of its maintenance obligations in connection with the easement must await further factual development or settlement.

The court granted each party’s motion for summary judgment in part and denied each in part.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Owner Not Entitled to Examine Election Ballots

Sigel v. The Monarch Condominium Association, Inc., No. W2011-01150-COA-R3-CV, Tenn. App. Ct., Jan. 29, 2012

Association Operations: A Tennessee appeals court upheld a lower court’s ruling that a unit owner, who was a candidate for the association board, was not entitled to audit the ballots cast in an election of the condominium association’s board of directors.

In 2001, Dr. Kenneth Sigel moved into The Park Palace apartments in Memphis, Tenn. In 2006, the apartments were converted to The Monarch Condominiums, and Sigel purchased one of the units. In 2010, Sigel ran for election to be on the association’s board of directors. The election was conducted using secret ballots. The members’ votes were weighted, with each unit allocated three, four or five votes, depending on the size of the unit. After Sigel lost the election, he expressed concern about tabulation of the votes and requested to review the written ballots.

The board agreed to release its tally sheets, but refused to release the written ballots. The tally sheets indicated the total number of votes each candidate received but did not show the weight allocated to each vote or the candidate for whom each unit owner voted. The association offered to arrange a third-party audit of the votes.

Sigel sued the association, asking that the association be enjoined (a court order ordering or prohibiting a party from doing a specified act) from destroying the written ballots and compelled to produce the ballots for his examination. The trial court entered an initial order requiring the association to preserve the ballots pending the lawsuit’s resolution. The association denied that Sigel was entitled to examine the ballots.

Subsequently, Sigel filed a motion for summary judgment (a determination made by a court without a trial) in which he argued that the court should exercise its equitable powers (ability to determine a case based on fairness and not legal merits) and order the association to release the election ballots. Based on his argument that the association had illegally refused his request to see the ballots, Sigel also asked the court to award him a penalty fee, attorney’s fees and legal expenses. The association maintained that individual unit owners had a reasonable expectation of privacy in their written ballots.

Sigel argued that pursuant to the Tennessee Condominium Act, “[a]ll financial and other records shall be made reasonably available for examination by any unit owner, the holder of any mortgage or deed of trust encumbering a unit, and their respective authorized agent.”  However, the court, in looking at the plain meaning of the entire Condominium Act, found that the right to access association records was clearly defined in the act by a list of accessible records; the act did not specify ballots or any category of records that would encompass ballots on that list.

Sigel also contended that he was entitled to examine the ballots pursuant to the Tennessee Nonprofit Corporation Act. The trial court held that, under the rules of statutory construction (guidelines applied by a court to aid in its interpretation of a written document), a more specific statute, i.e., the Condominium Act, trumps a broader statute, the Nonprofit Corporation Act. Accordingly, it denied Sigel’s motion for summary judgment and dismissed the case. Sigel appealed.

On appeal, Sigel asked the court to consider whether the Nonprofit Corporation Act applied to this matter and whether the written ballots must be produced as “records” under the Nonprofit Corporation Act. He argued that the trial court erred in ruling that the issues of the case were governed by the Condominium Act. He pointed to language in the condominium master deed describing the powers and duties of the association, which states that the association’s duties are governed by the Nonprofit Corporation Act. Thus, he argued the Nonprofit Corporation Act applied in this case.

After examining the master deed, the appeals court disagreed with Sigel, finding that the election of board members was governed by the association’s bylaws. The bylaws specifically state that the association is to comply with the requirements of the Tennessee Horizontal Property Act, of which the Condominium Act is a part. Moreover, the Condominium Act provides that a unit owners association may be organized as a profit or nonprofit corporation or as an unincorporated association. Thus, the appeals court agreed with the trial court that the Nonprofit Corporation Act was a broad statute that governed all nonprofit corporations, while the Condominium Act was enacted to govern condominium associations.

The court observed that the Tennessee Constitution has long been interpreted to recognize the right to a secret vote in elections. In enacting the Condominium Act, the Tennessee Legislature did not state that a condominium association must disclose its election ballots. For these reasons, the court believed that the legislature would not have expected or intended written election ballots to be included in the documents available to condominium unit owners on demand.

The decision of the trial court was affirmed. Costs of the appeal were assessed against Sigel.

©2012 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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