July 2018
In This Issue:
Recent Cases in Community Association Law
Declaration’s Termination Did Not Terminate Owner’s Obligation to Pay Assessments
Developer Remained Liable for Construction Defects Years After Transferring Rights to Successor
All Owners Must Have an Opportunity to Vote
Association Did Not Violate FHA’s Anti-Retaliation Prohibition by Providing Litigation Updates to Members
Association Had Power to Obligate Owners to Join Private Club
Association Not Liable for Toddler’s Drowning in Condominium Hot Tub
Club Was Not Obligated to Conduct a Hearing Before Terminating Membership
Short-Term Leasing Consistent with Residential Use
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Recent Cases in Community Association Law


Law Reporter provides a brief review of key court decisions throughout the U.S. each month. These reviews give the reader an idea of the types of legal issues community associations face and how the courts rule on them. Case reviews are illustrations only and should not be applied to other situations. For further information, full court rulings can usually be found online by copying the case citation into your web browser. In addition, the College of Community Association Lawyers prepares a case law update annually. Summaries of these cases along with their references, case numbers, dates, and other data are available online.

Declaration’s Termination Did Not Terminate Owner’s Obligation to Pay Assessments

Meadowview Heights Homeowners Association, Inc. v. Chosse, 2018 Mass. App. Div. 54 (Mass. App. Div. Mar. 20, 2018)

Assessments: The Massachusetts District Court, Appellate Division held that the obligation to pay association assessments was not a covenant or restriction subject to the declaration’s termination clause, but rather an implied contract to contribute to the association’s road maintenance costs.


Meadowview Heights Homeowners Association, Inc. (association) governed a 70-lot community in Provincetown, Mass. In 1987, Mabel Chosse purchased a lot in the community.

In January 2009, Chosse stopped paying assessments, prompting the association to file a collection action against her. Chosse asserted she was no longer obligated to pay assessments because the Meadowview Heights declaration of protective covenants (declaration) had expired. Originally recorded in January 1984, the declaration provided that its covenants and restrictions would continue for 25 years.

The association argued that Chosse was still an association member and obligated to pay assessments imposed by the association under its bylaws. The bylaws required the association to maintain and repair the common areas and gave the association the right to assess owners. The association also contended a contract was implied for each owner to pay the association’s costs to maintain the community’s private roads.

Under the declaration, the developer could charge owners a road maintenance fee until the private roads were conveyed to the association. Chosse responded that the developer neither transferred the roads nor assigned its right to collect a road maintenance fee to the association.

The trial court held that the association’s right to collect assessments expired in January 2009, relieving Chosse of the obligation to pay amounts due after that date. The trial court granted summary judgment (judgment without a trial based on undisputed facts) in Chosse’s favor, and the association appealed.

The appeals court found that the assessment obligation was not a covenant or restriction subject to the termination clause. Rather, all lots benefitted from properly maintained private roads providing access to the lots, and receipt of that benefit implied an obligation to pay the maintenance costs.

The appeals court further found that it was unnecessary for the developer to assign its right to collect a road maintenance fee to the association because the obligation was already implied by the existence of the private roads. The declaration clearly showed the developer’s plan was for ongoing road maintenance costs to be shared by all lot owners. The declaration also established the association as the mechanism to enforce the common development scheme and the implied contract.

Accordingly, the trial court’s judgment was reversed. The case was remanded for the trial court to establish the amount owed by Chosse to the association.

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Developer Remained Liable for Construction Defects Years After Transferring Rights to Successor

Burien Town Square Condominium Association v. Burien Town Square Parcel 1, LLC, 416 P.3d 1286 (Wash. Ct. App. Div. May 14, 2018)

Developer Liability: The Court of Appeals of Washington held that the statute of limitations for condominium construction defect claims did not expire until after association control was turned over to the owners, and the original developer remained liable for defects so long as a successor declarant controlled the association.


Burien Town Square, LLC and Burien Town Square Parcel 1, LLC (collectively, the developer) developed the Burien Town Square Condominium in Burien, Wash. The first unit was sold in May 2009, and the city issued a certificate of occupancy for the building in July 2009. Burien Town Square Condominium Association (association) was organized to govern the condominium.

The developer defaulted on its construction loan, and its lender foreclosed on the remaining unsold units. In November 2010, BTS Marketing (BTS) acquired the remaining units from the lender and the declarant rights from the developer. BTS then appointed directors to the association’s board.

In August 2013, owners notified the association about construction defects, but it took no action. In March 2014, the unit owners gained control of the association and elected the board. In February 2015, the association notified the developer and BTS of construction defects.

In April 2015, the association sued the developer for the construction defects. The developer responded that the statute of limitations under the Washington Condominium Act (act) barred the claims. The trial court agreed, dismissed the case, and awarded attorneys’ fees to the developer. The association appealed.

The act provides that a claim involving the common elements must be filed within four years after the claim accrues. The developer argued that the latest date the association’s claim could have accrued was July 2009, when the certificate of occupancy was issued. Therefore, the claim was barred after July 2013.

The association contended that the statute of limitations did not expire until one year after association control was turned over to the owners. The act also allows the statute of limitations to be extended an additional 105 days by notifying the developer in writing about the construction defects. Thus, the association argued the statute of limitations did not expire until July 2015.

The act specifies that, regardless of the four-year limit on claims, the statute of limitations does not expire prior to one year after termination of the declarant control period. The developer argued that the declarant control period ended when it ceased having any control over the association in November 2010, the foreclosure date. The association asserted that the declarant control period continued so long as a declarant controlled the association.

The appeals court found that BTS constituted a successor declarant because it succeeded to all the developer’s declarant rights. It held that the original developer remained liable to the association and owners for the actions it took before it transferred its declarant rights to BTS.

Alternatively, the developer argued that the declarant control period ended in November 2012 because that was the last time it exercised any development right. The act provides that the declarant control period ends when the first triggering point is reached, one of which is two years after a developer’s right to add new units was last exercised.

The developer asserted that it did not exercise any development rights after November 2010. The appeals court stated that the fact that the developer transferred the declarant rights to BTS did not mean that development rights ceased to be exercised by anyone.

The developer complained that it was unfair to be held liable so many years after its involvement in the project ended. However, the appeals court found this approach untenable because it would create a loophole in the act. It would allow the original developer to avoid liability simply by transferring its rights to a successor, who could control the association until the statute of limitations expired.

Both the act's language and public policy supported the conclusion that the developer control period must be a single period during which any declarant, not just a specific developer, controls the association.

The appeals court determined that the statute of limitations for the association’s claim expired in June 2015. Thus, the lawsuit filing in April was well within the limitations period. The appeals court also vacated the attorneys’ fee award to the developer. Since neither party had yet prevailed on the construction defect claim, no one was yet entitled to attorneys’ fees.

Accordingly, the trial court’s judgment was reversed, and the case was remanded for further proceedings.

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All Owners Must Have an Opportunity to Vote

Jepsen v. Camassar, 181 Conn. App. 492 (Conn. App. Ct. May 1, 2018)

Documents: The Appellate Court of Connecticut held that, where a deed restriction provided for amendment by the vote in writing of a majority of owners, simply obtaining the signatures of a majority of owners was insufficient.


Billard Beach was developed in 1954 as a 48-lot subdivision in New London, Conn. Each lot purchaser received one deed for the lot and a second deed for an undivided 1/48 interest in a 250-foot strip of beachfront property (beach). Billard Beach Association (association) was a voluntary organization without authority over the subdivision.

The beach deed contained restrictions on the use of the beach and provided that restrictions could be modified by a majority vote in writing of the beach owners. It further specified that each owner was entitled to the number of votes equal to the numerator of their fractional interest in the beach; upon any such vote, the majority was to be determined according to the sum of the votes counted.

In 2008, Craig Barrila purchased a lot and a beach fractional interest. He did not personally use the beach, but he allowed his girlfriend and her three children to swim, hold campfires, and party at the beach. This beach use by Barrila’s guests caused some concerns among other residents.

In July 2011, an association representative informed Barrila that guests could not use the beach without the owner being present. A group of owners also circulated a petition proposing to modify the beach restrictions (2011 modification). The 2011 modification sought to revise the beach use restrictions, increase the approval required for future amendments, and add enforcement provisions.

When Barrila received the proposed 2011 modification, he emailed its proponents, advocating for a public owners’ meeting to discuss the proposal. Despite that request, the 2011 modification with the signatures of a majority of the owners was recorded in the land records the next morning. No meeting was ever held, and no vote was taken.

Barilla and lot owners Anders and Beth Jepsen (collectively, plaintiffs) filed suit against Beth Camassar and the remaining beach owners, seeking to void the 2011 modification. In response to the suit, the association drafted amended and restated covenants and restrictions for Billard Beach (2014 modification). The proposed 2014 modification included extensive provisions addressing who could use the beach, how many guests an owner could have, and activities restricted on the beach.

On October 3, 2014, the association secretary notified 41 owners by email that the association’s annual meeting would be held on October 10, at which the 2014 modification would be voted upon. Attached to the email was a copy of the 2014 modification and a proxy form for those who could not attend the meeting.

On October 5, Beth Jepsen objected to the improper meeting notice and the 2014 modification. She requested an open discussion among owners over a reasonable amount of time and with proper notice.

Fewer than half the owners attended the meeting in person or by proxy. The association president informed those in attendance that voting on the 2014 modification would be held open until November 1 to give more time for proxies to be cast. Jepsen attempted to talk at the meeting, but she was interrupted by rude comments and left.

By November 1, 22 owners had voted for and two against the 2014 modification. Two additional “yes” proxies were later submitted. On November 6, the association secretary informed about 30 owners by email that the 2014 modification had received a majority of the votes, and each of them needed to sign the official document.

In December 2014, the 2014 modification was recorded in the land records, along with the signatures of 29 owners, including several who did not attend the meeting or vote by proxy. The plaintiffs amended their complaint to also challenge the validity of the 2014 modification.

The trial court found the 2011 modification invalid because no formal vote was taken. It stated that a vote required more formality than just obtaining signatures. However, the trial court found the 2014 modification was valid because a vote was conducted, and it was approved by a majority of the owners, either by proxy or by signing the document. The trial court further determined that, since the plaintiffs attended and participated in the meeting, they waved their right to object to deficiencies in the meeting notice. The plaintiffs appealed.

Restrictive covenants that do not include amendment provisions may not be amended without the consent of all owners who are subject to the covenants. The 2014 modification amended portions of the beach deed besides the use restrictions, including how the beach deed itself could be amended. Since the beach deed contained no provisions for modifying portions other than the use restrictions, the appeals court held that the unanimous consent of all owners was required to amend such other portions.

Both the magnitude of the beach rights and the context in which the rights were created informed the appeals court. It noted the 2014 modification did not involve a trivial dispute between neighbors, but rather, the possible restriction of an owner’s right to use the beach.

The appeals court agreed with the trial court that the vote contemplated by the beach deed required more formality than just obtaining signatures. It construed the modification provision as establishing a two-step process. First, every beach owner must be given the opportunity to vote. Votes must then be counted to determine whether a majority of owners favored the proposed modification. The 2011 modification was void because no vote was ever taken.

The appeals court further found two problems with the 2014 modification. First, notice of the vote was not given to all owners. The right to vote is meaningless without notice that voting will take place. Second, a majority of the owners did not vote in favor of the 2014 modification. Owners ultimately submitted a total of 24 proxies in favor of the 2014 modification. Even without debating the validity of the proxies submitted after the deadline, 50 percent did not constitute a majority.

Accordingly, the trial court’s judgment holding the 2014 modification valid was reversed, but the judgment was affirmed in all other respects.

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Association Did Not Violate FHA’s Anti-Retaliation Prohibition by Providing Litigation Updates to Members

Geraci v. Union Square Condominium Association, 891 F.3d 274 (7th Cir. May 25, 2018)

Federal Law and Legislation: The U.S. Court of Appeals for the Seventh Circuit held that an association providing litigation updates to its members concerning an owner’s fair housing claims was not retaliation under the Fair Housing Act, and the association could present its own expert to disprove the owner’s claim that she was handicapped.


Holly Geraci owned a unit on the top floor of the Union Square Condominium in Chicago, Ill. Union Square Condominium Association (association) governed the condominium.

Geraci suffered from claustrophobia and a fear of medium-to-large dogs resulting from a vicious-dog attack as a child. Consequently, Geraci tried to avoid situations in which she and her small dog would be exposed to other dogs.

The association rules acknowledged that some people fear animals, and it asked residents to respect others’ concerns when sharing confined spaces such as elevators. On several occasions, Geraci asked the association to remind dog walkers to honor requests to stay off an elevator when asked, and she reported that dog walkers were violating the rules. The association never acted on her reports.

In August 2013, Geraci was involved in an incident with another resident and an unspecified number of dogs in an elevator. Geraci said the resident attacked and beat her. As a result, Geraci sought psychological treatment and was diagnosed with post-traumatic stress disorder (PTSD). Thereafter, Geraci lived in a perpetual state of fear that prevented her from sleeping or leaving her home.

Geraci asked the association to modify an elevator with a key that would allow her to ride nonstop to her floor. In November 2014, Geraci’s psychologist wrote to the association that accommodations for PTSD should address repeated and unexpected re-exposure to fearful stimulus.

In February 2015, Geraci also asked the association to enforce its pet policy and install cameras in the hallways and elevators. In March 2015, the association responded that it could not ascertain from the information provided by Geraci’s psychologist whether an accommodation was required or if there was a nexus between the complained of condition and the request.

Geraci then sued the association for violating the Federal Fair Housing Act (FHA) and Illinois Human Rights Act by failing to accommodate her disability. Geraci also asserted the association retaliated against her by publishing litigation updates and holding an open forum to discuss and update owners about the status of the litigation.

Geraci alleged the association held an open forum to discuss her lawsuit to incite owners to retaliate against her. She contended the association singled her out and had never held a public forum for other lawsuits. Geraci alleged some owners at the forum blamed her for harming the building and others applauded in approval.

The association was allowed at trial, over Geraci’s objection, to present the testimony of a psychiatrist who had conducted a court-ordered examination of Geraci. The psychiatrist contradicted the testimony of Geraci’s psychologist. The psychiatrist diagnosed Geraci with three separate mental conditions, none of which was PTSD.

The jury returned a verdict in the association’s favor. Geraci appealed, arguing that the trial court erred in instructing the jury that Geraci first had to prove she had a handicap before she could recover for retaliation under the FHA and erred in allowing the association to present expert testimony challenging her claimed mental impairment.

The FHA makes it unlawful to coerce, intimidate, threaten, or interfere with any person’s rights protected by the FHA. Geraci claimed the association revealed her PTSD to other owners in the public forum and litigation updates, causing her to suffer additional emotional distress and embarrassment, which threatened or interfered with her rights under the FHA.

The appeals court described the association’s conduct as a far cry from the retaliatory conduct the statutes were designed to prevent. It said Geraci’s PTSD became public knowledge the moment she chose to sue the association about it. Geraci conceded at trial that no information was revealed in the open forum or the litigation updates beyond the factual report of the public record.

The appeals court found no federal law prevented association members from knowing why the association was bearing legal costs. Litigants should expect that members would want to know the details of the lawsuit, if for no other reason than to consider whether the suit should be settled. Sending litigation updates and holding an open forum were reasonable methods of informing association members.

Geraci asserted the association should have only the opportunity to argue her condition was not an impairment rather than being allowed to disprove the handicap through its own expert witness. The appeals court stated that one of the most basic tenets of law is that a defendant has the right to defend itself against accusations. The most common way of doing this is through disproving the plaintiff’s claims. The association had the right to disprove Geraci’s claim that she was handicapped.

Accordingly, the trial court’s rulings were affirmed.

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Association Had Power to Obligate Owners to Join Private Club

Amberfield Homeowners Association, Inc. v. Young, 813 S.E.2d 618 (Ga. Ct. App. May 15, 2018)

Powers of the Association: The Georgia Court of Appeals held that an association had the power to accept easements to access and use nearby private club facilities and to assess all owners for the costs.


Amberfield Homeowners Association, Inc. (association) governed the Amberfield subdivision in Gwinnett County, Ga. Amberfield had no recreational facilities, but The Fields Swim & Tennis Club, Inc. (club) operated a recreational club near Amberfield, which the owners in Amberfield and other surrounding communities could join.

By 2015, however, it became necessary for the club to increase its membership to keep it financially viable. The boards of directors of the association and the club agreed that the club could remain in business if Amberfield owners were not just invited, but required, to join.

In March 2015, the association distributed a ballot to all Amberfield owners proposing that its declaration of covenants and restrictions (declaration) be amended to authorize the board to enter into an easement and cost sharing agreement with the club that would grant each owner a basic club membership and obligate each to pay club fees. The ballot stated that the association would collect the club fees together with the assessments and pay the fees to the club.

In June 2015, the association determined that the proposal had been passed and recorded the declaration amendment. In December 2015, the association and the club recorded a declaration of easement and cost sharing agreement (agreement). The agreement granted each owner club membership and an easement to use the club amenities, except for tennis facilities. Owners could, however, upgrade their membership to include the tennis facilities for an additional fee.

Steve Young and five other Amberfield owners (collectively, the plaintiffs) sued the association, seeking a declaratory judgment (judicial determination of the parties’ legal rights) that the declaration amendment was void. The plaintiffs asserted that the association had no right to force them to join a separate, private club over which the association had no legal control or authority. The trial court agreed with the plaintiffs and granted judgment in their favor. The association appealed.

The association argued the declaration was validly amended with the requisite owner approval. That amendment gave the association the authority to contract with the club for the owners’ benefit. If club membership had remained voluntary, the entire subdivision would have lost access to the kind of amenities that were expected in suburban neighborhoods. Thus, the association asserted that the agreement not only stabilized the club but helped to maintain Amberfield home values.

The association further contended the Georgia Nonprofit Corporation Code and the Georgia Property Owners’ Association Act give associations broad powers to make contracts and purchase or acquire real or person property. Even before it was amended, the declaration gave the board the power to acquire, hold, and dispose of real and personal property on the association’s behalf. The appeals court recognized that an easement is a real property interest.

The plaintiffs urged that the mandatory club dues obligation was a personal covenant that had nothing to do with the plaintiffs’ properties or the association’s property. However, the appeals court found the club dues obligation touched and concerned the land such that the obligation could pass to successor lot owners. Further, the appeals court determined the easement rights would normally be a common expense borne by all owners through association assessments.

The plaintiffs argued they did not accept or use the club facilities granted by the easement. Where a grantee declines to accept a grant of rights in land, the conveyance is ineffective. However, the appeals court found the declaration granted the association the authority to accept easements for the association and its members.

The appeals court further determined the association had such authority even before the declaration amendment. Where the declaration delegates decision-making authority to the board, a court should examine only whether exercising that authority was procedurally fair and reasonable and whether the substantive decision was made in good faith, was reasonable, and was not arbitrary or capricious.

The plaintiffs could not show that the board’s decision to accept the easement was unreasonable, arbitrary, or in bad faith. Accordingly, the trial court’s judgment was reversed.

©2018 Community Associations Institute. All rights reserved. Reproduction and redistribution in any form is strictly prohibited.

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Association Not Liable for Toddler’s Drowning in Condominium Hot Tub

Salyer v. Brookview Village Condominium Association, No. 18-CA-08 (Ohio Ct. App. Jun. 8, 2018)

Risks and Liabilities: The Ohio Court of Appeals found a condominium association was not liable when a toddler attending a pool party drowned in the condominium hot tub because swimming is inherently dangerous, and the hot tub was an open and obvious hazard.


Brookview Village Condominium Association (association) governed a condominium in Fairfield County, Ohio. In July 2013, a condominium resident reserved the pool area for a private event. Two-year-old Traetin Reyes attended the event with his parents, Rose Salyer and Pedro Reyes.

A hot tub was next to the pool on a raised platform. On the day of the party, a sign was posted beside the hot tub indicating it was closed due to a broken water heater. However, water remained in the hot tub, and the entrance was not blocked or gated.

Pedro went to the restroom to change into dry clothes, and Traetin went with him. However, before Pedro finished dressing, Traetin left the restroom and wandered alone back to the pool. About 20 minutes later, Traetin was found drowned in the hot tub.

In 2016, Salyer sued the association for wrongful death. She alleged the association negligently maintained the hot tub as an attractive nuisance, which lured Traetin to his death. The association argued there was no reckless or intentional conduct on its part, and the hot tub was an open and obvious hazard. Therefore, it asserted Salyer’s claim was barred by the recreational activity doctrine.

The attractive nuisance doctrine says that owners who know a condition on their property poses an unreasonable risk of serious injury or death, and also know that children frequent the area, are liable for injuries to children who trespass on that property.

The recreational activity doctrine bars recovery for injuries a person might receive while participating in a recreational or sporting activity unless another’s actions were reckless or intentional.

The trial court determined that the recreational activity doctrine applied but the attractive nuisance doctrine did not. It concluded that Traetin was a licensee rather than a trespasser, and the association had no duty to warn Traetin of the open and obvious danger posed by the hot tub. The trial court found no intentional or reckless act or omission by the association that proximately caused Traetin’s death. Accordingly, it granted summary judgment (judgment without a trial based on undisputed facts) in the association’s favor. Salyer appealed.

The appeals court agreed with the trial court that the attractive nuisance doctrine did not apply because Traetin was not a trespasser but a guest or licensee. A licensee is a person who enters property with the owner’s permission or acquiescence for his own benefit. Traetin’s family was invited by a Brookview Village resident to the pool, which was available for residents and their guests. There was no indication that the association opened the pool to the public or that it derived benefit from the pool use.

Salyer argued that Traetin became a trespasser when he entered the closed hot tub. However, the hot tub was not in a separate area, and there was no gate or barrier separating the hot tub from the pool. The hot tub was in the same condition it would have been if operational, except that the water was cold. The fact there was a sign indicating the hot tub was closed did not convert Traetin’s status from licensee to trespasser.

Swimming is, without question, a recreational activity, and drowning is an inherent risk of swimming. The fact that Traetin was too young to understand the risks of swimming did not alter the analysis of whether the association was at fault. The determinative factor in a defendant’s liability in sports and recreation cases is the defendant’s own conduct, not the participant’s ability to appreciate the inherent dangers of the activity. There was no evidence that the association engaged in reckless or intentional conduct that caused Traetin’s death.

Since Traetin chose to engage in swimming, he is deemed to have assumed the ordinary risks of swimming, which included drowning. The hot tub was also an open and obvious hazard, so the association was not obligated to provide warnings of the danger. Accordingly, the trial court’s judgment was affirmed.

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Club Was Not Obligated to Conduct a Hearing Before Terminating Membership

Emerson v. Cape Fear Country Club, Inc., No. COA17-1149 (N.C. Ct. App. Jun. 5, 2018)

State and Local Legislation and Regulations: The North Carolina Court of Appeals held that the North Carolina Nonprofit Corporation Act did not require prior notice and an opportunity for a hearing before membership in a nonprofit corporation could be terminated.


William Emerson was a member of the Cape Fear Country Club, Inc. (club) in Wilmington, N.C. On January 1, 2016, Emerson had a disagreement with a club employee in the golf shop. A witness described the incident as a “profanity-laced tirade” by Emerson. Another person said Emerson cursed at the employee and declared, “This is war.” Emerson acknowledged a disagreement took place but denied that he was shouting or cursing. The club’s president convened a special meeting of the board of directors to discuss the matter.

This was not the first time Emerson had been disciplined for misbehavior, but it had been some time since the last incident. In 2005, Emerson argued with another club member and damaged club property. Emerson was suspended for 30 days, required to replace the damaged property, and apologize to those involved. In 2007, Emerson again had a disagreement with a club member about a golf bet. That time, Emerson’s membership was suspended for six months, but he was reinstated sooner because several members wrote letters on his behalf.

On January 7, 2016, the board met and voted to terminate Emerson’s club membership. On January 8, the board informed Emerson—by phone and in writing—that his membership was terminated because of his recent unacceptable behavior and his cumulative disciplinary history with the club.

However, on February 5, the board sent Emerson another letter, inviting him to attend a meeting on February 15 and offering him the opportunity to speak on his behalf about the termination. Emerson acknowledged receiving the letter but did not attend the meeting.

In April 2016, Emerson sued the club for declaratory judgment (judicial determination of the parties’ legal rights) on the status of his club membership and whether the club could conduct a post-termination hearing and still comply with the North Carolina Nonprofit Corporation Act (act). The trial court granted summary judgment (judgment without a trial based on undisputed facts) in the club’s favor, and Emerson appealed.

Emerson argued that the act requires nonprofit corporations to conduct a hearing before terminating a membership. The act provides that membership be terminated in a manner that is fair and reasonable and carried out in good faith. Emerson claimed the board violated this standard by failing to provide him an opportunity to attend, present evidence, and hear from witnesses against him at the board meeting at which the termination decision was made.

The appeals court noted that the terms “fair,” “reasonable,” and “good faith” were not defined in the act, so it examined the act’s history for legislative intent. When drafting the North Carolina Nonprofit Corporation Act, the Legislature incorporated many provisions from the American Bar Association’s Model Nonprofit Corporation Act (model act), but not all.

The model act has since been amended to state that termination procedures are fair and reasonable when the member is given at least 15 days prior written notice of the proposed termination and an opportunity to be heard before a decision is made. However, the Legislature declined to include this requirement in the North Carolina act. When the Legislature adopts verbatim provisions of a model code but rejects others, there is a presumption that the Legislature chose to deviate from the model code’s requirements. Accordingly, the appeals court held that a hearing was not required to comply with the act’s fair, reasonable, and good faith requirements for termination.

The appeals court further noted that, even if the act did require prior notice and a hearing, it was unreasonable for Emerson to claim he was damaged by the lack of hearing when he elected not to attend the meeting proposed by the club.

Accordingly, the trial court’s entry of summary judgment in the club’s favor was affirmed.

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Short-Term Leasing Consistent with Residential Use

Tarr v. Timberwood Park Owners Association, Inc., No. 16-1005 (Tex. May 25, 2018)

Use Restrictions: The Texas Supreme Court held that short-term leasing did not violate a residential use restriction.


In 2012, Kenneth Tarr purchased a home in the Timberwood Park subdivision in San Antonio, Tex. Timberwood Park Owners Association, Inc. (association) governed the subdivision.

In 2014, Tarr’s employer transferred him to Houston. Instead of selling his San Antonio home, Tarr decided to use it for short-term rentals. He formed a company to manage the rentals and advertised the home online. Over five months, the home was rented for about 102 days for periods ranging from one to seven days. Parties of various sizes rented the home, sometimes involving several families and as many as 10 people at one time. Tarr paid both state and county hotel taxes for the rentals.

The association notified Tarr that short-term rentals constituted commercial use and violated the subdivision’s restrictive covenants, which required that homes be used solely for residential purposes. In September 2014, the board of directors conducted a hearing and imposed a fine. Undeterred by the mounting fines, Tarr continued to lease the home.

Tarr sued the association for breach of the covenants and declaratory judgment (judicial determination of the parties’ legal rights) that the covenants did not limit leasing durations. The trial court granted summary judgment (judgment without a trial based on undisputed facts) in the association’s favor and ordered Tarr to cease short-term rentals immediately. Tarr appealed.

In Tarr v. Timberwood Park Owners Assn, 510 S.W.3d 725 (Tex. App. Ct. 2016) (reported in December 2016 Law Reporter), the Fourth District Court of Appeals affirmed the trial court’s decision, holding that the covenants prohibited short-term rentals to persons who did not intend to remain in the home. Tarr appealed to the Texas Supreme Court.

Two restrictions in the covenants mentioned residential use. First, no building other than a single-family residence could be constructed on a lot. Second, lots could be used solely for residential purposes, and no business could be conducted that was noxious or harmful. The supreme court stated the context in which the limitations were established could not be ignored. The two restrictions were in entirely different sections of the covenants, and the supreme court declined to conflate the two.

The single-family residence restriction was among the building restrictions. The supreme court found it merely limited the structure that could be erected on the lot, not the activities that could take place in the structure.

The supreme court analyzed the residential purpose restriction to determine whether it focused on the owner’s use of the property or on the activity that takes place on the property. If the restriction governed the owner’s use, then Tarr violated the restriction by profiting from the lot as part of a business enterprise. However, by referring to how the property was used, the restriction expressly made the conduct taking place on the property the relevant question. So, did the tenants use the property for a residential purpose?

The supreme court noted the covenants did not define “residential purpose” or “business purpose.” This was especially problematic because “residence” could have multiple meanings. If a covenant is unambiguous, the restriction must be liberally interpreted to give effect to its purpose and intent.

A covenant is ambiguous if more than one reasonable interpretation can be offered. However, the fact that a word has two or more meanings does not automatically make it ambiguous. Sometimes the relevant question is not which of two meanings is intended but how general a single meaning should be. If a court can assign a meaning to “residential purposes,” it is not ambiguous solely because it is vague or uncertain when applied to a certain factual question.

The supreme court found the appropriate meaning of “residential purpose” could be discerned by considering its context within the use restrictions and by examining the meanings given the term when the covenants were recorded. The supreme court concluded that residential use involved activities generally associated with a personal dwelling.

The covenants did not address leasing or impose minimum occupancy requirements. As such, the supreme court declined to add restrictions to the covenants by narrowly interpreting “residential.” Without some indication to the contrary, words are to be given their full meaning and not arbitrarily limited.

The supreme court did not address the fact that the courts of appeals in different districts have reached seemingly different conclusions about short-term leasing restrictions. (See Ridgepoint Rentals, LLC v. McGrath, Nos. 09-16-00393-CV, 09-17-00006-CV (Tex. Ct. App. 9th Dist. 2017), reported in January 2018 Law Reporter; and Zgabay v. NBRC Prop. Owners Assn, No. 03-14-00660-CV (Tex. Ct. App. 3rd Dist. 2015), reported in October 2015 Law Reporter). However, it did disapprove those cases that imposed an intent or physical presence requirement when the covenant included no such specification. The supreme court further noted that different conclusions could be reached where the covenants defined residential or business uses by specifically enumerating prohibited conduct.

In conclusion, the supreme court held that, so long as Tarr’s renters used his home for a residential purpose, no matter how short-lived, neither their on-site use nor Tarr’s off-site use violated the restrictive covenants. The Supreme Court reversed the summary judgment grant in the association’s favor and remanded the case to the trial court for further proceedings.

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