February 2019
In This Issue:
Recent Cases in Community Association Law
Owner Did Not Have to Share in Costs to Renovate Limited Common Areas for Others' Exclusive Use
Condominium Developer Inappropriately Tries to Use Building Exterior for Third-Party Advertising
Condominium Association Qualified as a Homeowners Association for Purposes of Covenant Revitalization Statutes
Association Does Not Have to Afford a Hearing to Tenants
U.S. District Court Decrees That Condominium Association Liens Cannot be Crammed Down in a Chapter 13 Bankruptcy
Metal Workshop Qualified as a First-Class Dwelling
Court Allows Declaration Amendment Despite Lack of Requisite Votes
Adult Foster Care Family Home Did Not Constitute a Business in Violation of Covenants
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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.


Owner Did Not Have to Share in Costs to Renovate Limited Common Areas for Others' Exclusive Use

Adato v. 234 Beacon Street Condominium Trust, 94 Mass. App. Ct. 1118 (Mass. App. Ct. Jan. 28, 2019)

Assessments:  The Appeals Court of Massachusetts held that a condominium unit owner who had no right to park in an enclosed garage did not have to share in the costs of renovating the garage.


234 Beacon Street Condominium Trust (association) governed the 234 Beacon Street Condominium in Boston, Massachusetts.  Ronen Adato owned a unit in the condominium.

The nine-unit residential structure was separated from a trash room by a passageway.  Attached to the trash room was a garage containing six bays for cars and adjacent storage areas.  The parking bays were enclosed by doors.  There was no usable floor space in the garage that was not covered by the parking bays and the storage areas. 

The condominium master deed (master deed) dedicated the parking bays and storage areas to the exclusive use of six units.  Adato's unit was not among those six units.  The trash room shared a wall with the garage, and all owners could use the trash room.

The association's board of trustees (board) discovered a sagging roof beam in the garage that needed repair or replacement.  In 2015, the board voted to knock down the garage entirely and replace it and to renovate the trash room.  The board levied a $400,140 assessment to cover the renovation costs.

Under the master deed, Adato's unit was allocated a 6.748% share of the association's common expenses.  However, the board charged Adato for only about 2% of the total renovation costs.  Nonetheless, Adato felt that was too much.  Adato sued the association, seeking a declaratory judgment (judicial determination of the parties' legal rights) that he was not required to pay any assessment for reconstruction of a garage that he had no right to use.  The trial court granted judgment in Adato's favor.

The association appealed, arguing the garage was part of the common area for which all owners were obligated to share in the renovation costs.  However, the master deed designated the garage parking and storage areas as limited common areas for the exclusive use of particular units.  It also made costs associated with such limited common areas the sole responsibility of the unit owners holding the exclusive rights.

The association urged that the entire garage structure was part of the common areas for which all owners were responsible for sharing, while only the interior spaces occupied by the assigned parking and storage areas were the limited common areas for which the six-unit owners with garage assignments were solely responsible.  The appeals court found such interpretation was inconsistent with the nature of the garage owners' exclusive rights.

The master deed granted six owners exclusive rights to use the parking and storage areas "in the garage."  Because the exclusive use rights specifically referred to indoor, enclosed parking, the appeals court determined that the limited common areas were comprised not only of the floor underneath the parking spaces, but also the surrounding garage structure.

The association complained that the master deed's reference to "in the garage" was meant only to determine the location of the assigned parking spaces compared to the other outdoor parking.  The appeals court, however, found that its interpretation was the only approach which gave effect to all of the master deed's words.

The association argued that owners with garage assignments were responsible only for the garage interior because the master deed's maintenance section specified that unit owners were responsible for the maintenance and repair of the interior of their respective units and exclusive areas.  The appeals court determined that the term "interior" qualified only units and not exclusive areas.  Moreover, it found that reading such section as a limitation on owners' financial responsibility would be inconsistent with the references to other limited common areas, such as outdoor parking, which has no "interior" space.  The appeals court stated that it would be inappropriate to find that the owner who had exclusive use of an outdoor parking space had no financial responsibility for such parking area simply because it had no "interior" space.

The appeals court did agree with the association on one point.  Since some of the renovation costs related to the trash room, which all owners use, there was no reason that Adato should avoid a share of the costs associated with renovating the trash room.  Accordingly, the portion of the trial court's judgment relating to costs associated with the trash room was stricken, and the remainder was affirmed.  The parties or, if necessary, the trial court must decide how to apportion the renovation costs between the trash room and the garage.

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Condominium Developer Inappropriately Tries to Use Building Exterior for Third-Party Advertising

Becker Boards Summit, LLC v. The Summit at Copper Square Condominium Association, No. 1 CA-CV 18-0091 (Ariz. Ct. App. Dec. 20, 2018)

Developmental Rights:  The Court of Appeals of Arizona held that a condominium declarant's attempts to designate the building exterior walls as limited common elements for the exclusive use of its unit and to grant an exclusive easement to a third party to place billboards and advertising on the building exterior were invalid under the Arizona Condominium Act.


The Summit at Copper Square Condominium Association (association) governed a 165-unit condominium in Maricopa County, Arizona.  The developer, The Summit at Copper Square, LLC (Summit LLC), held certain rights as the "declarant," including the right to appoint the association's board of directors until 75% of the units were sold to purchasers (the declarant control period). 

Summit LLC ran into financial difficulties, and its lender foreclosed on Summit LLC's 74 unsold units and declarant rights.  In 2011, Urban Commons, LLC (Urban Commons) acquired all of Summit LLC's units and declarant rights.  Since the declarant control period had not expired, Urban Commons took over control of the board.

In May 2012, Urban Commons amended the condominium declaration (declaration) to designate the garage-level walls of the building exterior as a limited common element assigned for the exclusive use of Unit 1708, which it owned.  The following month, Urban Commons, through an affiliate, entered into a license agreement with Mark Becker, manager of Becker Boards Summit, LLC (Becker Boards), giving Becker Boards the exclusive right to install and operate wall signs, digital signs, and outdoor advertising on Unit 1708's limited common elements.  Urban Commons collected 55% of the gross billboard revenues under the agreement.

In May 2013, Urban Commons granted an exclusive, perpetual easement to Mark Becker for all of Urban Commons' rights, title and interest in the garage level building exterior walls.  The next month, Urban Common again amended the declaration to designate all exterior building walls facing the street as a limited common element for Unit 1708's exclusive use. 

The association also executed an easement granting Urban Commons the exclusive, perpetual right to install and maintain on the limited common element walls advertising signs, billboards, lighting and related equipment and structures.  In exchange for $875,000, Urban Commons assigned the easement rights to Becker Boards.  The two Urban Commons' employees who constituted the association's board executed the easement and subsequent assignment on behalf of the association and Urban Commons.

The owners took control of the board when the declarant control period ended in 2014.  The new board informed Becker Boards that it intended to terminate the easement.  Becker Boards sued the association for a declaratory judgment (judicial determination of the parties' legal rights) and to prevent the association from removing any signage or terminating the easement.

The association asserted the easement and the declaration amendments were void, voidable or otherwise invalid under the Arizona Condominium Act (act) and the declaration.  The trial court agreed that the easements were voidable and ruled that Becker Boards had no right to use the exterior building walls.  It ordered Becker Boards to remove all signage and restore the exterior walls to their original condition.  Becker Boards appealed.

The declaration granted the declarant the right to create easements, common elements and limited common elements within the condominium.  However, the condominium act provides that allocations of common element interests shall not discriminate in favor of units owned by the declarant.  Becker Boards argued that common elements are distinct from limited common elements, so the act's nondiscrimination clause did not apply to its easement.

The appeals court disagreed, stating that Urban Common could not avoid the nondiscrimination clause merely by labeling the building walls as limited common elements.  The declaration provided that all portions of the condominium outside of the units were common elements; the limited common elements were merely a subset of the common elements.  Thus, the nondiscrimination clause applied to all of the exterior building walls.  The appeals court held that the declaration amendments were void because they purported to allocate a limited common element in favor of the declarant's unit in violation of the act's nondiscrimination clause.

The act also provides that any conveyance, encumbrance or transfer of an interest in the common elements without the unit to which the interest is allocated is void.  The appeals court found that, through the easements and assignment to Becker Boards, Urban Commons attempted to convey the Unit 1708's limited common elements without also conveying the unit, permanently severing a portion of the common elements from the unit.  This, too, was void under the act.

The act provides that certain contracts entered into during the declarant control period, specifically including any contract or lease between the association and the declarant or a declarant affiliate, are voidable at the association's option.  The appeals court found the easement granted by the association to Urban Commons fell within the type of contract covered by the act.  Thus, the association could void the easement, and it did so properly by giving notice to Urban Commons.

Since Urban Commons' easement was voided, the signage rights granted to Becker Boards through the easement were no longer effective, and all rights in the building walls reverted to the association.  Accordingly, the trial court's judgment was affirmed.

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Condominium Association Qualified as a Homeowners Association for Purposes of Covenant Revitalization Statutes

Eastwood Shores Property Owners Association, Inc. v. Department of Economic Opportunity, 44 Fla. L. Weekly D290 (Fla. Dist. Ct. App. Jan. 25, 2019)

State and Local Legislation and Regulations:  The Court of Appeal of Florida held that a condominium association qualified as a homeowners association under the Florida Marketable Record Titles to Real Property Act, entitling it to pursue covenant revitalization in accordance with the Florida Homeowners' Association Act.


Eastwood Shores Property Owners Association, Inc. (association) governed the Eastwood Shores Condominium in Pinellas County, Fla.  The condominium was established, and its declaration of condominium (declaration) recorded, in 1979.  Therefore, under the Florida Marketable Record Titles to Real Property Act (MRTA), the covenants and restrictions contained in the declaration expired in 2009.

The association applied to the Florida Department of Economic Opportunity (DEO) to revive the declaration pursuant to the covenant revitalization statutes contained in the Florida Homeowners' Association Act (HOA Act).  The association submitted the documentation required by the HOA Act.  DEO denied the request, finding that the association did not qualify as a homeowners association subject to the HOA Act since it was governed by the Florida Condominium Act (Condominium Act).

The association appealed.  The association did not dispute that it was a condominium association governed by the Condominium Act, not the HOA Act.  Instead, the association argued that a specific provision in MRTA made it eligible to seek revival of its declaration pursuant to the HOA Act's covenant revitalization sections.

MRTA provides that, a homeowners association not otherwise subject to the HOA Act may use the covenant revitalization procedures set forth in the HOA Act to revive covenants that have lapsed under MRTA's terms.  MRTA defines a homeowners association as a homeowners association as defined in the HOA Act or an association of parcel owners, which is authorized to enforce use restrictions imposed on the parcels.

MRTA does not define "parcel owner," but it defines "parcel" as real property which is used for residential purposes that is subject to exclusive ownership and which is subject to any covenant or restrictions of a homeowners association.  No one disputed that Eastwood Shores was a residential community. 

The Condominium Act specifies that a condominium unit is a part of the condominium property, which is subject to exclusive ownership.  In addition, the declaration gave the association the right to enforce its covenants and restrictions and obligated every unit owner to be a member of the association. 

The fact that each unit owner owned a proportionate undivided share of the condominium common elements did not change the fact that the unit is subject to exclusive ownership and that the association is comprised of unit owners.  That the condominium unit owners rather than the association owned the community common areas also did not remove the association from the definition of "homeowners association" under MRTA.  Therefore, the appeals court concluded the association qualified as a homeowners association under MRTA.

Moreover, the appeals court noted that eligibility for covenant revival is not determined by the definition of homeowners association.  It is the parcel owners that are eligible to seek revival of the declaration.  Had the unit owners formed an organizing committee to prepare and submit the necessary documentation, DEO would not have been able to deny the request.

Finally, the appeals court stated that the purposes served by the covenant revitalization statutes apply equally to condominiums as to subdivisions of detached homes.  The purpose is to preserve and protect existing residential communities and continue existing operations by reviving a declaration and other governing documents that have ceased to govern all or some parcels.

Accordingly, the appeals court reversed DEO's determination that the association did not qualify as a homeowners association entitled to revive its declaration.  On remand, DEO is to review the substance of the proposed revived declaration in accordance with the covenant revitalization statutes.

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Association Does Not Have to Afford a Hearing to Tenants

Harbour Island Condominium Owners Association, Inc. v. Alexander, No. B285755 (Cal. Ct. App. Jan. 24, 2019)

Covenants Enforcement:  The Court of Appeal of California held tenants did not have standing to assert the rights of their landlord before the board concerning fines imposed for the tenants' violations, and the association did not have to give the tenants an opportunity to be heard.


Harbour Island Condominium Owners Association, Inc. (association) governed a community in Ventura County, Florida.  Susan Alexander and Jason Mavropoulos (collectively, the tenants) rented a unit in the community. 

In 2015, the association sued the tenants and their landlord, alleging that the tenants stalked, harassed, and intimidated Harbour Island residents and created noise disturbances.  The association requested an injunction (requiring a party to take certain action or refrain from action) against the tenants requiring them to mitigate noise, to keep their dogs out of common areas where pets were prohibited, and to stop photographing the association president at the community pool.  The tenants accused the association of harassment for citing them for rule violations and of conspiring against them by refusing to allow them to attend association meetings. 

The tenants' downstairs neighbor testified that there was a lot of stomping and door slamming going on in the tenants' unit.  She believed the excessive noise was purposeful to provoke her because the tenants seemed to be able to control the behavior.  While the association's request for a restraining order was pending, the neighbor said it was very quiet upstairs, but when the trial court ruled against the tenants, the stomping and door slamming resumed.

Residents testified that they saw Mavropoulos lead his dog to a grassed area where pets were not allowed and let his dog urinate directly in front a sign indicating dogs were not allowed.  Mavropoulos claimed he was unaware of any common areas where dogs were not allowed.

The association president said Alexander photographed her at the pool but then hid behind a pillar when the president looked at her.  The president said Alexander was aggressive and made her frightened.  Alexander responded that filming was good when people are following you.

The trial court granted a preliminary injunction against the tenants.  It required them to place throw rugs in all walking areas of their bedroom and office, install a pneumatic mechanism on their front door, install door bumpers or pads, cease recording or photographing the president in the common area, and cease allowing their dogs to urinate and defecate in common areas marked "no pets allowed." 

Alexander appealed, arguing that the declaration of covenants (declaration) did not address dogs.  However, the declaration prohibited residents from disturbing other residents or creating a nuisance.  The appeals court held that such provision was broad enough to allow the association to exclude dogs from specified common areas for health and safety reasons.  The appeals court noted that courts are not inclined to question the wisdom of a restriction unless it violates public policy.

Alexander complained that the association did not adequately investigate the neighbors' complaints of excessive noise.  The association indicated that a physical investigation was conducted only when an architectural violation was suspected.  Since there was no suggestion that the floor was improperly installed, and door slamming was not an architectural problem, the association did not believe it was required to conduct a property inspection. 

The appeals court agreed.  The declaration did not obligate the association to conduct a physical inspection, and the association was entitled to seek an injunction to stop acoustic nuisances that interfered with other residents' quiet enjoyment.  Two other residents testified about excessive thumping, stomping, and door slamming coming from the tenants' unit.  As such, the trial court did not abuse its discretion in ordering the tenants to use rugs to mitigate the noise. 

Alexander argued she was unfairly denied an opportunity to challenge the violation notices and fines imposed by the association.  However, only owners were allowed to participate in association meetings.  The appeals court determined that Alexander did not have standing to assert the rights of her landlord with respect to his appeal before the association's board of directors.

Accordingly, the trial court's judgment was affirmed.

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U.S. District Court Decrees That Condominium Association Liens Cannot be Crammed Down in a Chapter 13 Bankruptcy

In re:  Spradley, No. 18-cv-263 (PGS) (D. N.J. February 6, 2019)

Assessments:  The United States District Court for the District of New Jersey held that a properly recorded condominium association lien was not subject to being split or subject to modification as part of a unit owner's Chapter 13 bankruptcy plan under the United States Bankruptcy Code's anti-modification provisions.


The Oaks at North Brunswick Condominium Association, Inc. (association) governed a condominium in Middlesex County, New Jersey.  Gianni Spradley owned a unit in the condominium.

In 2008, Spradley became delinquent in paying assessments to the association.  Between 2008 and 2015, the association recorded four liens totaling $33,211 against Spradley's unit.  In 2017, Spradley filed for Chapter 13 bankruptcy protection.  Spradley valued his unit at $169,000 and indicated it was subject to a first mortgage of $172,000.  The association asserted it had a secured claim against the unit in the amount of the four recorded liens plus an unsecured claim in the amount of $7,509.

In his proposed bankruptcy plan, Spradley sought to "cram down" the association's recorded liens by splitting them into one secured lien of $1,920, equal to six months' of regular assessments, and an unsecured claim of $32,291.  The New Jersey Condominium Act (condominium act) grants limited priority over the first mortgage for an association lien in the amount of the customary assessments for the six-month period prior to the lien's recording so long as certain conditions are met.

The association objected to the proposed plan, arguing that its liens were protected under the anti-modification provisions of the United States Bankruptcy Code (bankruptcy code), which prevent modification of any claim secured by an interest in real property that also serves as the debtor's principle residence.  The unit was Spradley's principle residence.

Finding that the condominium act created an independent statutory lien that barred invocation of the bankruptcy code's anti-modification provisions, the bankruptcy court granted Spradley's proposal to cram down the association's liens.  The association appealed to the United States District Court for the District of New Jersey (district court). 

The condominium act establishes a lien on each unit in favor of the association that is perfected (becomes effective) once the lien is recorded.  The district court determined that, while the condominium act elevates a lien equal to six months' of assessments above the first mortgage and other liens on the property, the remaining amounts reflected in recorded liens remain valid liens and security interests in the property.

Since the unit was Spradley's principle residence, the district court determined that the association's recorded liens would ordinarily be protected from being crammed down by the bankruptcy code's anti-modification provisions.  The decision supports the position of New Jersey condominium associations that a properly recorded lien claim is not subject to modification by debtors and should be included in its entirety in a unit owner's Chapter 13 bankruptcy plan.

The district court remanded the case to the bankruptcy court to determine whether the association's liens satisfied the condominium act's requirements to qualify as a security interest in the unit, namely whether the liens were properly recorded in accordance with the condominium act.

Editor's Note:  The Editor thanks Thomas Vincent Giaimo and Kaitlyn R. Campanile of Giaimo & Associates, LLC in Rumson, New Jersey, for contributing this case.  Mr. Giaimo and Ms. Campanile also represented the association in this appeal.

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Metal Workshop Qualified as a First-Class Dwelling

Olson v. Chula Vista Homeowners Association, No. 2 CA-CV 2018-0086 (Ariz. Ct. App. Dec. 28, 2018)

Covenants Enforcement:  The Court of Appeals of Arizona held that a metal workshop converted into a residence qualified as a first-class dwelling in compliance with subdivision covenants.


Chula Vista Homeowners Association (association) governed the Chula Vista community in Cochise County, Arizona.  In 2005, Rodney and Gloria Olson purchased a lot in Chula Vista.

In 2009, the Olsons submitted an architectural review request to the association, seeking approval to build a 1,370 square-foot, frame and stucco house, as well as a 6,000 square-foot metal workshop.  The community restrictive covenants provided that no improvement or structure other than a first-class private dwelling may be erected in the community.  The covenants also required that all improvements be "site built" and prohibited manufactured homes, modular homes, mobile homes, A-frame homes, and other "nontraditional" homes and façades.

The association approved the request.  The Olsons constructed the metal workshop but did not commence construction of the dwelling.  In 2011, the Olsons obtained a permit from the county to convert the workshop from an outbuilding to a single-family residence.  The following month, they requested and obtained a variance from the association allowing them to reside in the workshop for three years during construction of the dwelling.

By January 2015, the Olsons still had not begun construction of the dwelling.  The association informed the Olsons it intended to enforce the covenants.  The association demanded the Olsons request an additional variance and begin construction of the home or stop living in the workshop.  The Olsons responded that a variance was not required for the converted workshop to continue to serve as their residence because it was a first-class, site-built private dwelling.

In August 2015, the association notified the Olsons it was imposing a $100 per month fine for the violation.  It also recorded a violation notice against the property.

In February 2016, the Olsons sued the association, seeking a declaratory judgment (judicial determination of the parties' legal rights) that the converted workshop did not violate the covenants and that the fine was invalid because the association did not comply with the Arizona open-meeting laws.  The Olsons also claimed the violation notice slandered their title.

The trial court ruled in the Olsons' favor, finding the converted workshop was first-class and did not violate the covenants.  The trial court vacated the fine, ordered that the violation notice be removed from the property record, and awarded the Olsons $5,000 in damages.  The association appealed.

The association argued it had reasonably determined the converted workshop was not a traditional, first-class dwelling and the trial court should have deferred to the association's interpretation of its own covenants.  The appeals court stated that a restrictive covenant should be interpreted to give effect to the parties' intention, as ascertained from the words used or the circumstances surrounding the covenant's creation, and to carry out the purpose for which the covenant was created.

The covenants did not define "first-class," although the dictionary defined it as "of the foremost excellence or highest quality."  In 2003, the association had approved a 4,000 square-foot building with 1,100 square feet of living space that was identical in style and building material with the Olsons' workshop.  The association insisted that, after the metal building was approved, the covenants were amended to prohibit other owners from using such structures as residences by specifically prohibiting manufactured and modular homes and requiring that structures be site-built.

However, the appeals court found nothing in the amended covenant language specifically prohibited or addressed metal buildings such as the workshop.  Thus, the most reasonable inference was that the association considered the 2003 metal building to be first-class.  The association could have added a prohibition against using a metal building as a primary residence, but it chose not to.  Since the Olsons' workshop was of a similar size and identical in style and building materials to the earlier-approved structure, the trial court was not wrong in determining the workshop was "first-class."

The trial court found that the association slandered the Olsons' title by recording a violation notice that it knew or should have known was groundless or contained a material misstatement of fact.  The appeals court did not agree because the conclusion that the converted workshop complied with the covenants was not so highly probable that the association's conduct could be predicated upon an assumption of such.  The fact that the Olsons had previously sought a variance to live in the converted workshop indicated that they, at one time, did not believe the workshop complied with the covenants. 

Accordingly, the trial court's judgment with respect to the workshop's compliance with the covenants was affirmed.  However, the appeals court reversed the judgment pertaining to slander of title and vacated damage award to the Olsons.

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Court Allows Declaration Amendment Despite Lack of Requisite Votes

Orchard Estate Homes, Inc. v. The Orchard Homeowner Alliance, No. E068064 (Cal. Ct. App. Jan. 29, 2019)

State and Local Legislation and Regulations:  The Court of Appeal of California held that an association is not required to prove voter apathy as part of a petition to reduce the voting requirements for declaration amendments under the California Davis-Stirling Common Interest Development Act.


Orchard Estate Homes, Inc. (association) was a homeowners association, which governed a 93-unit community in Riverside County, California.  In 2011, the association adopted a rule prohibiting short-term rentals.  When it attempted to enforce the rule, however, an owner successfully defended against enforcement because the rule was not contained in the declaration of covenants, conditions and restrictions (declaration) recorded against the land.

In 2016, the association sought to amend the declaration to include a short-term rental prohibition.  The declaration could be amended with the approval of 67% of the owners and 51% of mortgagees holding first mortgages on the units.  Although 91% of the owners participated in the voting, only 58 owners voted in favor of the proposal, representing 62% of all owners.

In 2017, the association filed a petition with the trial court pursuant to the Davis-Stirling Common Interest Development Act (act), seeking judicial approval to reduce the percentage of votes required to the amend the declaration.  A group of owners who purchased units to use for vacation rentals formed The Orchard Homeowner Alliance (Alliance) for the purpose of opposing the petition.

The Alliance argued that the association's petition did not qualify for a reduction in voting requirements under the act's requirements, specifically because voter apathy had not been alleged or proved.  The trial court granted the association's petition, and Alliance appealed.

The act provides that, where the declaration requires that amendments be approved by owners holding more than 50% of the votes in the association, an association may petition the court for an order reducing the percentage of votes required for an amendment.  Among other things, the association must describe the efforts made to solicit the required owner approval, state the number of votes actually received, and explain the reason for the amendment. 

The appeals court found that the act gives the trial court broad discretion to grant or deny the petition.  The trial court is not required to make particular findings; it is sufficient if the trial record shows the trial court considered the requisite factors in making its decision.  The act specifically provides that the trial court may, but is not required to, grant the petition if it finds all of the following:  (1) proper notice of the court hearing was given to all interested parties, (2) balloting was conducted in accordance with the governing documents and applicable law, (3) a reasonably diligent effort was made to permit voting on the proposed amendment, (4) owners holding more than 50% of the votes voted in favor of the amendment, (5) the amendment is reasonable, and (6) the petition is not for an improper purpose described in the act.

Alliance did not complain that the information submitted by the association was insufficient to satisfy the act's requirements stated above.  Instead, Alliance argued that voter apathy was an essential element of the act and that a reduction in voting requirements is not appropriate unless voter apathy has been established.

California courts have previously found that the purpose of the voting reduction statute is to provide associations with the ability to amend their governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures authorized by the declaration.  However, the courts have not imposed an additional requirement beyond those stated in the act, and voter apathy is not among the list of elements that must be established under the act.

The appeals court declined to impose an additional element not expressed by the legislature in the act.  The appeals court found that the trial court did not abuse its discretion in granting the association's petition.  Accordingly, the trial court's judgment was affirmed.

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Adult Foster Care Family Home Did Not Constitute a Business in Violation of Covenants

Saunders v. Counts, No. 341268 (Mich. Ct. App. Feb. 7, 2019)

Covenants Enforcement:  The Court of Appeals of Michigan held that operation of an adult foster care family home did not violate subdivision covenants prohibiting businesses.


In 2014, Candice Counts purchased a home in the Pine Valley Estates community in Livingston County, Michigan.  Later that year, she established Hummingbird Meadows, Inc. (Hummingbird Meadows) as a nonprofit corporation to operate an adult foster care facility in her home.  Six elderly residents with disabilities moved into the home, and Counts, a registered nurse, lived in the home with them and cared for the residents.

David Saunders and several other owners in Pine Valley Estates (collectively, plaintiffs) sued Counts and Hummingbird Meadows for violation of the community protective covenants, asserting that operation of the foster care facility violated the covenants' prohibition on businesses within the community.  The plaintiffs alleged the business created problems for the community, including generating additional traffic.  The plaintiffs sought a permanent injunction (order prohibiting or mandating certain action) barring operating of the facility in the community.

Shortly after the lawsuit was filed, the Michigan Department of Licensing and Regulatory Affairs granted Hummingbird Meadows a license to operate an adult foster care family home.  Under the Michigan Adult Foster Care Facility Licensing Act (act), an adult foster care family home is a private residence with the approved capacity to receive six or fewer adults to be provided with foster care for at least five days per week and at least two consecutive weeks.  The licensee must live in the residence.

Counts responded that the plaintiffs' claims were barred by the act.  She also argued that the adult foster care home had a minimal impact on traffic because the residents did not drive or maintain personal vehicles.  In addition, the home was located near the subdivision entrance, so any increased traffic from emergency medical services was minimal.  Counts also insisted the foster care home constituted a single-family residential use that did not conflict with the covenants' prohibition on businesses.

The trial court granted summary judgment (judgment without a trial based on undisputed facts) in the favor of Counts and Hummingbird Meadows (collectively, the defendants).  The plaintiffs appealed.

The Pine Valley Estates covenants specified that the lots could be used only for single-family residential purposes and that no profession of any kind or business enterprise may be conducted upon any lot.  The plaintiffs conceded that the foster care home might be a permissible residential use, but they still insisted it violated the business prohibition.

The plaintiffs relied upon a prior case in which the Michigan Supreme Court held that a family daycare center constituted a business or commercial use of property.  However, the Michigan Court of Appeals (appeals court) found significant differences between a daycare facility and an adult foster care home. 

At daycare facilities, parents drop off children for temporary care and pick them up later the same day.  Daycare facilities do not offer permanent residency for the children; the children do not have their own rooms, store their belongings there, or use the facility as their legal address.  As such, the recipients of the daycare services do not reside together as a single housekeeping unit with the facility caregivers.  By contrast, the residents at Hummingbird Meadows were permanent residents of the home who used the home's address as their legal address.  Counts also lived with the residents in the home as a family, so they constituted a single housekeeping unit.

The appeals court also recognized that Michigan has a public policy supporting the community placement of adults requiring foster care as part of a movement toward deinstitutionalization.  Such public policy is expressed both in the act and in case law.  It is also supported by a Michigan constitutional mandate to foster and support institutions, programs and services for the care, treatment and rehabilitation of persons who are physically, mentally or otherwise seriously disabled.

As such, the appeals court concluded the trial court was correct in ruling in the defendants' favor.  However, the appeals court recognized that residential use only restrictions are valuable property rights and are also favored by public policy.  So, the appeals court cautioned that its opinion should not be interpreted to extend further than the specific facts of this case and that there may be instances when restrictive covenants can work to bar operation of an adult foster care facility.

Accordingly, the trial court's judgment was affirmed.

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