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, CAI’s College of Community Association Lawyers prepares a case law update annually. Case law summaries along with their references, case numbers, dates, and other data are available online.

Lack of Restrictions Did Not Mean Multifamily Housing Was Permitted

AZ Developers, LLC v. Sun Valley Farms Property Owners Association of Queen Creek, No. 2-CA-CV 2021-0016 (Ariz. Ct. App. Oct. 5, 2021)

Sun Valley Farms Property Owners Association of Queen Creek (association) governed the Sun Valley Farms community in Pinal County, Ariz. In June 2018, AZ Developers, LLC (AZD) purchased a parcel in the community with the intent of building a multifamily apartment complex on it.

AZD hired an architect to design the complex and began the process of seeking rezoning and a change in land use for the property. The property was zoned for suburban ranch and general business, and its land use designation was moderate low-density residential and rural living/suburban neighborhood. AZD proposed changing the zoning to multiple residence and the land use designation to high-density residential and urban center.

AZD held community meetings about its proposed zoning and land use changes. The association's president attended the meetings and asked AZD to contact her. The president also emailed AZD asking how it planned to address the residential use restriction but received no response. The community’s declaration of conditions, covenants, and restrictions (declaration) prohibited more than one single-family residence per parcel on the property.

AZD sued the association, seeking a declaratory judgment (judicial determination of the parties' legal rights) that the declaration did not prohibit multifamily units, that the association could not prohibit or interfere with its plans to build multifamily units, and that the one single-family residence restriction was too vague to prohibit the construction of multifamily units. The single-family residence restriction was adopted as an amendment to the declaration more than 20 years before AZD's purchase. AZD also contended that the amendment was invalid because the association did not follow the proper procedures to amend the declaration.

The trial court determined that the amendment was valid and that the restriction clearly prohibited multifamily housing. It granted summary judgment (judgment without a trial based on undisputed facts) in the association's favor and awarded the association attorneys' fees and costs. AZD appealed.

The declaration required the written consent of the owners of at least 75% of the acreage for any amendment. It further stated that the amendment was not effective until the proper instrument reflecting the required consents had been executed, acknowledged, and recorded in the county records. AZD argued that the owners consenting to the amendment had to sign the amendment and that their signatures had to be acknowledged and notarized for the amendment to be effective.

The appeals court noted that the amendment provisions required only that the required consents be reflected in a writing that was executed, acknowledged, and notarized. It held that such provision did not require that any individual owner's signature be executed, acknowledged, notarized, or recorded. The amendment stated that the owners signing the amendment represented at least 75% of the acreage. The amendment was signed by an association officer, whose signature was acknowledged and notarized, and it was recorded. Since the recorded document reflected the required consent of owners, it complied with the declaration's amendment provisions and was enforceable.

AZD asserted that multifamily units were not prohibited by the declaration because the declaration was silent on the issue. The appeals court stated that the courts are to give effect to the intention of the parties as gleaned from the declaration's text as well as the circumstances and purposes relating to its creation. The appeals court stated that the fact that the declaration did not expressly prohibit multifamily residences or even reference multifamily use did not mean that such use was permitted.

In addition to permitting only one single-family residence per parcel, the declaration permitted only one accessory structure that was incidental to single-family residential use. The appeals court determined that the plain intent was to limit any housing to single-family residences. The fact that single-family residences were the only type of housing discussed and regulated reasonably indicated that other types of housing were prohibited.

In addition, all the other restrictions on construction and appearance related only to single-family residences and accessory structures. It seemed inconceivable that the parties intended to be highly restrictive of what could be done with respect to single-family residences but intended to permit multifamily housing with no restrictions whatsoever on size, appearance, or construction.

AZD complained that the association was not entitled to recover attorneys' fees because the declaration and association bylaws permitted recovery only in enforcement actions, but a violation of the declaration had yet to occur. However, Arizona law gave the trial court discretion to award attorneys' fees in a contested action arising out of a contract. Since the declaration is viewed as a contract, the trial court did not abuse its discretion in awarding attorneys' fees to the association.

Accordingly, the trial court's judgment was affirmed.

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Developer Cannot Impose Property onto Association Without Consent

The Carlyle Condominium Association v. Spruce Street Properties, No. 924 WDA 2020 (Pa. Super. Ct. Sept. 10, 2021)

Spruce Street Properties (Spruce Street) and Duquesne Properties, LLC developed The Carlyle, a 61-unit condominium in the historic Union Bank Building in downtown Pittsburgh. David Bishoff (Bishoff) owned both development companies. Bishoff recorded a declaration of condominium (declaration) that created the Carlyle Condominium Association (association) governing the condominium.

The declaration originally identified the building's exterior as within the boundaries of the first-floor commercial unit owned by Spruce Street. The declaration defined the building exterior as including all exterior walls, elevations, roof, windows, doors, and the airspace above the building.

In June 2014, there was an election where unit owners took control of the association. After the election, the association sued Spruce Street, Bishoff, and others, alleging that Spruce Street breached the declaration by failing to deposit funds into a reserve to cover expenses relating to the building exterior. Spruce Street and Bishoff then unilaterally recorded an amendment to the declaration that converted the building exterior from part of the commercial unit to common elements and specified that the association was responsible for performing and paying for exterior maintenance, repair, and replacement. The association had no part in creating, executing, or recording the amendment.

In June 2016, the association initiated a second lawsuit, which was consolidated with the earlier lawsuit, seeking a declaratory judgment (judicial determination of the parties' legal rights) to declare the amendment invalid and/or unenforceable under the Pennsylvania Uniform Condominium Act (act).

The trial court granted summary judgment (judgment without a trial based on undisputed facts) in favor of the association with respect to the declaratory judgment claim. Spruce Street and Bishoff (collectively, the defendants) appealed.

The defendants argued that the amendment was valid because the declaration reserved to Spruce Street the right to convert a portion of the commercial unit to common elements. Therefore, the association was placed on notice of Spruce Street's right to unilaterally amend the declaration. In addition, the act permits units to be subdivided or converted into a combination of units and common elements and permits such an amendment to be executed by the unit owner. The defendants further claimed that no additional duties had been placed on the association, as it was always obligated to maintain the building exterior.

The act provides that the declaration may be amended only by the vote or agreement of unit owners holding at least 67% of the votes in the association or such larger majority as the declaration may require. This voting requirement does not apply to certain limited amendments executed by a developer, none of which were applicable in this case. The owner voting requirement also does not apply to amendments by a unit owner to subdivide the owner's unit.

The defendants insisted their amendment qualified as a unit owner subdivision. The act permits an owner to subdivide its unit into two or more units, but each subdivided unit must be assigned a unit number, a vote in the association, and liability for common expenses. The defendants' amendment did none of these things. The act did not permit the unit owner unilaterally to convert all or any portion of the unit into common elements.

The act permits a declaration to expressly provide a right for units to be subdivided or converted into common elements or a combination of units and common elements. However, the appeals court found no exemption from the act's voting requirement for amendments for such subdivisions or conversions. All the exemptions from the voting requirement are clearly stated in the act. The act plainly required that unit owners vote on the type of amendment the defendants attempted to make.

Nothing in the act authorized a developer or unit owner to unilaterally execute a declaration amendment that would effectively convert a significant portion of a unit into a common element for which the association is responsible to fund and maintain. In addition to the owner voting requirement, the act required that the amendment be executed, recorded, and certified by an association officer. It was undisputed that no association officer had any part in the amendment. The act's requirements are designed to protect the association and unit owners from exactly what the defendants attempted to do, which is to unilaterally force obligations upon the association without the association's or the owners' consent.

Accordingly, the trial court's judgment was affirmed.

Party Holding Sole Discretion Has Complete Authority to Withhold Consent

First Equitable Realty III, Ltd. v. Grandview Palace Condominium Association, Inc., No. 3D20-1807 (Fla. Ct. App. Oct. 6, 2021)

First Equitable Realty III, Ltd. (developer) developed Grandview Palace, a condominium in Miami-Dade County, Fla. Grandview Palace Condominium Association (association) governed the condominium.

The developer owned coin-operated washers and dryers located in 22 laundry rooms in the condominium. Residents could use the laundry facilities on a pay-per-use basis. For nearly 10 years, the association paid all utility expenses incurred in operating the laundry rooms.

The declaration of condominium (declaration) designated the laundry rooms as limited common elements. It made the association responsible for maintaining and repairing the limited common elements, except that the association was not responsible for repairing or replacing any equipment or improvements made to the limited common elements by the developer.

The declaration did not address the laundry room utility expenses, but it defined "common expenses" as costs for the operation, maintenance, repair, or replacement of the common elements and utilities for the entire condominium. The declaration stated that, for so long as the developer held units for sale in the ordinary course of business, the association could not take any action that would be detrimental to the sale or lease of units by the developer, in its sole opinion, without the developer's consent.

After the developer turned over control of the association to the owners, the association's board of directors proposed an amendment to the declaration providing that the association was not responsible for laundry room utility charges. The developer refused to give its consent, but the amendment was adopted by the association and recorded.

The association then sued the developer, seeking a judicial determination of the parties' rights. The developer contended that the amendment was invalid without its consent. The association asserted that, even if the amendment were invalid, the original declaration made the developer responsibility for the laundry room utility expenses because they did not qualify as common expenses. The trial court granted summary judgment (judgment without a trial based on undisputed facts) in the association's favor. The developer appealed.

The appeals court noted that all limited common elements are common elements, even though not all common elements are limited. By specifying that utilities for the entire condominium were common expenses payable by the association, without excluding utilities for limited common elements, it was clear the association was intended to absorb the utility costs relating to the laundry rooms. Such interpretation was consistent with the Florida Condominium Act (act), which provided that maintenance of the common elements was the responsibility of the association, but the declaration could provide that limited common elements be maintained by those entitled to use them or that the costs of maintaining the limited common elements be charged to those entitled to use them.

Thus, the act establishes that the default rule is for the association to pay the costs of the limited common elements unless the declaration clearly shifts the burden to those entitled to use the limited common elements. Since the declaration did not clearly shift the expense burden to the developer, the association is responsible for the costs.

The declaration gave the developer the right to reject any amendments it deemed harmful to the sale of its units. The association argued that the amendment was valid because shifting the utility expenses to the developer would be beneficial to the sale of units as future owners would pay lower assessments. However, the declaration gave the developer the sole discretion to determine the harm to its sales. It did not impose any reasonableness standard on exercising such discretion. Given the developer's opposition to the amendment, the amendment was invalid.

Accordingly, the trial court's judgment was affirmed in part and reversed in part. The case was remanded for further proceedings.

Developer's Failure to Build Additional Units Before Deadline Caused Undeveloped Land to Become Common Property

Lakeside Estates Condominium Property Owners Association v. Sugar Springs Development Company, No. 354451 (Mich. Ct. App. Sept. 16, 2021)

In 1994, Sugar Springs Development Company (Sugar Springs) recorded a master deed creating a condominium in Gladwin County, Mich. Lakeside Estates Condominium Property Owners Association (association) governed the condominium. Sugar Springs reserved the right to construct up to 60 units in the condominium. Its right to expand the condominium originally expired in 2000, but Sugar Springs recorded various amendments to the master deed extending the development deadline to 2022. A total of 48 units were built.

In 2019, Sugar Springs took steps to construct the last 12 units. The association sued Sugar Springs, claiming that Sugar Springs lost the right to construct additional units because the undeveloped land had become condominium common elements by default under the Michigan Condominium Act (act).

The act's development provisions were amended in 2016, but the amendment did not retroactively apply to developmental rights created prior to the amendment. The 2002 version of the act provided Sugar Springs with a 10-year period in which to unilaterally withdraw any portion of the undeveloped land identified in the condominium documents as "need not be built" without the consent of unit owners. If Sugar Springs did not withdraw the undeveloped property from the condominium before expiration of the development period, the act provided that the undeveloped property remained part of the condominium as general common elements and all rights to construct units on such property ceased.

The condominium's construction began in December 1998, so Sugar Springs had until December 2008 to withdraw or develop the undeveloped property. Sugar Springs' failure to do so by the deadline resulted in the undeveloped land remaining part of the project as general common elements. The trial court determined that Sugar Springs' rights were extinguished well before it attempted to construct additional units in 2019. It granted summary judgment (judgment without a trial based on undisputed facts) in the association's favor. Sugar Springs appealed.

Sugar Springs argued that the 2002 act violated its due process rights because its developmental rights were taken without notice or any formal process. However, the state may condition the permanent retention of a property right on the performance of reasonable conditions that indicate a present intention to retain the property interest. The legislature need only enact and publish a law and afford citizens a reasonable opportunity to familiarize themselves with the terms of a statute to advise its citizens of the lapse of a property right, and no specific notice need be given regarding an impending lapse.

Sugar Springs argued that the 2002 act resulted in an unconstitutional taking of its property without compensation. A taking requires an action by the government to take private property or a property right. However, it was Sugar Springs' failure to act within the 10-year period that caused the lapse of the property right, not any action of the state.

Sugar Springs also argued that the trial court erred by deciding that the master deed could not be amended to extend the time to complete the project beyond December 2008. The appeals court disagreed. Condominiums are not products of common law and exist only through the rights granted by that act. The act provides a detailed process for creating and revising a condominium project and the documents required. The act also contains explicit provisions governing amendments to the master deed.

Sugar Springs contended that it had the contractual right to amend the master deed to extend the development deadline, and the act could not infringe upon that right. Any so-called contractual rights Sugar Springs may have to develop the condominium were created by the act itself and subject to the act's amendment requirements. The act imposed strict limits on rights to construct optional units, but Sugar Springs could have effectively extended the construction deadline by designating the units as must be built before the optional construction deadline expired.

Sugar Springs argued the association and the unit owners were equitably estopped from challenging the amendment extending the development deadline. Equitable estoppel originated to help prevent fraud. Sugar Springs contended that the association's and the owners' failure to immediately object to the master deed amendment purporting to extend the development deadline induced Sugar Springs to act to its prejudice by incurring costs and expenses in the belief that it could construct the remaining units. For equitable estoppel to apply, however, would require that the association and the owners actually did something to cause Sugar Springs to lose its vested property rights. This did not occur. Sugar Springs' vested property rights lapsed by operation of law.

Accordingly, the trial court's judgment was affirmed.

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Creating a Three-Unit Condominium Constitutes a Division of Land for Purposes of Restrictive Covenant

Nordstrom v. Kane, No. 2020AP1942 (Wis. Ct. App. Sept. 28, 2021)

In 1993, the owners of 50 parcels on Cottage Row Road in Gibraltar, Wis., executed and recorded restrictive covenants (covenants) against their properties for the purpose of maintaining fair and adequate property values and preserving the property as a desirable residential area.

In June 2018, Steven and Jacqueline Kane, through their company Cottage Row Properties, LLC (collectively, the Kanes), purchased a 7.44-acre parcel (Tract 54) on Cottage Row Road. The covenants stated that Tract 54 contained three dwellings, and it allowed one additional dwelling and accessory building to be constructed on the tract as permitted by county ordinance. However, the covenants expressly prohibited Tract 54 from being divided to create any additional tracts therefrom.

In 2019, the Kanes removed one structure from the property, leaving the main residence and a cottage. They planned to covert Tract 54 into a three-unit condominium. The main residence and the cottage would comprise two of the units, which they intended to sell. The Kanes planned to construct and retain a new detached residence on the third unit.

The Kanes, believing that the covenants would not impede on their plans, filed an application for land division with the county. Shortly thereafter, a group of Cottage Row Road owners sent the Kanes a letter asserting that their plans would violate the covenants and the zoning code. The letter demanded that the Kanes cease and desist all further action to subdivide the tract.

The Kanes did not withdraw their application. Instead, they recorded a Cottage Row Condominium declaration and a plat against Tract 54 in September 2019. The following day, Stephan Nordstrom, Graycliffe LLC, and Carl and Cynthia Curry (collectively, the objectors) sued the Kanes, seeking to bar them from dividing the property and a declaratory judgment (judicial determination of the parties' legal rights) that the condominium declaration and plat were void and that no condominium existed on Tract 54.

The objectors argued that, under the county land ordinance, the creation of a condominium on Tract 54 constituted a land division in violation of the covenants. The Kanes insisted that the creation of a condominium was not a division of land under state law. The county zoning administrator testified that the establishment of a condominium was considered a land division under the zoning ordinances and treated as other types of land divisions because each unit in the condominium constituted a separate parcel of real estate. Before the condominium documents were recorded, Tract 54 constituted one parcel, but the condominium documents converted the property into three separate parcels which could be independently owned and conveyed.

The trial court determined that the covenants did not allow Tract 54 to be divided to create additional tracts, and that was exactly the effect of the condominium structure. The trial court granted summary judgment (judgment without a trial based on undisputed facts) in favor of the objectors, declaring the condominium declaration and plat void. The trial court also entered a permanent injunction (order prohibiting or mandating certain action) restraining the Kanes from taking further action relating to the division of Tract 54 and barred them from selling any of the condominium units. The Kanes appealed.

The covenants did not define the terms "divided" or "tracts," so the appeals court consulted dictionaries. It determined that "divide" meant to separate into two or more parts, and "tract" meant a precisely defined area of land. The condominium conversion in this case clearly separated Tract 54 into two or more precisely defined areas of land by creating the three site condominium units in violation of the covenants.

The Kanes argued that this interpretation was contrary to the Wisconsin Condominium Ownership Act (act), which provides that a condominium is a form of ownership, not a form of land use, and is not a subdivision as defined by the land platting statutes. However, the Kanes ignored the remainder of such provision, which expressly limits such statement for purposes of interpreting the act. Therefore, by its express terms, the subdivision provision does not apply to the interpretation of a restrictive covenant unrelated to the act.

The objectors conceded that the condominium conversion did not qualify as a subdivision for purposes of the act, but it nevertheless qualified as a division of land for purposes of the covenants. The appeals court agreed because nothing in the act's plain language prevented a restrictive covenant from treating a condominium conversion as a division of land distinct from a subdivision under the platting statutes. In fact, the act expressly states that a subdivision ordinance may apply to a condominium as long as it is applicable to condominiums and the application is reasonably related to the nature of condominium ownership.

The Kanes insisted that the condominium conversion did not violate the covenants because it did not create more residences than permitted by the covenants. The appeals court stated that the restriction on the number of homes was not relevant to the question of division of the land. The condominium conversion violated the covenants because it divided Tract 54 into additional separate tracts.

Accordingly, the trial court's judgment was affirmed.

Georgia Property Owners' Association Act Allows New Use Restrictions Without Owner's Consent

Ochoa v. Coldwater Creek Homeowners Association, Inc., No. A21A0914 (Ga. Ct. App. Sept. 28, 2021)

Rafael and Luz Ochoa (the Ochoas) owned a house in the Coldwater Creek subdivision in Lawrenceville, Ga. Coldwater Creek Homeowners Association, Inc. (association) governed the community in accordance with its declaration of covenants (declaration).

In 2005, the association members voted to amend the declaration to opt into compliance with the Georgia Property Owners' Association Act (act). The owners also voted to make other amendments to the declaration, including imposing a leasing cap prohibiting more than 5% of the units from being rented at any one time and requiring owners to obtain a leasing permit from the association before leasing a property.

In 2014 and 2015, the association notified the Ochoas that they were violating the declaration by failing to maintain their yard and treat weeds, to obtain a shade for their garage window, and to repair their mailbox and post. The Ochoas also were leasing their property without the association-issued permit. The Ochoas did not undertake any of the required maintenance. The association levied fines against the Ochoas. In June 2015, the association filed a lien against the Ochoas' lot for $6,548, which represented unpaid fines, late fees, and other outstanding balances.

In July 2017, the Ochoas corresponded with the association, disputing the fines. There was back-and-forth correspondence between the association and the Ochoas until the Ochoas filed suit to cancel the lien, declare the leasing restrictions unenforceable, and collect attorneys' fees. The association filed a counterclaim to bar the Ochoas from continuing to lease their property and to collect the unpaid amounts due.

The trial court determined that the Ochoas were barred from suing the association because they did not request a hearing before the association's board of directors (board). The declaration required that, prior to filing suit against the association, the owner must make a written request to the board for a hearing and attend the hearing to discuss an amicable resolution of the dispute. In the hearing request, the owner must make a good faith effort to explain the grievance and give the board a reasonable opportunity to address the grievance before filing suit. The trial court granted summary judgment (judgment without a trial based on undisputed facts) to the association and ordered the Ochoas to pay fines totaling $18,759. The Ochoas appealed.

The Ochoas argued that the association waived strict enforcement of the hearing provision through its actions in attempting to reach a settlement with them without holding a hearing. The appeals court disagreed. The law will not infer the waiver of an important contract right unless the waiver is clear and unmistakable. For a waiver to exist, the evidence must show an intentional relinquishment of a known right or benefit as to exclude any other reasonable explanation.

There was no evidence that the association clearly and unmistakably waived the dispute resolution provision. There was no mention of a hearing by either side. As such, the Ochoas' claims were barred by their failure to comply with the declaration, but this did not bar the association's counterclaims against the Ochoas.

The Ochoas argued that a 75% majority, as opposed to two-thirds, was required to impose the leasing amendment against them because that was the majority required for declaration amendments at the time they purchased their property. In 2002, at least 75% of the members voted to amend the declaration to reduce the percentage approval required for future declaration amendments to two-thirds.

Under Georgia law, no change in the covenants restricting lands to certain uses that imposes a greater restriction on the use or development of the land will be enforced unless agreed to in writing by the owner of the affected property at the time such change is made. The appeals court determined that the 2002 amendment was merely a change in the procedural rules concerning how the community governed itself rather than the imposition of a greater restriction on the use or development of the land. Therefore, the reduction in the voting percentage was valid.

The association members next voted to opt into the act. Communities that have opted into the act are specifically made exempt from the law barring any change in the covenants restricting lands to certain uses to impose greater restrictions on the use or development of the land without the owner's consent. Thus, the amendment to the declaration imposing the leasing restriction could be adopted by a two-thirds majority vote. As such, the Ochoas were subject to the leasing restriction, even though they did not consent to it.

The Ochoas argued that the fines were arbitrary and capricious because the fine amounts varied over time. The association showed that the balance due was $5,475, but the Ochoas submitted a statement dated June 2015 that reflected a balance due of $5,075. This unexplained discrepancy created a factual dispute that prevented summary judgment from being granted to the association; the issue would have to be resolved at a trial.

Accordingly, the trial court's judgment was affirmed in part and reversed in part.

Association Needs Accurate Accounting Records to Prevail in Collection Case

Villa Marina Association of Apartment Owners v. Collins, No. 81865-1-1 (Wash. Ct. App. Oct. 4, 2021)

Villa Marina Association of Apartment Owners (association) governed a condominium in Washington state. John Collins owned a unit in the condominium. Collins lived elsewhere and rented the unit.

In December 2016, the association sued Collins for delinquent assessments (2016 case). Collins contended that he had made all assessment payments and that the association had a practice of posting payments months after it received the checks. He also asserted that the association had not given him credit for two payments, and he provided copies of the canceled checks.

The association provided a payoff statement indicating that Collins owed $12,006 through February 2017. Although Collins claimed the late fees and interest imposed were not justified due to the association's accounting irregularities, he paid the amount demanded by the association. The parties agreed for the case to be dismissed, but no settlement agreement was signed, and there was no agreement about how the payment would be applied.

In December 2019, the association again sued Collins, claiming that his account had been delinquent since September 2018. The association requested a money judgment, foreclosure of its lien, and appointment of a receiver over Collins' unit. The Washington condominium act (act) provides that an association is entitled to the appointment of a receiver to collect rent from the tenant of a nonowner-occupied unit in an action to foreclose the association's lien.

The association moved for summary judgment (judgment without a trial based on undisputed facts). It submitted an account ledger starting in August 2018. The ledger showed that Collins had a credit balance of $421 in August 2018 but owed $40,072 by May 2020 for assessments, late fees, interest, and attorneys' fees.

Collins submitted his own accounting showing his payments. He contended that the association incorrectly applied the settlement payment for the 2016 case, and once the inappropriate late fees and interest were removed, his account had a higher credit balance. The association argued that Collins could only dispute the association's ledger from and after March 2017 and could not re-argue amounts due through February 2017 covered by the 2016 case.

The association agreed to remove interest charges from March 2017 through August 2018 and submitted an updated ledger to the trial court. The association claimed that the updated ledger reflected a generous windfall in Collins' favor. The updated ledger showed that Collins owed $44,092 even after the adjustments. The trial court first thought the accounting too confusing to clearly determine what Collins owed, but the association insisted that any accounting discrepancy was in Collins' favor. The trial court granted summary judgment in favor of the association and appointed a receiver over Collins' unit.

Collins appealed, contending that there remained a genuine issue of material fact as to the exact amount he owed to the association. Summary judgment is appropriate only if there is no genuine issue as to any material fact and the requesting party is entitled to judgment as a matter of law. The party seeking summary judgment bears the burden of demonstrating the absence of any genuine issue of material fact.

The appeals court held that the association did not show that there was no genuine issue of material fact. The association's contention as to the validity of the ledger balance was based on the premise that Collins' payment to settle the 2016 case zeroed out the account balance as of March 2017. However, the association presented no evidence that Collins owed at least $12,006 before he made the settlement payment.

The association argued that Collins was barred from disputing the accounting before March 2017 as a matter of law based on the principle of res judicata. For this principle to apply, the 2016 case had to result in a final judicial determination on the merits of the claim. However, Collins' delinquency amount before the settlement payment was not a definite issue adjudicated by the trial court. Rather, the trial court dismissed the 2016 case based on the stipulation of the parties. As such, Collins was entitled to a trial to determine the exact amount due.

However, the association was entitled to the appointment of a receiver to collect rent from Collins' tenant. The act clearly provides that an association is entitled to a receiver where the unit owner does not live in the unit, and there was no dispute that Collins did not live in the unit.

Accordingly, the trial court's judgment was affirmed in part and reversed in part. The case was remanded for further proceedings.

Developer Can Force Public College to Buy its Property Interest for Campus

Westside Ventures, Ltd. v. Houston Community College System District, No. H-19-2928 (S.D. Tex. Oct. 7, 2021)

Westside Ventures, Ltd. (Westside) designed a mixed-use planned community across about 760 acres it owned in Katy, Texas. Although Westside did not develop all the property itself, it guided the development by imposing deed restrictions on some parcels to balance residential neighborhoods with commercial interests.

In 2007, Westside sold a little more than 100 acres to a developer for residential development. By deed restriction, Westside restricted about 54.4 acres to single-family residential use. The deed stated that the covenants ran with the land and were binding on successors and assigns. About 10 years later, the developer asked Westside if it would remove the deed restriction, but Westside declined.

In 2019, a little more than 25 acres of the property restricted to residential use (the restricted property) was sold to Houston Community College (college) for a campus. The sale contract stated that the seller would not sue the college for its nonresidential use of the property. The contract also gave the college a $300,000 credit for the purpose of mitigating any costs or remedying "existing conditions and contingencies" of the property. The college began construction of a school campus on the restricted property.

Westside sued the college for violating the residential use restriction. It sought a ruling that the deed restrictions applied to the college and compensation under inverse condemnation for the taking of its property interest in the restricted property. Inverse condemnation is an action by a private property owner alleging that a property interest has been taken for public use without a formal condemnation proceeding.

Westside contended that its property interest in the residential use restriction was taken by a governmental entity because ignoring the use restriction would lower the value of Westside's remaining properties. The college asserted that it did not have to abide by the deed restriction because it is the government. It also alleged that deed restrictions are not compensable property rights.

Both the Fifth Amendment to the U.S. Constitution and the Texas Constitution provide that private property may not be taken for public use without just compensation. The court held that the residential use restriction was a property interest belonging to Westside much in same way one property owner can hold an easement over another's property. Through the deed restriction, Westside retained a property interest in the restricted property and sold less than full absolute title to the property.

The court found that each parcel in the development was inextricably linked to other parts, either directly or indirectly. Deed restrictions are valuable for future owners of the different properties because they balance the number of homes to businesses in the community and help stabilize the area.

Condemnation is a process where the government seizes private property for a public use. A private property owner can use the inverse condemnation process if its property is damaged by a public benefit. An inverse condemnation claim requires that: (1) a governmental entity intentionally performed specific acts; (2) those acts resulted in the taking, damaging, devaluing, or destruction of the owner's property; and (3) the taking was for a public use.

As a public college, the college qualified as a governmental entity. The college purchased the restricted property with full knowledge of the use restriction and received $300,000 to fight the deed restriction. The deed restriction limited use of the restricted property to single-family homes, but the college planned to use the property for a campus for more than 4,000 students. The campus would undermine Westside's plans for a mixed-use development on its property adjacent to the restricted property. It also qualified as a public use of the restricted property.

As such, the campus project satisfied all the criteria for inverse condemnation. The college's use of the property qualified as a taking that required compensation. The court said that the college could build the campus, but it must pay Westside to acquire full title to the restricted property unencumbered by the deed restriction.

The court granted partial summary judgment (judgment without a trial based on undisputed facts) in Westside's favor.