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Subject: Are changes to CCRs binding on existing lot owners or just new lot owners?
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JohnR49
(Tennessee)

Posts:8


08/11/2019 5:56 AM  
Our existing CCR's have provisions for modifications. I understand that the modifications do not come into effect until the modified CCR is recorded in our County Deed & Registar's office. My question is, are the changes retroactively enforceable on current lot owners or only upon lot owners who register their deed after the modifications are recorded?
Thanks in advance.
John Randle
President
Lovell Hills Homeowners Association
Knoxville, Tennessee
PestY
(South Carolina)

Posts:67


08/11/2019 6:08 AM  
The President of a registered corporation should ask the corporation's attorney for the answer to a legal question.

If no attorney of record ~ GET ONE.


SHEEZ
SheliaH
(Indiana)

Posts:2621


08/11/2019 6:54 AM  
Posting rules prohibit using real names of HOAs - please be careful next time you post.
JohnR49
(Tennessee)

Posts:8


08/11/2019 7:09 AM  
Oooops .. thank you.
NpS
(Pennsylvania)

Posts:3572


08/11/2019 7:15 AM  
Posted By JohnR49 on 08/11/2019 5:56 AM
Our existing CCR's have provisions for modifications. I understand that the modifications do not come into effect until the modified CCR is recorded in our County Deed & Registar's office. My question is, are the changes retroactively enforceable on current lot owners or only upon lot owners who register their deed after the modifications are recorded?


Depends what you are changing. But typically, when you get the appropriate number of votes from the membership, you put out a notice with an effective date. After that effective date, all owners must comply unless, as part of the change, you grandfathered something or other.

The recording of the CCR amendments is required. But, individual notice to each of the owners is also required.
Recording alone is not enough.

Sikubali jukumu. Read all posts at your own risk.
JohnR49
(Tennessee)

Posts:8


08/11/2019 7:41 AM  
Thank you for the advice given so far. To clarify my question, our CCR's grant a "Planning Committee" with the "sole right to amend these covenants and restrictions". Consequently, should the "Planning Committee" amend the CCR's to require all houses to have pink shutters with blue polka dots, will this amendment be applicable to current lot owners or just new lot owners?
KerryL1
(California)

Posts:6534


08/11/2019 7:47 AM  
Very shocking, let's back up, JohnR. CC&Rs virtually always require that Owners vote to amend them, and often require a very high % of Owners' approval votes, e.g., 67%; 75%. Did your board have an attorney work on the amendments?

Can you give us the title of the Article in the new CC&Rs about amendments, and the exact wording? Something feels very wrong here.
MelissaP1
(Alabama)

Posts:8396


08/11/2019 8:17 AM  
Do you mean a Planning Committee in regards to organizing the rule changes or a committee in charge of making the changes? Usually this isn't done by a committee. It's done by a majority of owner vote. A committee may be involved so to organize the process. I don't see a committee actually making CC&R's or Article of Incorporation changes on their own. Are you confusing By-laws with CC&R's?

Former HOA President
TimB4
(Virginia)

Posts:16411


08/11/2019 9:51 AM  
John,

Typically, it applies to all at the time of recording.

If there is any grandfathering, that should have been in the language of the amended document (as grandfathering is not automatic).

Hopefully an attorney informed you about this prior to the vote taking place.
TimB4
(Virginia)

Posts:16411


08/11/2019 9:58 AM  
Posted By JohnR49 on 08/11/2019 7:41 AM
our CCR's grant a "Planning Committee" with the "sole right to amend these covenants and restrictions".




If this is true, I would work to remove that amendment.

As has been pointed out, CC&Rs should be the toughest document to amend with a very high percentage required to amend.

Does the amendment actually change how the CC&Rs can be amended (as there may be a conflict between the the section on the committee and the section on actual amendment process)?
JohnC46
(South Carolina)

Posts:8550


08/11/2019 10:01 AM  
Posted By TimB4 on 08/11/2019 9:58 AM
Posted By JohnR49 on 08/11/2019 7:41 AM
our CCR's grant a "Planning Committee" with the "sole right to amend these covenants and restrictions".




If this is true, I would work to remove that amendment.

As has been pointed out, CC&Rs should be the toughest document to amend with a very high percentage required to amend.

Does the amendment actually change how the CC&Rs can be amended (as there may be a conflict between the the section on the committee and the section on actual amendment process)?




I agree.
PestY
(South Carolina)

Posts:67


08/11/2019 10:28 AM  
Posted By KerryL1 on 08/11/2019 7:47 AM
Very shocking, let's back up, JohnR. CC&Rs virtually always require that Owners vote to amend them, and often require a very high % of Owners' approval votes, e.g., 67%; 75%. Did your board have an attorney work on the amendments?

Can you give us the title of the Article in the new CC&Rs about amendments, and the exact wording? Something feels very wrong here.





D'OH
JohnC46
(South Carolina)

Posts:8550


08/11/2019 11:00 AM  
John in TN

Who appoints this Planning Committee?
AugustinD


Posts:1886


08/11/2019 2:52 PM  
Posted By JohnR49 on 08/11/2019 7:41 AM
Thank you for the advice given so far. To clarify my question, our CCR's grant a "Planning Committee" with the "sole right to amend these covenants and restrictions". Consequently, should the "Planning Committee" amend the CCR's to require all houses to have pink shutters with blue polka dots, will this amendment be applicable to current lot owners or just new lot owners?




The courts have ruled that amendments requiring less than 100% vote have to be fair and reasonable. Google on "tyranny of the majority" and "homeowners' association" at justia.com and some HOA suits will come up.

I expect that a court would throw out the pink shutters and blue polka dots requirement in its entirety, since the current owners have a right to expect a certain standard from future owners.
JohnR49
(Tennessee)

Posts:8


08/11/2019 4:50 PM  
First of all I would like to express my sincere appreciation for the advice and comments offered so far on the site!!! I am obviously not a lawyer and generally rely on my common “country” sense in most questions of a legal nature. Further, due to the limited resources of the HOA, no attorney has been retained.

Secondly, a little more background that may be germane to the issue at hand. My (un-named :-}) HOA is a voluntary membership organization chartered by TN for the improvement of the health, welfare, and morale of its members through the furtherance of a sense of community. The HOA has 87 lots in question of which 59 hold membership at a cost of $24.00 per year per lot. The HOA hold title to no property, common or otherwise, in the subdivision. The HOA currently has ZERO CCR enforcement authority and relies on the local County ordinances to address significant issues.

The CCR’s in question were issued by the developer and reflect some 4 pages of “thou shall” and “thou shall not” mandates. The CCR’s provide for their modification by a “majority of the then owners of the lots vote to change said convenants in whole or in part” as well as by a developer appointed “Planning Committee” who has “the exclusive power and discretion to control and approve all of the buildings, structures, and other improvements on each building lot in the manner and to the extent set forth herein.” and has “the sole right (a) to amend these convenants and restrictions, but all such amendments shall conform to the general purposes and standards of the convenants and restrictions herein contained, (b) to amend these convenants and restrictions for the purpose of curing any ambiguity in any inconsistency between the provisions contained herein, (c) to include in any contract or deed or other instrument hereafter made any additional convenants and restrictions applicable to the said land which do not lower the standards of the convenants and restrictions herein contained, and (d) to release any building lot from any part of the convenants, and restrictions (including, without limiting the foregoing, building restriction lines and provisions hereof relating thereto) if the Planning Committee, in its sole judgement, determines that such release is reasonable and does not substantially affect any other building lot in an adverse manner.”

Enforcement of the CCR’s is specifically limited to “any other persons owning any real estate situated in said development or subdivision to prosecute any proceedings at law or in equity against the person or persons violating or attempting to violate any such convenants, and either to prevent him or them from so doing or to recover, damages or other dues for such violation.” It should be noted that the developer no longer owns any property in the subdivision. Further, it should be noted that my (un-named) HOA is not identified in the CCR’s.

The developer now appears to be desirous of relieving himself from further responsibilities and wishes to “pass the torch” for Planning Committee responsibilities to my HOA.

At this point in time I would question the developer’s authority to accomplish such a transfer as the HOA is not identified in the current CCR’s. While I acknowledge that the developer and his Planning Committee have a unilateral authority to change the CCR’s as they desire, as do a majority of the lot owners, I do not believe that the HOA is under any obligation to concede to such actions by the developer or his Planning Committee.

Should my HOA concede to accept the responsibilities of the Planning Committee, my original question boils down to “who is affected by any changes to the CCR’s promulgated by the Planning Committee (now HOA)”? Is it just new owners, or can such changes be enforced against lot owners who were not part of the modification process?

Again, any and all advice is appreciated.
--
John in TN
RichardP13
(California)

Posts:3764


08/11/2019 5:04 PM  
Posted By JohnR49 on 08/11/2019 7:41 AM
Thank you for the advice given so far. To clarify my question, our CCR's grant a "Planning Committee" with the "sole right to amend these covenants and restrictions". Consequently, should the "Planning Committee" amend the CCR's to require all houses to have pink shutters with blue polka dots, will this amendment be applicable to current lot owners or just new lot owners?



Now, that's an HOA I could live in, pink shutters and blue polka dots.

Been there, Done that
AugustinD


Posts:1886


08/11/2019 5:27 PM  
Posted By JohnR49 on 08/11/2019 4:50 PM
At this point in time I would question the developer’s authority to accomplish such a transfer as the HOA is not identified in the current CCR’s. While I acknowledge that the developer and his Planning Committee have a unilateral authority to change the CCR’s as they desire, as do a majority of the lot owners, I do not believe that the HOA is under any obligation to concede to such actions by the developer or his Planning Committee.

Should my HOA concede to accept the responsibilities of the Planning Committee, my original question boils down to “who is affected by any changes to the CCR’s promulgated by the Planning Committee (now HOA)”?
JohnR49, like you, I see zero legal authority for the developer to appoint the HOA as anything. Your volunteer HOA can accept whatever it wants, but from my reading, such an acceptance will lack any legal meaning. If the HOA foolishly tries to amend the CC&Rs per the section on this Planning Committee, I think it will be an illegal act.

As for all the other verbiage: This would not be the first time a developer put language into the covenants that made it more powerful than it actually is under common law (= court-made law).

I can see the developer amending the covenants to create a HOA. HOAs are such a big deal that I do not think this would withstand a court challenge.
NpS
(Pennsylvania)

Posts:3572


08/11/2019 5:29 PM  
Thanks for the additional info John.

I am not familiar with voluntary HOAs.

But in all the mandatory HOA docs I've seen, all rights of the developer disappear when the HOA gets turned over to the HOA. Your "Planning Committee" was a right of the developer to be in control. The right is gone. The control is gone. The "Planning Committee" needs to be gone too.

As others have said repeatedly, the right now belongs to the owners. New rules require a high percentage of approval.

Also, it looks like you only take in around $1,500 per year in income. Not sure what you can do with that, but I certainly wouldn't be putting much time into it.


Sikubali jukumu. Read all posts at your own risk.
AugustinD


Posts:1886


08/11/2019 5:33 PM  
Posted By JohnR49 on 08/11/2019 4:50 PM
While I acknowledge that the developer and his Planning Committee have a unilateral authority to change the CCR’s as they desire,
They do not have authority to change the CC&Rs,'as they desire.' In the past, developers have gone off half-cocked and radically changed CC&Rs, only to have current residents of the developer's neighborhood defeat such changes in court.

The courts view covenants as a kind of contract. If the contract is changed in a radical way, the courts say, 'Foul. Not allowed.' Minor amendments made properly that are not radical changes are fine.
JohnR49
(Tennessee)

Posts:8


08/11/2019 5:35 PM  
We use our limited income to produce a community wide directory, fund Santa Claus neighborhood visits and a summer neighborhood picnic, provide street lights for school bus stops, maintain neighborhood signs, make memorial/bereavement donations, and provide a significant discount on trash collection for members. Not a "high roller" for sure.
AugustinD


Posts:1886


08/11/2019 5:59 PM  
Posted By JohnR49 on 08/11/2019 5:35 PM
We use our limited income to... provide street lights for school bus stops...


On whose land does your voluntary HOA install these lights? Who has the legal maintenance responsibility for these lights? If a bulb burns out and a kid is hit by a car as a result, will the voluntary members of the volunteer HOA be liable? (Maybe so.)

I am sure you and yours would like things to be casual and easy; happy and promoting harmony between neighbors. But this forum focuses mostly on mandatory HOAs and condominiums. For these mandatory HOAs and condominums, the liability concerns are massive. The mandatory HOAs and condominiums have liability insurance. Does your voluntary HOA have liability insurance? Are there any statutes in Tennessee that speak to voluntary HOAs?
JohnR49
(Tennessee)

Posts:8


08/11/2019 6:17 PM  
Thank you for the response re: street lights. They are provided by the local utility company on poles erected on the utility ROW. I would not have thought that the entity paying the electric bill would have any liability for the utility company's failure to provide the light. Please let me know if I am incorrect. Could this be another example of "no good deed goes unpunished:?
AugustinD


Posts:1886


08/11/2019 6:49 PM  
Posted By JohnR49 on 08/11/2019 6:17 PM
Thank you for the response re: street lights. They are provided by the local utility company on poles erected on the utility ROW. I would not have thought that the entity paying the electric bill would have any liability for the utility company's failure to provide the light. Please let me know if I am incorrect. Could this be another example of "no good deed goes unpunished:?


Are you saying that the voluntary HOA asked the utility company to put up the lights, and the utility company agreed? If so, great. It sounds like the utility has legal responsibility for the lights. The only question I have is who is paying the electric bill. Else when it comes to voluntary HOAs, this is the sort of activity that makes sense to me. I grew up in a new development a buzillion years ago. It was not a HOA, but everyone in the development chipped in dues from time to time to maintain a sign at the entrance and at another point, to install trees in an orderly fashion up and down the street (said trees then became the lot owner's responsibility). Once in awhile they negotiated collectively with the city for xyz. It worked.
JohnR49
(Tennessee)

Posts:8


08/11/2019 7:15 PM  
The HOA pays the power bill from its "vast" resources :-} ... anything to keep the kids safer (no sarcasm intended). And yes, we fund for "beautification" efforts throughout the neighborhood, without assuming the title to anything.
From the collective wisdom presented so far, I do not think that my HOA's assumption of CCR related issues and responsibilities will be productive.
I feel that we are fortunate to not be in the situation of a "mandatory HOA".
NpS
(Pennsylvania)

Posts:3572


08/11/2019 8:32 PM  
Hi John

I commend you for working to improve your community with such a limited budget.

And that's where my comprehension of your situation ends.

Your original post asked the question whether changes by a specially designated group could be enforced retroactively. Overwhelmingly, the responses you got said that, once it's out of the developers hands, it would take a vote of the members by a large margin to make changes to your CCRs.

Let's say I owned a house in your community and you said that I had to comply with the changes. What would happen if I said no way? Can you force me? Maybe. But you'd have to go to court for that - And you don't have the money for a lawyer. So where are you?

Also, what happens if I say ok - I don't want to be in your voluntary HOA anymore. I'm not paying any dues. Where are you then? Through the courts you could maybe force me to comply even after I quit, bu? then again you don't have the money to pursue it.

In your original post, you said that you were the prez of your HOA. Does that mean that this special group that the declarant used to have now reports to you or your BOD? Do they exist? Do they make decisions? Is the problem you're having that you're not getting cooperation from the members?

There's just something about this situation that I don't get. Would appreciate a deeper explanation - Maybe something that speaks of a real change that your HOA attempted to impose instead of polka-dot paint hypothetical.

Thanks.

Sikubali jukumu. Read all posts at your own risk.
PestY
(South Carolina)

Posts:67


08/12/2019 4:55 AM  
it is a volunteer community social club


do whatever y'all like


bs-meter
JohnC46
(South Carolina)

Posts:8550


08/12/2019 10:03 AM  
JohnR

You posted:

The CCR’s in question were issued by the developer and reflect some 4 pages of “thou shall” and “thou shall not” mandates. The CCR’s provide for their modification by a “majority of the then owners of the lots vote to change said convenants in whole or in part” as well as by a developer appointed “Planning Committee” who has “the exclusive power and discretion to control and approve all of the buildings, structures, and other improvements on each building lot in the manner....

Once the Declarant/Developer has turned control over to the owners things in the Covenants concerning the Declarant/Developer are no longer applicable.

In the above bold it says how owners can modify the Covenants then it says they can be changed as well by the Developer appointed Planning. Committee. Well if no Developer, than no appointed Planning Committee. Many docs, my own included, are original and say all kinds of things about Declarant control. As we are owner run, we have to read through (ignore) those parts. It would cost about $2,500 for a Lawyer to rewrite our docs eliminating the Declarant references so we opted not to do such.

We had a good relationship with our Declarant. Prior to turnover, our Appointed BOD Advisory Committee got the developer to make some changes to our docs as he still had the power to do so. Have you considered doing such?
PestY
(South Carolina)

Posts:67


08/12/2019 10:24 AM  
Posted By JohnC46 on 08/12/2019 10:03 AM
JohnR

You posted:

The CCR’s in question were issued by the developer and reflect some 4 pages of “thou shall” and “thou shall not” mandates. The CCR’s provide for their modification by a “majority of the then owners of the lots vote to change said convenants in whole or in part” as well as by a developer appointed “Planning Committee” who has “the exclusive power and discretion to control and approve all of the buildings, structures, and other improvements on each building lot in the manner....

Once the Declarant/Developer has turned control over to the owners things in the Covenants concerning the Declarant/Developer are no longer applicable.

In the above bold it says how owners can modify the Covenants then it says they can be changed as well by the Developer appointed Planning. Committee. Well if no Developer, than no appointed Planning Committee. Many docs, my own included, are original and say all kinds of things about Declarant control. As we are owner run, we have to read through (ignore) those parts. It would cost about $2,500 for a Lawyer to rewrite our docs eliminating the Declarant references so we opted not to do such.

We had a good relationship with our Declarant. Prior to turnover, our Appointed BOD Advisory Committee got the developer to make some changes to our docs as he still had the power to do so. Have you considered doing such?




Right - On

I.....must.....learn.....to.....read.....

So must the OP
JohnR49
(Tennessee)

Posts:8


08/13/2019 4:48 PM  
Thanks again to the many posters who have commented on my predicament.

First of all, I should note that the developer (who no longer owns any property in the subdivision) has not ceded control to the lot owners.

Secondly, for 7 of the 14 units in the subdivision, the developer incorporated a separate HOA, independent of mine, with a mandatory membership and annual assessments, to deal with modifications to property issues (e.g. the Planning Committee) and the maintenance of Common Property.

Thirdly, there are 3 units that were developed by the same developer that do not reference any HOA in their restrictions, leaving all adjudication issues to a Planning Committee headed by the developer. Any “enforcement” rights are delegated only to individual lot owners (i.e. the Planning Committee itself is not empowered to bring suit for violations).

Finally, there are another 4 units in the subdivision that were developed by a different developer that no longer have any Planning Committee to deal with modifications.

Yes, my HOA can be characterized as a “social club”, but it is also the only entity that currently addresses all 14 units in the subdivision and that may be the stimulus for the developer’s proposed actions.

The developer of 10 of the 14 units in the subdivision is now desirous of assigning to my HOA the Planning Committee responsibility and its enforcement responsibilities for the 10 units. The developer seems to realize that he has no authority over the 4 initial units that were developed by his predecessors, but which are still part of the defined subdivision.

While I question the developer’s authority to make such an assignment to my HOA, especially in the absence of any identification of my HOA in the current restrictions for 10 of the 14 units as well as the developer’s non-involvement in the incorporation of my HOA, I am trying to ascertain any potential impact of my HOA in its potentially new (and unwanted) role … should the developer proceed with modifying the current restrictions to reflect such an assignment.

Yes .. this sounds like a horse that was developed by a committee .. and it now resembles a camel.
NpS
(Pennsylvania)

Posts:3572


08/14/2019 4:49 AM  
John

I will say it as plainly and as simply as i can.

There are 2 kinds of rights, and only 2 kinds of rights.

There are "claimed" rights and there are "proven" rights.

You and I can read the same documents and come to a different conclusion. You say the document establishes certain rights. I say the document doesn't establish those rights. Those are both "claimed" rights.

The one and only way to convert "claimed" rights into "proven" rights is to go to court. Only a court order will tell us and the rest of the world whose interpretation of "claimed" rights is correct.

Now, I've come to the conclusion in your particular case that:
- with less than $1,500 in annual income, you don't have the money to take your "claim" to court; and
- with no ownership anymore, the declarant doesn't want to spend the money to take his "claim" to court.

So - What to do? 3 options that I see:

1. Accept the advice of posters here who have overwhelmingly said that the declarant no longer has any rights to transfer once he no longer owner any land.

2. Accept the declarant's purported transfer of supposed rights and see if your other owners will pay their dues under that arrangement. I think that's a bogus approach, but like any other "claimed" right that hasn't yet been disproved in a court, you can try and see who pays.

3. Ignore the declarant's claimed rights, and notify the rest of the owners that you would like to continue the fine work you've been doing if they sign up to pay the small amount you charge each year for the services.

As far as the 10 or 14 unit differences are concerned, that's a distraction. You are talking once again about "claimed" rights - which may I remind you can never become "proven" rights one way or another without going to court.

So, since no one is in a position to establish "proven" rights, the only option is to make a decision on which door you want to spend your time pursuing - Doors 1 & 3, or Door 2.

Best of luck.


Sikubali jukumu. Read all posts at your own risk.
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