Condominiums and Homeowners Associations

Fair Housing Act (FHA) protects homeowners from limits on their Christmas display if the reasons for those limits are based on the owners’ religion rather than the scope of their activities

/ Antidiscrimination Law, Condominiums and Homeowners Associations, Fair Housing Act, Religious Freedom, Servitudes

The Ninth Circuit has held that a homeowners association may not be able to enforce its rules limiting the scope of a Christmas display by owners in the common scheme if those limits are  motivated by opposition to the owner’s religion in violation of the Fair Housing Act, 42 U.S.C. §3617. Morris v. W. Hayden Estates First Addition Homeowners Ass’n, Inc., 104 F.4th 1128 (9th Cir. 2024). The owners (Jeremy and Kristy Morris)  had engaged in these activities at their prior home where they had strung up thousands of Christmas lights, sang Christmas carols, employed costumed characters playing Santa Claus and the Grinch, and hosted a live nativity scene with a live camel. The family also offered free hot chocolate to visitors which led to 200 families visiting their property the first day with 20 to 100 families visiting the rest of the week. When the owners put in an …

Fair Housing Act (FHA) protects homeowners from limits on their Christmas display if the reasons for those limits are based on the owners’ religion rather than the scope of their activities Read More »

Retroactive restriction on commercial use invalid against a lot that was expressly permitted to engage in such uses

/ Condominiums and Homeowners Associations, Servitudes

The Supreme Court of Virginia has held that a declaration that gives owners collective powers to “modify” or “change” covenants in the declaration did not give the owners the right to prevent commercial use by a lot owner that had been expressly permitted to engage in commercial uses under the original declaration. Westrick v. Dorcon Group, LLC, 901 S.E.2d, 468 (Va. 2024). While the court focused on dictionary definitions of the word “modify,” it also took the traditional (and now receding view) that covenants such be seen as encumbrances on property (rather than as valuable benefits) and thus should be interpreted narrowly to ensure the widest freedom to use land. It also noted that the power to create “exceptions,” or “modifications,” or to “vacate” the restrictions suggested a power to limit the restrictions, not a power to introduce new ones. There was no homeowner’s association created by the declaration, but …

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HOA cannot prohibit short-term leasing if original covenants contained no restraints on alienation

/ Concurrent or Common Ownership, Condominiums and Homeowners Associations, Servitudes

A North Carolina court refused to allow a homeowners association (HOA) to amend its covenants to ba short-term leasing (leasing for less than 90 days) even though the HOA followed the correct procedures to amend the covenants and nothing limited their power to adopt the restriction. McDougald v. White Oak Plantation Homeowners Ass’n, 904 S.E.2d 180 (N.C. Ct. App. 2024). The modern approach to covenants tends to see them as valuable property rights and the ability of an association to “govern” the association by imposing limits on land use as a welcome power, the traditional approach viewed covenants as meddlesome encumbrances on ownership that burden an owner’s freedom to use their property as they see fit, especially when ownership is held in fee simple. These contrasting attitudes mean that the modern approach interprets ambiguities in the declaration to achieve the intent of the grantor and perhaps even to give the …

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Bank with actual knowledge of intent to create homeowners association bound by covenants even though the mortgage was recorded before the homeowners association declaration

/ Condominiums and Homeowners Associations, Mortgages, Real Estate Transactions, Servitudes, Title Issues

An appellate court in New Jersey held that a bank that received a mortgage on a piece of property was bound by a later-recorded homeowners association covenants because it had actual knowledge that the developer planned to subject the property to the declaration. Fulton Bank of N.J. v. Casa Eleganza, 473 N.J. Super. 387, 281 A.3d 252 (N.J. App. Div. 2022). This was the case even though New Jersey had a race-notice recording act and the declaration was recorded after the mortgage was recorded. The court used the equitable doctrine of equitable subrogation to change the order of priorities to avoid injustice. Because the bank was subject to the covenants, it was obligated on foreclosure to pay past due fees to the association. This result conflicts with the approach taken by the California Supreem Court in Riley v. Bear Creek Planning Committee, 551 P.2d 123 (Cal. 1976), which freed an owner from covenants …

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Scope of easement to operate a neighboring golf course determines whether intrusion of dozens of golf balls a year to victims’ property constitutes a trespass

/ Condominiums and Homeowners Associations, Easements, Servitudes, Trespass

A couple that bought a home next to a golf course sued the golf course for trespass because of all the golf balls that landed on their property. Although the golf course attempted to take remedial measures to stop golf balls from landing on the couple’s property, roughly 90 balls would land on the property each year, a dozen of which struck the house. The couple won in the trial court which awarded them $100,000 in compensatory damages for property damage and $3.4 million in emotional distress damages. The trial court also issued an injunction preventing play on the 15th hole under the golf club implemented additional remedial measures, such as reconfiguring the hole or installing netting. The Supreme Judicial Court of the Commonwealth of Massachusetts reversed and remanded the case to the trial court for more proceedings. Tenczar v. Indian Pond Country Club, Inc., 2022 WL 17813649, — N.E.3d — (Mass. 2022). …

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Homeowners Association architecture regulations must be reasonable and authorized by governing documents

/ Concurrent or Common Ownership, Condominiums and Homeowners Associations

The Nevada Supreme Court adopted §6.7 and §6.9 of the Restatement (Third) of Property (Servitudes) and held that restrictions on construction (including architectural review committees) are only valid if owners are on notice of them and they exercise their powers “reasonably.” Moretto Trustee of the Jerome F. Moretto 2006 Trust, v. ELK Point Country Club Homeowners Ass’n, Inc., 507 P.3d 199 (Nev. 2022). Those sections state that no homeowners association has implied power to regulate the architecture of individual units unless the governing documents (the declaration that establishes the association) explicitly confers that power on the association, and even then, the exercise of that power must be reasonable. In this case, the governing bylaws required owners to get board approval before building any structure on their property. After purchasing a lot subject to the bylaws, the executive board created an architectural review committee and some architectural guidelines. One of the owners …

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Short-term rentals do not violate “residential use only” covenant

/ Concurrent or Common Ownership, Condominiums and Homeowners Associations, Leaseholds, Real Estate Transactions, Servitudes

The Mississippi Supreme Court has held that short term rental of property is not a commercial use that would violate a covenant limiting land to residential purposes. Lake Serene Prop. Owners Ass’n v. Esplin, 334 So.3d 1139 (Miss. 2022). There has been some disagreement among state courts on this question because the use of property as an Airbnb or other short term rental can be viewed as changing property to “hotel” use, at least when the owner does not share occupancy with the guest.

Courts split on whether short term rentals are a nonresidential use

/ Condominiums and Homeowners Associations, Real Estate Transactions, Servitudes

With continued disagreement among courts in the U.S., the Kentucky Supreme Court has weighed in on the side of finding short term rentals of property to be more like hotels than home ownership or residential leasing and so does not qualify as a “residential” use prohibited by a covenant that prohibits nonresidential uses of the land.. Hensley v. Gadd, 560 S.W.3d 516 (Ky. 2018). In contrast, the Arkansas Supreme Court rules that short-term rentals in a residential subdivisin die not violate a restrictive covenant that prohibited commercial uses. Vera Lee Angel Revocable Tr. v. Jim O’Bryant & Kay O’Bryant Joint Revocable Tr., 537 S.W.3d 254 (Ark. 2018).

Nearby changes do not satisfy the changed conditions doctrine so restrictive covenants remain in effect

/ Condominiums and Homeowners Associations, Servitudes

The Alabama Supreme Court has reaffirmed the traditional rule that changes nearby but outside a restricted neighborhood are not sufficient to come within the changed conditions doctrine that would make existing restrictive covenants unenforceable. Capitol Farmers Market, Inc. v. Ingram, 2021 WL 5752352 (Ala. 2021). Covenants remain enforceable unless changes inside the neighborhood subject to the covenants have made it impossible for them to achieve their original purposes. In this case, changes within a mile-one radius of the restricted properties were not enough to conclude that the covenants could not achieve their purposes, especially because properties on several sides were still being used in a manner consistent with the covenants.

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