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, links to the full court rulings are found after each summary.
CAI’s College of Community Association Lawyers selects the cases for Law Reporter through its work associated with the Case Law Database. CCAL prepares a legal analysis of each case with additional facts, holding and reasoning, and significance for the database. Portions of the legal analysis are included in Law Reporter and combined with summaries developed in part with artificial intelligence. Full court decisions are entered into ChatGPT and summarized for a nonlegal audience. Each summary is edited for style, clarity, and content.
Contractors Can’t File Duplicate Liens on Different Properties
Liens and Foreclosure: Under Indiana law, a contractor cannot use one debt claim to burden multiple properties owned by different parties by asserting duplicate liens. Each lien must be limited to the improvements benefiting the particular lot.
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EdgeRock Development undertook a project to develop five parcels of land into a mixed-use development known as the Trails of Westfield. EdgeRock hired C.H. Garmong & Son for construction work on roads, grading, and utilities across all lots and to build structures on two of the lots. Fox Contractors Corp. served as Garmong’s subcontractor. When EdgeRock fell behind on payments, Garmong and Fox recorded construction liens on all five lots, which were owned by different parties. EdgeRock satisfied an initial lien by borrowing $4.9 million from First Bank Richmond, but later disputes led to further liens and litigation. Garmong and Fox recorded redundant mechanics’ liens covering the same debts across multiple lots with different owners.
A mechanic’s lien (sometimes called a construction lien or contractor’s lien) is a legal claim that contractors, subcontractors, laborers, or suppliers can file against real estate when they have provided labor or materials for improvements to the property but haven’t been paid.
The contractors sued to foreclose and recover damages. EdgeRock and the bank contested. The trial court largely sided with the contractors.
The Indiana Supreme Court held that mechanics’ liens must be specific to the property improved and cannot be duplicated across properties with different owners. Construction lien priority relates back to the date work began, not the recording date. The statutory exception for mortgage lien priority applies only to funds used for the specific project related to the lien.
This case clarifies the scope and validity of mechanic liens in Indiana, emphasizing the need for liens to be tied to specific property improvements and establishing the priority of construction liens based on the commencement of work. It also delineates the limits of mortgage lien priority in the context of project financing.
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Property Use Restrictions Must be Clearly Stated to Be Enforceable
Covenant Enforcement: Restrictive covenants must be clearly stated. Courts will not extend them beyond their text or fill in unstated restrictions through interpretation. In this case, density restrictions do not necessarily imply a prohibition of residential use on smaller lots unless the covenants expressly say so.
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Between 1988 and 1993, Texas acquired over 10,000 land tracts in Ellis County for the now-defunded Superconducting Super Collider. The Texas General Land Office later sold these tracts, often attaching one of six levels of deed restrictions. In 1988, David Lemon bought two parcels with “level 5 restrictions” that limited density to two residences per 5-acre tract and designated the land for residential use only. These restrictions were to last 20 years, automatically renewing in 10-year intervals unless 80% of adjoining owners agreed to modify them. In 2019, Lemon sold the land to Salvador Family Holdings without referencing the restrictions, and the property was eventually transferred to EIS Development II.
EIS began developing a 73-lot residential subdivision called Sunset Meadows on the property, with lots under 2 acres. The project received necessary approval from Waxahachie and Ellis County with no objections from adjoining landowners at the time. After development began, three adjoining owners formed the Buena Vista Area Association and sued to enforce the original deed restrictions, arguing the plan violated the two-residences-per-5-acre rule.
The trial court granted summary judgment to the association, concluding the restriction unambiguously limits development to no more than two main residences per 5-acre tract. It enjoined EIS from building more than 40 residences in total (i.e. applying the two-per-5-acre idea over the roughly 100 acres). On appeal, the Texas Court of Appeals affirmed. EIS then petitioned to the Texas Supreme Court.
The Texas Supreme Court held the restriction limited density but not tract size and did not prohibit building one residence on each sub-5-acre lot. The restriction was silent about minimum tract size and how to apply the two-residence limit to tracts smaller than 5 acres. The court therefore concluded that since the restriction did not expressly or reasonably imply a prohibition on one residence per sub-5-acre tract, EIS’s planned development did not violate the restriction.
This case is significant because it reinforces the principle that restrictions on property use must be clearly stated to be enforceable. Additionally, the court clarified that a factfinder must consider all changes since creation of a restriction to determine whether the changed conditions doctrine precludes enforcement of the restriction.
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Nevada’s Alternative Dispute Resolution Requirements Clarified
Civil Procedure: Nevada’s statutory alternative dispute resolution requirement is a procedural claim-processing rule subject to waiver or a jurisdictional prerequisite that cannot be waived. The statute cannot be used to void judgments long after the fact.
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Michael Kosor, a homeowner in the Southern Highlands residential community in Las Vegas, sued the association and developer over the right to elect the association’s board of directors. The association’s bylaws, covenants, and restrictions establishes a “declarant control period” during which the developer could appoint a majority of the board members. Kosor argued the declarant control period had ended based on home sales, but the association and developer disputed his interpretation. After years of litigation, the district court dismissed the case with prejudice and awarded fees and costs to the association and developer.
The association and developer sought additional fees incurred on appeal. Kosor then raised alternate dispute resolution for the first time and argued the district court lacked jurisdiction because the parties did not comply with it. Under Nevada law, disputes involving association covenants, conditions, and restrictions are required to go to pre-suit mediation or arbitration.
The court affirmed the statutory dispute resolution requirement does not remove a class of cases from the trial court’s jurisdiction. It is a procedural claim-processing rule subject to waiver and not a nonwaivable jurisdictional prerequisite. A statute must clearly state it is a jurisdictional requirement, and this statute did not.
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Clear Drafting of Documents Essential to Settling Most Issues
Contracts and Easements: Ambiguity in property deeds can lead to litigation over what interests are intended to be conveyed. Courts will look at the deeds and plats, development structure, and evidence of intent when interpreting ambiguous conveyances.
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Terri Crider and her brother Joey Crider inherited property in Maggie Valley, N.C., with Terri holding a two-thirds interest and Joey holding one-third. Following disputes, Joey agreed to sell his interest. Terri formed Mary Annette LLC with investors Jorge and Dana Cure, Michael Washburn, and Christine Sheffield with the three member entities each holding one-third membership interest. Mary Annette contracted to buy Joey’s interest to develop a planned unit development, which was approved by the zoning board for 34 lots including cabins, recreational vehicle units, and a common area labeled “tract C-4" to be owned by the homeowners association.
On April 1, 2001, Terri and Joey conveyed their respective property interests to Mary Annette. After closing, disputes arose among the members over management and unit ownership. This action followed.
The court held that Terri Crider retained a two-thirds ownership interest in the individual units and conveyed only her interest in the common area (tract C-4) to Mary Annette. Although the individual units lay within C-4's perimeter, the plat depicted them as separate parcels with the deed only specifically referencing tract “C-4.” The court rejected the plaintiffs’ testimony about their intentions to create a planned unit development with individual units for sale at purchase, ruling the parties cannot change or add deed terms through testimony.
This case demonstrates that precise language in deeds and plats is critical when establishing common areas in planned developments.
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Specific Bylaws Provisions Must Be Examined When Determining Insurance Responsibilities
Insurance: Courts must consider both condominium governing documents and insurance coverage when determining liability for property damage due to a water leak. The association may have a fiduciary obligation to unit owners in handling insurance claims.
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Gilberto Mortera owns a condominium unit at Kona Villa in Diamondhead, Miss. In 2018, his unit suffered about $59,000 in property damage due to a water heater failure in the unit above. Mortera reported the damage to the association, which contacted State Farm to investigate. State Farm opined that individual unit owners are responsible for interior damage repairs provided in the declaration. The association declined to pursue the insurance claim further and did not provide Mortera with a copy of the insurance policy. Mortera sued the owner of the unit above, State Farm, and the association. The suit against the unit owner settled, and the suit against State Farm was dismissed due to Mortera’s lack of standing. Mortera then filed a complaint against the association, alleging breach of fiduciary duty for not pursuing the insurance claim.
The court of appeals found the circuit court improperly focused on the maintenance provisions of the bylaws, which placed the responsibility for water heater maintenance on individual unit owners. Mortera argued that his claims were related to the insurance policy and the insurance provisions of the bylaws, which should have been the focus. The insurance policy did not cover some of Mortera’s damages, and the association, as the “insurance trustee” had duties according to the bylaws. The court determined there were genuine issues of material fact regarding the association’s fiduciary duty to pursue the insurance claim, making summary judgment inappropriate.This case highlights the importance of examining the specific provisions of condominium bylaws and insurance policies when determining the responsibilities and duties of a homeowners association. The court here also emphasized the need to consider the insurance provisions rather than solely focusing on maintenance responsibilities.
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CC&Rs Impose Binding Constraints on What Development Is Permissible
Contracts & Easements: Developers must carefully respect the covenants, conditions, and restrictions when planning improvements. Failing to do so can expose the develop to injunctions and liability.
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Olen Properties owned a four-story office building in a 117-acre commercial development governed by CC&Rs recorded in 1973. KCN A Management was the successor declarant and approved a project to develop a 312-unit residential apartment complex, a public park, and structured parking on land adjacent to Olen’s building. The project eliminated 452 surface-level parking spots and substituted structured and subterranean spaces. Olen objected, citing violations of multiple provisions of the CC&Rs that justified imposing injunctive relief to halt the project.
The court of appeals largely upheld the trial court’s injunction but clarified several points. It held that KCN, as successor declarant, owed fiduciary duties directly to Olen even without an association or board, and could not rely upon previous case law to justify decisions that violated the CC&Rs. The court found multiple violations in KCN’s approval of the project. Specifically, the project proposal failed to include “complete working drawings,” bypassed the phased approval process, and proposed a construction timeline exceeding the two-year CC&R limit.
It also concluded the planned subterranean garage and four-story parking structure did not meet the “on-grade” parking requirement. Parcels and building sites have distinct rights within development areas. Reclassifying common parking areas onto parcels exceeded the declarant’s authority without a formal amendment.
This case strongly supports strict enforcement of express limitations in commercial CC&Rs, even against a developer with unilateral control and no governing association. The court interpreted parcels versus development area definitions to address parking rights, construction limitations, and consent requirements. Further, it extended fiduciary duties to a nonassociation declarant.
The decision provides broad guidance on declarant duties, redevelopment of aging commercial projects, and shared infrastructure rights. Finally, the court’s textual approach to easements rejects workaround methods like licenses or mixed designations that form recorded covenants.
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Unit Owners’ Rights to Define and Initiate Special Meeting Agendas Reinforced
Association Operations: This case directly interprets the provisions of Rhode Island’s version of the Uniform Condominium Act concerning special meeting rights of unit owners and the board’s obligations to honor the agenda items specified in valid owner petitions. The case critiques judicial overreach in prematurely ruling on the substance of meeting motions and reinforcing procedural fairness in association governance.
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Unit owners at a 330-unit Rhode Island condominium petitioned for a special meeting to challenge the board’s switch ratio utility billing. Their petition met all legal requirements and included four motions, one barring billing methods that violated the declaration or law. The board issued a vague meeting notice, excluding the motions and citing procedural discretion. Owners responded by seeking injunctive relief under Rhode Island’s Condominium Act.
The Rhode Island Supreme Court reversed in part, finding the trial court erred by evaluating the merits of the petition’s proposed motions instead of focusing on whether the meeting notice complied with statutory requirements. The state condominium act indicates that owners with sufficient votes may compel a special meeting, and the association must issue notice listing the agenda items. The court determined the petition satisfied both the statute and the bylaws, cautioning against strict scrutiny of agenda language and criticizing the trial court for granting relief not requested. The case was remanded for further proceedings, damages, and attorney fees though the underlying issue may be moot since the board had adopted plaintiffs’ desired gas meter formula.
This case reinforces unit owners’ rights pursuant to Uniform Act-based condominium acts to initiate and define special meetings agendas. It restricts boards from revising owner petitions based on procedural discretion and advises courts to avoid ruling on agenda content prematurely. The ruling is especially relevant for association counsel navigating board responses to owner-driven petitions, cautioning against efforts to dilute meetings requests or misuse procedural rules to hinder participation. While unit owner proposals may be flawed or exceed voting scope, the court held such issues should be addressed during the meeting, not used to deny it. The decision may influence similar cases in other Uniform Act states.
Note: The opinion is still subject to formal revision before final publication in the Rhode Island Reporter. Later comparison may be warranted to ensure no substantive changes have been made.
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Read CAI’s amicus curiae brief related to this case
Deed Restrictions Can Be Amended Provided They Comply with Documents, Legal Standards
Amendments: Property owners associations have the authority to modify deed restrictions provided the amendments comply with the governing documents and applicable legal standards. Adhering to a clear procedure in the amendment process is critical to ensuring enforceability.
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In 2003, developer David Eller created the Swan Point Landing subdivision with 90 residential lots and recorded restrictive covenants limiting lots to single-family residential use and prohibiting commercial activity. The association could levy uniform assessments, and Eller, as declarant, held weighted voting power (four votes per lot) during the development period, originally set to expire in 2013. In 2006, Eller amended the declarations using this power to designate seven lots as commercial for guest lodging and tour operations. The Martins purchased two of these lots and opened Bay Flats Lodge in 2007. They later acquired four residential lots with some used for short-term rentals. Additional amendments in 2012 and 2018 extended the declarant’s control through 2023.
As roads deteriorated, the declarant amended the declarations again in 2019 to allow non-uniform special assessments based on a lot’s contribution to damage and restored the declarant’s right to vote on those assessments. In 2021, the board — relying on a traffic study attributing 79% of road wear to the Martins’ lodge — apportioned that share of an $879,600 repair cost to them and banned short-term residential rentals. The Martins were assessed nearly $695,000 and sued, challenging the amendments and assessment scheme. The declarant and allied owners then voted in 2022 to formally adopt prior amendments.
The Texas appellate court affirmed that amendments restricting short-term rentals and reviving the declarant’s voting power were enforceable because they were consistent with the residential purpose of the original declarations and did not violate public policy or destroy the scheme of the covenants. The appellate court struck down the special assessment allocation amendment as inconsistent with the original covenants.
This case is significant because it presents an approach to determining whether an amendment is enforceable. While some jurisdictions frame this analysis under reasonableness, the Texas appellate court framed the question as one of consistency with the original governing documents.
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