Vermont HOA residents, owners evicted from leased land

By Deborah Goonan, Independent American Communities

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Homeowners associations vary considerably in many ways, including size of membership, the type of residential dwellings, and the nature of shared obligations. Although most modern HOAs have been created by developers, prior to construction of new homes, some HOAs are created under different circumstances.

Malletts Bay HOA, located in Colchester, Vermont, on the banks of Lake Champlain, is an association of two dozen home sites on a 7-acre parcel. The land parcel is owned by Mongeon Bay Properties LLC (MBP), a family that has owned the land for more than 80 years. During most of this time, the Mongeon family rented small cottages set up as seasonal campsites.

However, in 1995, residents were encouraged to organize an HOA for the purposes of engaging in a 25-year land lease with MBP. (The lease was later extended to 2036.) Subsequently, several tenants later purchased their modest, affordable homes. (According to articles below, one was purchased for $35,000) Some owners then made improvements to their properties. One owner purchased a second cottage to lease to a tenant.

When Malletts Bay HOA was formed, it was for the benefit of the original landowners, and for the purposes of engaging in a lease between MBP and the homeowners of the Association.

From the beginning, most owners were aware of the risks involved in owning a home on leased land. But for several owners living on very low incomes, Malletts Bay HOA offered the enticement of owning a home with a long-term lease.

What HOA members did not understand was that the lease with MBP, and the HOA itself, created several obligations and financial liabilities. And when the HOA failed to maintain the portion of its land embankment along Lake Champlain, severe erosion undermined several of the properties.

You read that right – the terms of the lease with MBP clearly stated that the HOA was responsible for maintaining the integrity and condition of the land, even though the HOA does not own any land.

Because Malletts Bay is a very small association, it has never employed a property manager. Members do collect $290 per month for each dwelling, to be paid as rent to MBP. But, over the years, the Association had done little to maintain the land, and, in particular, the steep embankment along the lake.

Most lakefront owners are aware that a seawall of some sort is a necessity to prevent erosion from the constant ebb and flow of water, a process that can be hastened due to severe weather and flood conditions.

But, according to details provided in case summaries, Mallets Bay homeowners had no seawall in place, not even rip rap or vegetation, to prevent erosion of the embankment. Furthermore, storm drainage from cottage roofs and paved surfaces was not properly routed to the base of the embankment, causing further damage to the slope with every rainfall.

The fact that MBP expected homeowners on leased land to figure out how to manage storm water diversion and prevent shoreline erosion, without any professional guidance is somewhat remarkable. But landowners making long-term leases tend to have the upper hand in negotiations. Mongeon’s attorney explained to the court that he kept the rent payments deliberately low, on the condition that the HOA would make the financial committment necessary to maintain the land.

And, as is typical of most HOAs, not only did the members fail to understand how to maintain the property, they also made no plans to save money for periodic maintenance and repairs. So when a storm in 2011 eroded their embankment, undermining several homes, and rushing waters took out their beach access stairway, there was almost no money to make repairs.

When landowner Mongeon was contacted by the town of Colchester to address code violations (as several homes are now teetering on the edge of the embankment), he in turn notified the HOA of its responsibility to make repairs.

First, an apparent blame game started. HOA members who lived across the street from lakeside insisted that each homeowner was responsible for the land around his or her own property. However, that’s not how the HOA works. The obligation to maintain any part of the land, as confirmed by the courts, is a collective one.

When the HOA received a second notice with an intent to evict residents if they failed to repair damages, the owners were only able to scrape together a small portion of the money needed for a proper repair.

According to the case summary, the HOA brought in a few truckloads of dirt to dump along the bank. However, the repair had not been reviewed or authorized by an engineer, and therefore, quickly eroded away.

Mongeon hired his own expert to determine the extent of damages and to come up with a plan to rebuild the embankment, incorporating a seawall, as well as to redirect storm water so as to prevent future damage. A trial court awarded MBP $135,000 payable by the HOA, as well as attorney fees.

When the owners realized they had nowhere near enough money to pay for court-awarded damages, they HOA turned around and sued MBP, under several claims which turned out to be baseless.

At the same time, Mongeon appealed the trial court’s ruling, seeking the right to evict residents for failure to maintain the embankment. The Supreme Court of Vermont recently ruled that land lease is clearly in favor of MBP. It explicitly gives the landlord the right to evict residents for breach of lease agreement, after proper notice and an opportunity to cure the breach.

So now, following six years of legal wrangling, the owners and residents are being officially evicted. Those that own their small homes are forced to walk away from them, even though some of them are still paying a mortage.

Homeowners learned some difficult leassons about the risks of mandatory HOA membership, and owning property on land subject to a long-term lease.

Dozens of families forced out of Colchester neighborhood

Posted: Apr 07, 2017 6:00 PM EDT
Updated: Apr 07, 2017 6:46 PM EDT
By Jennifer Costa WCAX

COLCHESTER, Vt. –
“I still can’t believe it,” Dana Hark said. “It’s hard to come to grips with it.”

Hark is getting ready to say goodbye. She’s owned a quaint Colchester cottage since 1987. She started as a renter, eventually bought it, turned it into a youth hostel and raised her first child here. It’s a house full of memories.

“We’re being evicted from the land,” Hark said.

“And figured I’ll die here,” Mike Carroll said.

Carroll, 72, is packing up, too.

“I’m losing my house,” he said. “Everyone else here is losing their house.”

Hark, Carroll and 22 other families are part of the Malletts Bay Homeowners Association. Their houses belong to them but Mongeon Bay Properties owns the land. The two groups had a rental agreement set to expire in 2036. Now, a Supreme Court order is tossing the homeowners out 19 years early.

“I was disappointed,” Carroll said. “I wasn’t surprised.”

The legal battle centers on an abandoned property along East Lakeshore Drive. After 2011 flooding, the bank around the house was damaged. Mongeon Bay Properties sued the homeowners association, wanting to terminate its rental agreement covering all of the residents. The landowner claimed the association failed to live up to the lease terms by not having an adequate seawall to prevent erosion.

Read more (VIDEO)

http://www.wcax.com/story/35099815/dozens-of-families-forced-out-of-colchester-neighborhood

 

More details available here:

High and Dry: Malletts Bay Cottagers Must Vacate Their Homes
By ALICIA FREESE @ALICIAFREESE

http://www.sevendaysvt.com/vermont/high-and-dry-malletts-bay-cottagers-must-vacate-their-homes/Content?oid=3944217

 

Legal references:

Mongeon Bay Properties, LLC v. Mallets Bay Homeowner’s Assn.

http://law.justia.com/cases/vermont/supreme-court/2016/2016-vt-64.html

 

Malletts Bay HOA has a history of conflict with MBP. At one point, the HOA had purchased a 44% interest in the land from a cousin of the landowner, only to have to resell the land after a previous legal battle.

MALLETTS BAY HOMEOWNERS ASSOCIATION INC v. MONGEON BAY PROPERTIES LLC

http://caselaw.findlaw.com/vt-supreme-court/1465636.html

 


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