High profile property rights case highlights impact of restrictions on HOA membership

By Deborah Goonan, Independent American Communities

 

Homeowners’ Associations have become so common, that they now exist in every state and for various purposes.

Media reports, often driven by the real estate industry, tend to portray HOAs as large master planned communities with resort-style recreational amenities, or private residential neighborhood havens, some with maintenance provided by the association.

But many HOAs are small communities that have no recreational amenities and no need for on-site property management.

An Associated Press report highlights a legal battle involving one such very small HOA, just outside of Iowa City.

According to the report, Iowa State University football Coach Kirk Ferentz and his wife, Mary, live in a 4-home community, on private Saddle Club Road. In 2001, shortly after the Ferentz’s purchased their home along what was, at the time, a gravel road, their neighbors, John and Ann Marie Buatti, decided to subdivide their property. Two more estate homes were built, which led to an extension of the private road to access each property.

At the time, Buattis wanted to pave Saddle Club Road, but Ferentzes preferred to keep the gravel road, in order to discourage unwanted visitors.

An HOA was formed in 2001, for the purposes of funding maintenance for Saddle Club Road. The agreement stated that the private road would remain an unpaved, gravel surface, and that no owner could be forced to pay for construction or future maintenance of a paved road.

In 2003, homeowner Gary Watts paved Saddle Club Road, despite Kirk and Mary Ferentz’s objections.

By 2015, the road required resurfacing, and owners of 3 of the 4 homes created a second HOA for the purposes of rasing $37,000 for the project. Then they assessed the Ferentzes $9,400 for their share of the project. The Ferentz’s sued, claiming they had no obligation to join the HOA established in 2015. Ferentz’s attorney also argued that, under the 2001 agreement, his clients have no obligation to pay for a paved road that they have opposed all along.

Judge Kevin Mc Keever agreed. And Iowa Supreme Court has denied further appeal on this matter.

Score one victory for private property rights.

In the next challenge, Saddle Club HOA is pursuing the Ferentzes for planting trees too close to the road. That matter goes to trial in February.

Iowa State Hawkeyes football field (Pixabay.com free image)

 

Iowa coach Ferentz faces an unusual rival: his neighbors

BY RYAN J. FOLEY
Associated Press

JANUARY 10, 2018 12:09 PM

UPDATED Jan 12, 2018

IOWA CITY, IOWA
Iowa Coach Kirk Ferentz is facing a challenge from an unlikely opponent: his neighbors.

A Feb. 6 trial is scheduled in a lawsuit that pits the nation’s longest-tenured college football coach and his wife against the three other families who live along a private road outside Iowa City. A judge is expected to decide whether the Ferentzes breached a 2001 agreement and trespassed by planting trees and installing landscaping items that neighbors say encroach onto Saddle Club Road.

The lawsuit is part of a long-running dispute in which Ferentz and his wife, Mary, have been portrayed as difficult, stingy and privacy-obsessed, clashing with their image as friendly philanthropists who support the Iowa Children’s Hospital.

A judge ruled in September that the Ferentzes aren’t required to join the homeowners’ association that their neighbors formed in 2015 to share road maintenance costs. That freed the Ferentzes from having to pay a $9,400 assessment for road repairs and dissolved a lien the association obtained on their property to collect payment.

Read more here: http://www.miamiherald.com/news/business/article193933974.html#storylink=cpy

 

 

Lawsuits involving high-profile litigants draw attention to important property rights issues that affect all Americans.

In this case, several important lessons can be learned:

  • Covenants, Conditions, and Restrictions (CC&Rs) create contractual agreements among property owners
  • Property owners can enforce CC&Rs by filing individual actions in civil court, even if one or more of those owners is not a member of an HOA
  • CC&Rs may or may not create a mandatory homeowners’ association
  • HOAs sometimes exist for the sole purpose of funding maintenance of private infrastructure (in this case, a private road)
  • HOAs can be created for existing properties, but membership and payment of assessments is only mandatory with unanimous consent
  • Homeowners cannot create a second HOA as a replacement for a pre-existing HOA, unless all members first agree to dissolve the original HOA and join the new one

In this case, the owners of all four properties have the financial resources to assert or defend their rights in court. As bitter and unneighborly as the dispute may be, none of the parties is likely to go broke paying legal costs.

But what about the vast majority of homeowners, who don’t happen to have tens or even hundreds of thousands of dollars to hire private attorneys?

When an HOA board, whether controlled by a developer or homeowners, decides to move the goalposts by changing the rules of the game, homeowners have two choices: put up with unwanted new rules and unauthorized assessment increases, or spend a fortune fighting against insurance company attorneys for the HOA.

Hopefully, Mike Ferentz’s high profile property dispute will create case law that encourages attorneys to take cases — on contingency — on behalf of homeowners facing similar property rights issues involving HOAs.

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One Reply to “High profile property rights case highlights impact of restrictions on HOA membership”

  1. Making America great again-chalk one up for individual rights. The signers of the Declaration of Independence are most likely proud. Thanks Deborah for your timely report

    Like

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