Make Sure Governing Documents Spell Out Responsibilities

January 25, 2018
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It’s important to make sure that your governing documents spell out exactly the expectations for members—especially when it comes to financial responsibilities. An association prevailed in a recent case in Pennsylvania because its covenants specified what owners were obligated to pay for. When a homeowner balked at this, the association was able to show that it was mandatory to pay certain fees.

There, a homeowners association alleged that a homeowner breached the covenant to pay assessments for common area maintenance and other services necessary to operate the community. He had unpaid dues totaling over $15,000. The homeowner contested the reasonableness of the charges. The association asked a trial court for a judgment in its favor without a trial. A Pennsylvania trial court ruled in favor of the association.

The trial court explained that to rule in favor of the association without a trial, there couldn’t be any questions as to material facts in the case that a jury would need to weigh. Here, the facts were clear. The covenants for the community required all homeowners to pay for services the association provided to keep the community operating. Those services included maintenance of the common areas. Under the Uniform Planned Community Act (U.P.C.A.), a unit owner’s association may adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from unit owners, explained the trial court. Further, a unit owners’ association may impose charges for late payment of assessments and, after notice and an opportunity to be heard, levy reasonable fines for violations of the declaration, bylaws, and rules and regulations of the association.

The homeowner argued that the assessments weren’t reasonable and asserted that in some Pennsylvania community associations, there is an express agreement prohibiting assessments. But the trial court pointed out that in many of those associations, there is a covenant to pay dues to an association instead, which covers the same services an assessment would.

The trial court determined that the homeowner’s covenant attached to his deed clearly expresses that there is to be an association of property owners and that the owner of the premises will be subject to dues and assessments in compliance with the bylaws of the association. The bylaws state that the association’s board of directors shall “establish and enforce rules and rates for community service and establish any special assessment, the annual common expense assessments, fines and other charges.”

The homeowner also claimed that he was unaware of the rules, dues, and requirements at the time he purchased the home and that his realtor never explained things to him. The trial court pointed out that, first, that is not a legal defense. The trial court also noted that the homeowner didn’t mention hiring a lawyer at time of his purchase despite the large investment he was making. Finally, the U.P.C.A. requires that a re-sale certificate be given at least 10 days prior to closing to a buyer in all planned developments, including this one. The re-sale certificate lists the yearly dues, and contains the bylaws and current rules and regulations. A buyer can then cancel a transaction after receipt and review of the re-sale certificate if done within a certain period of time. The homeowner should have reviewed those documents at that time before proceeding to closing, the trial court said [Pocono Farms Country Club Ass’n v. Lewandowski, September 2017].