Majority Vote Can Amend Restrictions in Missouri
This week, we tell you about a landmark ruling out of Missouri that dramatically expands the ability of associations to add restrictions by amendment. It frees associations there — and potentially elsewhere — from a rule that has handcuffed them for 80 years.
The new case involves a subdivision that was established in 1923, with 23 recorded lots. The original indentures provided that the restrictions would be in force for 25 years unless “amended or extended by two-thirds of the lot owners …” They were amended, according to the court, about five times.
One amendment, approved in 1928, provides that “only one residence shall be erected on each lot.” In 2012, the purchaser of a 2.3-acre lot sought to split it into two lots for two residences. The subdivision sued to block the split, claiming it would violate the restriction in the amended indentures.
The seller and the buyer of the lot countered that the amendment was invalid because it was adopted without the unanimous consent of all lot owners. In support of this argument, they cited a 1938 ruling by the Missouri Supreme Court, referred to as Van Deusen.
“The court held in Van Deusen that the word ‘amend’ [in indentures] didn’t mean you could add new burdens that weren’t originally there,” explains Todd Hamby, a principal with the St. Louis law firm Carmody MacDonald P.C., which represents around 180 associations. Hamby represented the subdivision.
“The Van Deusen court believed no new restrictions can be created without the agreement of everyone because it changes the property rights people think they get when they bought in,” says Brad Goss, a partner with the St. Louis firm SmithAmundsen LLC.
The implications for associations in Missouri have been stark. “The way the law had developed,” Hamby says, “you couldn’t add amendments without the unanimous consent of every single owner. You’re not going to get unanimous participation, let alone unanimous consent, so it really hamstrung associations.”
To learn how the court has changed this dire situation, as well as what it means for associations in Missouri and possibly beyond, read our new article Missouri Court Strikes Down Unanimous Consent Requirement to Amend Restrictions.