Trying to predict how a court will rule on planned community issues can be difficult. Each community has a unique set of covenants and many issues that arise do not impact enough lots or money to reach the Court of Appeals. However, there appears to be a trend developing in that could be harmful to lot owners – application of a contract analysis.
The Court of Appeals has approached declarations as a simple contract with lot owners and in some recent cases and upheld provisions that placed a burden on lot owners and/or associations. Some judges are taking the position that if the declarations give the developer an unfair advantage there is no remedy because lot owners agreed to the declarations when they accepted a deed.
Our firm has a case on appeal that is encouraging the Court of Appeals to apply a long-standing reasonableness test to discretionary acts by a developer. We hope that it will check the move toward a “hands off” approach when the courts deal with actions by a developer. A decision is expected in 4 – 6 months.