Amended Subdivision Covenants Held Valid

In Taddei v. Vill. Creek  Prop. Owners Ass’n, Inc., COA 11-650, decided February 21, 2012, the plaintiff sought to have amended covenants enacted by the lot owners of a planned community declared invalid along with re-subdivision of lots in the community.

The subdivision’s covenants were amended by a vote of a majority of lot owners at a special meeting of the association.  Plaintiff filed suit against the association and also against the association president, alleging that the president had breached a fiduciary duty to the lot owners by advocating for change in the covenants.  The Trial Court determined that the covenants were properly enacted, that the provisions changing the manner of making assessments were not reasonable and therefore were invalid, that the provisions for changes in lots were reasonable and valid and that the president did not breach his fiduciary duty.  Plaintiff’s appealed from that part of the judgment in favor of the association and the president.

The Court of Appeals found that language in the covenants automatically extending the covenants for successive periods of 10 years unless a document is recorded prior to the expiration of any 10 year term revoking or modifying the instrument permitted the modifications undertaken by the association.  The court also found that the differences of opinion between the plaintiffs and the association president did not rise to the level of a breach of fiduciary duty.