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Posts Tagged ‘covenants’

Enforcing an HOA Covenant

Posted on: February 12th, 2018

By: Jan S. Sigman

Many homes built in the metro Atlanta area in the past 20 years are located in subdivisions that have a homeowner’s association (HOA). In 1994, Georgia adopted the Property Owner’s Association Act.  If an HOA elects to become subject to the Act, then the covenants passed by the HOA are enforceable against all the current property owners in the association, as well as subsequent purchasers into the community. Covenants may include restrictions on the development and use of the property.

In Great Water Lanier v. Summer Crest at Four Seasons on Lanier Homeowners Ass’n, Case No. A17A1810 (January 2, 2018), the Georgia Court of Appeals enforced various HOA covenants on a subdivision plat where Great Water accepted but did not sign the warranty deed. On cross motions for summary judgment, the trial court held the parcel was subject to the HOA covenants.  Great Water appealed, but the Court of Appeals affirmed the trial court’s ruling.  By accepting the deed, the Court of Appeals held, Great Water voluntarily consented to be bound by the HOA covenants. This case illustrates the need for buyers to conduct due diligence into HOA covenants that could encumber the property.

Jan Seanor Sigman is licensed to practice in Georgia and represents contractors and design professionals in all construction matters including contract negotiations, payment disputes and delays, contract terminations, and defective work. If you have any questions or would like more information, please contact Jan Seanor Sigman at jsig[email protected].

New Limitations to Application of Georgia Restrictive Covenants Act

Posted on: May 23rd, 2013

By: Joyce Mocek

Recently, a Fulton County Superior Court judge, in an unpublished order in the case of Cone v. Marietta Recycling Corporation, limited the application of the Georgia Restrictive Covenants Act, and provided guidance on whether a company could enforce a non-compete covenant against a former employee.

The Georgia Restrictive Covenants Act, which became effective on May 11, 2011 when signed by Georgia Governor Nathan Deal, established significant new guidelines concerning non-compete and non-solicitation agreements.  Since the enactment of the Georgia Restrictive Covenants Act, many employers have taken steps to require employees to sign new covenants so that they can benefit from the Act.

In Cone, an employee signed an employment agreement that contained a restrictive covenant on February 25, 2011, before the new law went into effect.  The employee was later fired, and subsequently signed a separation agreement on May 4, 2012.  The separation agreement provided that it “superseded” and “rendered null and void” all prior agreements, except the confidentiality provisions and restrictive covenants from the employment agreement, which “would remain in full force and effect.”   The employer argued that the covenants should be interpreted under the new law because the separation agreement, which post-dated the new law, was applicable by ratification and novation.   Judge Dempsey, Jr. disagreed, stating that the restrictive covenants were not ratified through the separation agreement, and there was no novation. He clarified that the only way the employer could have taken advantage of Georgia’s new law, was to require the employee to execute a new contract with new restrictive covenants having a new effective date after May 11, 2011, or by replacement of the old restrictive covenants with new ones.

Although this unpublished order is not binding on other courts, it provides useful insight into how other judges may determine whether the new law is applicable to a particular agreement, and what will be required to ensure the application of the new law.

 

Recent Court Rulings Suggest Homeowners’ Associations May Selectively Enforce Covenants

Posted on: September 6th, 2012

By: Marc Bardack

In two recent rulings, state trial court judges have rejected homeowner claims against homeowners associations (HOAs) for failing to enforce covenants against a neighbor.  These rulings raise the question of whether HOA’s can enforce neighborhood covenants selectively as they see fit.

In Sugarloaf Residential Property Owners Association, Inc. v. Greenwald, the homeowners sued the HOA for arbitrarily enforcing landscaping and other property improvement covenants against them and not against their neighbors.  In ruling against the homeowners, Gwinnett Superior Court Judge Michael Clark held that the HOA had the right to enforce covenants, but not an affirmative duty to do so.  He interpreted the HOA’s governing documents as providing that right but not making it an obligation.  Thus, the court effectively ruled that the HOA could enforce covenants as it saw fit.

Judge David Dickinson reached a similar conclusion in the Forsyth County Superior Court case of Lake Astoria Community Association, Inc. v. Ingmire v. Furr where the homeowner sued the HOA for failing to enforce neighborhood covenants consistently.  Similar to the declarations in the Gwinnett County case, Lake Astoria’s Declarations provided that the HOA could not “be held liable for any injury, damages or loss arising out of the manner or quality of approved construction on or modifications to any lot.”  Judge Dickenson ruled that this provision precluded Mrs. Ingmire from arguing that the HOA had a legal duty to enforce its architectural standards or design guidelines.  Again, the implication with this ruling is that the HOA is free to enforce its covenants when it sees fit to do so.

Of note is that neither court specifically addressed the “arbitrary and capricious” enforcement of covenants argument advanced by the homeowners.  While some would argue that such rulings negate the purpose of having an HOA and neighborhood covenants, homeowners are not without recourse.  For example, in both the Gwinnett County and Forsyth County cases described above, the homeowner did sue the neighbor who allegedly caused excess surface water runoff.  A question remains as to whether a homeowner would have standing to sue a neighbor for violation of a covenant when that violation did not cause direct damage to the homeowner.  In other words, it is clear that a homeowner could sue his next door neighbor for directing excess surface water onto his property and flooding his basement, but it is not as clear that the homeowner could sue the neighbor down the street for putting an addition on a house without HOA approval. Additionally, homeowners always have the option of getting involved on their HOA boards in order to push the enforcement of covenants.

Nonetheless, these rulings do provide some relief to HOAs and their board members (as well as their insurers) who dread getting dragged into the middle of disputes between neighbors.  These rulings cast a broad measure of protection even if enforcement is in fact selective.