HOA Case Law Journal
with Julie McGhee Howard
Holman v. Glen Abbey Homeowners Association, Inc.,
356 Ga. App. 379, 847 S.E.2d 1 (Ct. App. Georgia 2020)
HOA governing documents usually account for and prescribe how maintenance and repair fees may be levied against the homeowners in the association for both the shared and individually owned property in the community. While this is commonplace and a normal part of membership, when the property in need of maintenance or repair is a large lake, these fees can rise to dramatic figures. In this case, the owners living on the lake in the community were facing $1.9 million in repairs to the lake mandated by the city. The existing documents provided that the 16 lot owners with lakefront property were responsible for maintenance, along with the HOA because it owned and maintained a lakefront, recreational lot. This dispute arose when the HOA levied 1/17th of the repair costs against each of the 16 lot owners and the association. The 16 lot owners wanted to shift the costs to the greater HOA membership and share the responsibility, equally, among all HOA members.
- In 2015, the City of Alpharetta, north of Atlanta, notified the Glen Abbey HOA that the association would be required to make $1.9 million in repairs to the lake in the subdivision.
- The lake is owned by the 16 surrounding lot owners and the association, which owns one parcel with a recreation area along the lake.
- The HOA declaration states that the association shall have no liability or duty whatsoever with respect to the lake, except to the extent of its obligations under a separate lake declaration as owner of the recreation parcel.
- The lake declaration makes the 16 lot owners and the association equally responsible for the lake repairs and expenses.
- After the City’s notice, the HOA assessed the repair costs to the 16 owners and itself.
- In response, a majority of the lake lot owners voted to amend the lake declaration to shift the repair costs to all 535 HOA members and then they attempted to terminate the lake declaration.
The Issue of the HOA Governing Documents Suit:
When the 16 lake lot owners refused to comply with the existing lake declaration and, instead, attempted to terminate unilaterally their obligation to maintain their lake, they put themselves at odds with the other 500+ owners and their association. The association was forced to litigate on behalf of the general membership arguing that the documents clearly defined lake maintenance to be the responsibility of the lake lot owners, not the association at-large. The association and its attorneys argued that the 16 lake lot owners could not terminate their governing documents without following the documents precise procedure and having the other members vote on an amendment which could dramatically change their responsibility in the community.
The Court of Appeals held that the lake lot owners could not unilaterally amend the lake declaration to shift responsibility for lake maintenance and repair expenses to the 500+ HOA members without the consent of all the members. The Court found that it would be patently unfair to require a purchaser of a non-lake lot to read the lake declaration, to which they were not bound, as notice they might face future liability for the lake. The Court ruled the attempted amendment was an invalid, nonuniform restriction on the members.
The Court also ruled the lake lot owner’s attempted termination of the lake declaration was invalid because the termination provision required the approval of the lake lot owners “and the Association” requiring both a majority of the lake lot owners and the separate approval of the association, which the lake lot owners did not obtain.
The Cautionary Tale
Though this is a nuanced case and not likely to be repeated exactly, it offers a wise caution to all HOAs about how important it is to carefully review all the associations’ governing legal documents and agreements. As with the trend of other cases around the country, the Court applied the literal interpretation of the precise words of the procedural requirements of the governing documents. This case highlights why associations must make wise choices in their legal representation when faced with document interpretation and enforcement that requires not only an understanding of case law, but also a sophisticated understanding of all homeowners association governing document interpretation in Georgia.
Additional coverage about Holman v. Glen Abbey Homeowners Association, Inc.:
- NowackHoward HOA Attorneys Recognized by Daily Report on Law.com for Their Work on Appellate Case
- Appeals Court Sinks Lakefront Dwellers’ Demand That HOA Foot $1.9M Repair Bill
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