Creekside Golf Club owners sue HOA board for reserve fund spending
"Creekside Golf Club’s owners have asked a judge to remove the board of an adjacent homeowners association and put the HOA into receivership. It’s the latest volley in a two-year legal battle that will decide whether the club’s owners, developers Larry Tokarski and Terry Kelly, can close the South Salem championship course and turn it into a residential subdivision. The developers say the six members of the Creekside Homeowners Association Board, all of whom own golf course-view homes, illegally used the association’s reserve account to pay for an April 2016 lawsuit alleging the course must remain open indefinitely. That bankrupted the association, raising monthly assessments for the many homeowners whose property values would not be affected by the course’s closure, the lawsuit alleges."
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I haven't looked up any of the pleadings, but this looks like an unusual situation. The golf course owners seem to be claiming there is no contractual or property rights connection between the golf course and the residential properties, so they can turn the course into a subdivision if they want to. But the HOA said that buyers were promised in their original covenants that there would be a golf course next door. Deborah Goonan did a long post on HOA conflicts involving golf courses that mentions this case and others.
3 comments:
Worth it to look at pleadings from article.
A copy of the CCRs is attached as an exhibit to the HOA's pleadings which are accessible by link in the article.
Under Art. III - General Development, Section 4 Golf Course, it says:
"A portion of the real property described in Exhibit A may be developed into a golf course and related facilities. The golf course and related facilities may be modified, expanded or contracted, discontinued or converted to other uses, or sold or transferred by the owner thereof...."
When you read the pleadings in view of this it is pretty clear to even a layperson the HOA board never had a legitimate claim for any of the theories asserted in the litigation. Art. VII of the CCRs has some additional impositions on the golf course property but nothing that overcomes Art. III, Section 4. Curiously, Art. VII raises the issue as to whether the HOA property owners could vote to amend the section pertaining to the golf course to achieve what the board wanted. Of course that did not happen but it illustrates how CCRs and HOAs are used to disenfranchise property owners, shift control away from them, and shift liability onto them. What if the homeowners had voted to amend Art. III, Section 4 to eliminate authority of the golf course to discontinue? HOA-burdened property is problematic in that the owner has no right (according to many courts) to sell what he purchased because the other property owners can vote to detrimentally impose greater restrictions on the land. The board's pleadings hold little water in view of typical HOA activity. In this case the CCRs actually anticipated and authorized discontinuance of the golf course in the original documents.
Curiously the HOA pleadings cite to ORS 94.630 as support for the proposition it has standing to bring suit.
The U.S. Supreme Court addressed associational standing in Hunt v. Washington State. Subsequent U.S. Supreme Court cases further limited associational standing (can't sue your own members, can't sue when damages/harm is not the same and requires participation of individual members). ORS 94.630 purports to give associational standing to the HOA with respect to property owners rather than members. The restrictions at issue cover the golf course and expressly make the owner of that property bound but at the same time exclude the golf course owner from membership in the HOA. Thus the golf course owner is a property owner under the restrictions but not a member of the HOA.
Arguably the HOA would have had standing under Hunt and successors to sue because those cases focused on interests of members. But it appears to me ORS 94.630 does not give associational standing to the HOA because its suit is not in the common interest of the property owners. Indeed this would appear to be the type of suit Hunt and its successors would deny associational standing for.
There are so many golf courses and association governed common interest communities that are in a state of transition and conflict right now.
There a dozens of these kinds of posts on my website.
Apparently there are a few CC&Rs written to require a golf course forever, but, as IC_deLight points out, there are often provisions in the documents that give the owner of the golf course an escape hatch for the future.
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