Property II, Pages 615–619

Evergreen Highlands Association v. West

Supreme Court of Colorado, 2003

Facts:

Petitioner, a homeowner association, owned a park bordering respondent's property. It had voluntary assessments to maintain and improve the park. A clause in the subdivision's covenants provides that a majority of the owners could modify any of the restrictions.

Pursuant to the modification clause, over 75% of the lot owners voted to add an article to the covenants to require an assessment for the park. Respondent did not vote for the amendment and refused to pay it. When petitioner threaten to record a lien against respondent's property, respondent filed this lawsuit. Petitioner counterclaimed for a declaratory judgment that it had the implied power to collect assessments from all lot owners and sought damages for breach of the implied contract.

Procedural History:

District court ruled in favor of petitioner on the ground that the amendment was valid and binding. The court of appeals reversed, finding that the terms "change or modify" did not allow for the addition of a wholly new covenant. Neither addressed whether petitioner had the implied power to collect assessments.

Issue:

Does a homeowner association have the implied power to collect assessment?

Reasoning:

Other jurisdictions and the Restatement recognize that this is a necessary duty that is implied. It is enough that the obligation is recorded in the covenants, plat, articles of incorporation, and park deed. It was clear to respondent that the homeowner association existed when he purchased his lot.

Rule/Holding:

The subdivision is a common interest community by implication and petitioner has the implied power to levy assessments against lot owners for maintenance and improvement of common areas.

Judgment:

Reversed and remanded to calculate damages for petitioner.

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