The Missouri Supreme Court has ruled in favor of a homeowners’ association and successor developer to uphold the integrity of the community’s governing documents after an owner alleged a failure of the transfer of development rights and waiver and abandonment of the restrictions.
In 2004, a declaration and subdivision plat were recorded to establish a single-family residential community. However, the original developer was unable to proceed with development, thus the entire subdivision was transferred to another developer. This successor developer had different plans. Instead of a single-family residential community, the successor developer wished to create a mixed-use community. These plans ultimately failed to materialize, but not without the construction of a utility building, which was transferred to the owner and party to the lawsuit.
In 2015, the successor developer transferred all of its rights in the subdivision to another successor developer, Fogarty Farms, LLC (“Fogarty”). Fogarty proceeded to formalize the operations and administration of the association, Millstone Property Owners Association (“Millstone”). In June 2017, Millstone brought a suit against the owner for unpaid assessments and failure to maintain their lots. The owner filed a counterclaim asserting that Fogarty was not a successor developer and that the restrictions were waived and/or abandoned. The trial court found in favor of Fogarty and Millstone that the owner was liable for unpaid assessments, and the restrictions were not waived or abandoned. The Missouri Supreme Court upheld the trial court’s determination in all respects.
The court held that the rights of a developer for a platted subdivision are personal rights that do not run with the land. To determine if the rights of a developer were transferred, a court must look to the intent of the parties under the circumstances. Here, the evidence at trial demonstrated an intent of the original developer to transfer the development rights to the first successor developer via the deed transferring the subdivision. This transfer included possible future actions of that successor developer related to the development rights, including transferring said rights to Fogarty. The owner did not present any facts to counter the evidence that the first successor developer clearly believed they had acquired such rights and the right to transfer them to Fogarty. Accordingly, Fogarty is a successor developer of the community.
In an examination of waiver and abandonment, the owner argued that the construction of the utility building and the expressed change in development plans by the successor developer were evidence of waiver and abandonment. The court disagreed. First, the declaration unambiguously contains an anti-waiver provision whereby the failure to enforce any provision of the declaration shall not constitute a waiver to enforce such provision in the future. Second, the successor develooper may have expressed a desire to change from a single-family residential community to a mixed-use community and may have attempted to do so, but that plan was unsuccessful. No amendments or changes were made to the restrictions, even though the successor developer could have done so. Third, the single deviation of the utility building is not evidence to indicate an intention or purpose to abandon the plan or scheme of development for restrictions that apply to an entire area, such as a planned community. Accordingly, there is no waiver of abandonment.
In light of the foregoing, the Missouri Supreme Court has appropriately extended and applied long-standing principles of Missouri case law applying to developers and homeowners’ associations. For an owner to successfully show waiver and/or abandonment, an owner must show so many violations that are so general as to indicate abandonment of the entire scheme of development—not just the applicable covenant sought to be enforced.
(*Law Clerk Katie Gundersen was also a contributing author for this blog post*)
