Summary

Each owner of a lot in a planned community with multiple subdivisions was required to be a member of the master association – Holly Lake Ranch Association (HLRA).  Some of the owners voted to amend their particular subdivision’s respective deed restrictions.  The effect of which was to add a voting requirement for assessments, mandatory waiver of duplicate fees for additional lots, and restricted HLRA’s lien rights.  In this particular Texas case, Roddy v. Holly Lake Ranch Association, Inc., __ S.E.2d __ (2019), the court found that the amendments were “illegal” and therefore void.  In addition, the court remanded the case to the trial court to determine the reasonableness and necessity of the attorney fees it awarded to HILRA.

Issues

1. Were the amendments legal? No.
2. Was each owner of a lot entitled to one vote, regardless of the number of lots they owned?  Yes.
3. Was HLRA entitled to recover attorney fees for having to bring this case. Yes, but the exact amount of which had to be determined by the trail court after considering the appellate court’s decision.

Facts

Between 2014 and 2017 the property owners from multiple subdivisions voted to amend their respective deed restrictions.  The amendments benefited the owners in the following ways:

1. Adding a 51% voting requirement for assessments;
2. Confirming that each lot owner had one vote;
3. Requiring a mandatory waiver of assessments for any additional lots owned by an owner; and
4. Limiting lien rights for HLRA.

HLRA filed suit seeking a declaration that the amendments were void and alleging breach of contract and seeking attorney fees and injunctive relief.  On a motion for summary judgment the trial court agreed with HLRA and the owners appealed.

Court of Appeals of Texas

Affirmed most of the trial court’s decision but reversed the trial court relating to how voting would take place in the future: finding that each owner is entitled to one vote per lot.  Because of that reversal, the court of appeals also remanded the case to the trial court to determine the proper amount of attorney fees in view of its decision.  NOTE:  The owners may have been able to avoid the award of attorney fees because HLRA failed to provide a statutorily required notice, however, the owners also failed to timely object to the lack of notice, resulting in the court of appeals finding that “a party may … waive this mandatory requirement by failing to timely object [to the lack of notice].… Therefore, we conclude that Appellants waived the notice requirement.”

Lessons Learned

1. Hire experienced and knowledgeable attorneys to write any amendments. Otherwise, you may not only lose your amendment, but may have to pay the association’s attorney fees and costs when the amendments are found illegal or improper;
2. If you copy what your neighbor did (in this case relating to the amendments) then you will get the result your neighbor gets (that can obviously be a bad thing); and
3. The REAL Lesson.  If you hire attorneys who improperly advise you on amendments to your association documents, wrongly interpret your documents and fail to timely request notice on the attorney fee issue, you may want to change lawyers.