McMullin v. HauerAnnotate this Case
This land dispute concerned the ownership of seventeen acres of “common open space” in a purported common-interest community. Petitioners Crea and Martha McMullin (“the McMullins”) acquired thirty acres of land in Rio Blanco County, Colorado, intending to develop a rural subdivision. The McMullins recorded a final plat, which created seven lots along with seventeen acres of common open space, and entered into a subdivision agreement with the County. The plat identified the subdivision as “Two Rivers Estates.” For the next eight years, the McMullins were unable to sell any of the lots. During that time, the McMullins mortgaged six of the seven lots to finance the construction of a family lodge on one of the lots. They did not mortgage or encumber the common open space. When the McMullins became unable to pay the loans, the mortgagee foreclosed on Lots 2 and 3, which were then purchased by Respondents Joseph and Kelly Conrado (“the Conrados”) and John and Sena Hauer (“the Hauers”), respectively. Still under financial strain, the McMullins sold Lot 1 to the Hauers and Lots 4, 5, 6, and 7 to Lincoln Trust Company FBO John Hauer. After acquiring six of the seven lots, the Hauers and Lincoln Trust Company filed suit to quiet title to their respective lots. The Hauers asserted that Two Rivers Estates was a common-interest community under the Colorado Common Interest Ownership Act (“CCIOA”), and that their lots included appurtenant rights in the common open space through an unincorporated homeowners’ association created by the common-interest community. After a bench trial, the trial court found that the recorded final plat, certain deeds, and the subdivision agreement established both an implied common-interest community and an unincorporated homeowners’ association that held equitable title in the open space. The court further concluded that the Hauers, Lincoln Trust Company, and the Conrados were members of the unincorporated homeowners’ association; that each lot owner had a duty to contribute 1/7th of the common expenses to the homeowners’ association; and that the homeowners’ association had power to levy assessments to collect those expenses. The McMullins appealed, and the court of appeals affirmed in a split, published decision, with the majority largely agreeing with the trial court’s analysis. The Colorado Supreme Court concluded the recorded instruments were insufficient under CCIOA to create a common-interest community by implication. Accordingly, the Court reversed and remanded to the court of appeals for further proceedings.