TRIPLE CROWN SUBDIVISION HOMEOWNERS ASSOCIATION, INC. V. CLINTON S. OBERST, ET AL.
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RENDERED : NOVEMBER 26, 2008
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2006-SC-000934-DG
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TRIPLE CROWN
ON
HOMEOWNERS ASSOCJATION, INC .
V.
APPELLANT
ON REVIEW FROM COURT OF APPEALS
CASE NO . 2005-CA-000066-MR & 2005-CA-000242-MR
BOONE CIRCUIT COURT NO, 02-CI-00623
CLINTON S^ OETAL .
OPINION OF THE COURT BY JUSTICE SCHRODER
REVERSI G AND REMANDING
The question in t1ds appeal is whether or not the restrictive covenants
are sufficiently described so as to be incorporated by reference and binding on
the property herein . We opine that when the chain of title contains a specific
reference, Le, = sDibJect to the Dedaration of Covenants recorded in
Miscellaneous Book 292, Page } of the Booz%e County
___~
records ^ . .", , ƒ~~
property in question is subject to the restrictive covenants . Because we are
reversing the Court ofAppeals on ƒ1ii8issue, it will be necessary ƒo remand Ar
reconsideration of collateral issues .
The property in question is located in Boone County, but it could be
located in any county, as the rules are the same for title examinations. A
developer acquired some land for the purpose of developing a subdivision. In
order to establish a general plan and uniform scheme of development, the
developer proposed and recorded in the County Clerk's Office, a "Declaration of
Covenants, Conditions and Restrictions . . . " that applied to all property owned
by the developer, and there was an "expansion" clause which allowed the
developer to subject "after-acquired" property to those same restrictions . The
"expansion" clause simply required the developer2 to amend the original
restrictions to include the legal description of the after-acquired property
(which would place the restrictions in the chain of title to after-acquired
property) .
A title search reveals the current owners of the property have this
developer in their chain of title . The property in question was "after-acquired"
property of the developer. When the developer sold the property (Deed Book
551 at Page 88), the deed included this language : "subject to the Declaration of
Covenants recorded in Miscellaneous Book 292, Page 1, . . . and subsequent
amendments thereto ." The developer did not, however, also amend the
restrictions "expansion" clause to include the legal description of this "afteracquired" property . The current owners contend the failure to amend before
the sale renders the restriction inapplicable to their property.
1 The Declaration contained a legal description, so the covenants, conditions, and restrictions
were picked up in the chain of title.
Only the developer gets to decide to add properties . The other properties subject to the
restrictions do not have to approve said additions.
2
The trial court ruled that the reference in the chain of title (DB 551/P88),
incorporating the restrictions at MB 292/Pl, "acting alone was sufficient to
impose the covenants and restrictions . . . upon all subsequent purchasers . . .
.193
The Court of Appeals disagreed, recognizing the reference in the chain of
title, but concluding more was needed to subject the property to these specific
restrictions, that the restriction at MB 292/P1 had to be amended to include
the legal description of the property in question. We disagree, and opine the
trial court was correct.
There is no doubt of the developer's intention in the chain of title at DB
551 /P88, to incorporate by reference, the restrictive covenants previously
recorded at MB 292/131 . In Brandon v. Price, 314 S.W.2d 521, 523 (Ky. 1958),
our predecessor, the Court of Appeals, decided that "[ujnder the modem view,
building restrictions are regarded more as a protection to the property owner
and the public rather than as a restriction on the use of property, and the oldtime doctrine of strict construction no longer applies." The Court also
recognized the importance of a general plan or scheme in developing a
subdivision. Id, In Colliver v. Stonewall Equestrian Estates Assn, Inc., 139
S.W.3d 521, 522 (Ky.App. 2003), the Court ofAppeals recognized strict
construction of restrictive covenants is out, and the current rule is "the
intention of the parties" . The intention of the parties governs even if "that
3 Although the trial court also discussed the doctrine of "reciprocal negative easements", the
developer did not yet own the property in question, thus the restrictions could not attach to
property owned by someone else . ~See Black v. Birner, 179 S.W.3d 873, 879 (Ky-App- 2005) .
See also, Oliver v. Schultz, 885 S.W.2d 699, 701 (Ky. 1994), which abolished reciprocal
negative easements after 1994 unless they are recorded within the chain of title.
intention be not precisely expressed." Id . And the "general scheme or plan of
development" is an important factor to consider. Id. Colliver also recognized
that a homeowners' association had standing to enforce restrictive covenants .
Id . at 523-24. Black v . Bimer, 179 S.W.3d 873, 878 (Ky.App . 2005) noted that
"[m]ore recently, developers have adopted the practice of setting out the
covenants in a single declaration that is recorded against the lots in the
development before any conveyances are made . The declaration is then
incorporated by reference in subsequent deeds to various lots ." The question
in Black was whether restrictions, which had expired, were renewed by
language in a deed that read "[t]his conveyance is subject to all restrictions and
easements of record which affect the subject property." Id. at 881 . In holding
such language was only precautionary, not creating restrictions if none existed
at the time of conveyance, the Court reviewed similar deed language from other
states and decided there were no restrictions being incorporated by reference
unless enforceable encumbrances or restrictions already existed . Id. at 881132. That is a- different situation than the one we have here. Clearly, the
the
intention of the language "subject to
Declaration of Covenants recorded in
Miscellaneous Book 1292, Page I . . . . and subsequent amendments thereto[,]"
the
was to subject
property to these restrictive covenants, incorporating them
by reference, and was not intended as mere precautionary language as a more
general statement, like "subject to restrictions of record, if any", would be.
"Interpretation or construction of restrictive covenants is a question of
law[,]" which allows us to "review this matter de novo. " Colliver, 139 S.W. 3d at
523. The restrictions are in the chain of title and the language of the deed (DB
551/P88) expresses an intent to incorporate by reference the specific
restriction contained in the Declaration recorded (beginning) at MB 292/Pl,
notwithstanding that the restrictions themselves were not amended to include
the
a legal description of
property in question. Amending the restrictions to
include additional legal descriptions is one way to subject property to said
restrictions, but "incorporation by reference" is, as the Court said in Black, at
878, an accepted practice for "setting out the covenants . . . . .. Although
amending the declaration to include an additional legal description for afteracquired property would have made it easier for a title examiner, the absence
thereof does not obscure or defeat the obvious intent of the developer . It
merely fails to "precisely" express the intention of the developer. See Colliver,
at 522.
"Because we are reversing the Court of Appeals on the application of the
restrictive covenants to the property in question, a discussion of the doctrine of
negative reciprocal easements is moot. The issue of attorney fees, if any, is
now
a
matter
of concern. Although the Court of Appeals decided the issue was
moot in light of its ruling, it went on to discuss the issue, adopting the trial
court's analysis of KRS 411 .195, which purportedly allows attorney fees to the
original parties to an agreement to pay attorney fees. The Homeowners'
Association contends the property owner is responsible because there is privity
of contract with the original parties.
A review of the restrictive covenants beginning at MB 292/P1, reveals a
provision (Section 6.7) for collection of unpaid assessments, interest, and "the
costs of collection thereof, including attorney fees, . - - ." Although it could be
argued that attorney fees for collection of assessments is not the same as
attorney fees for enforcement of the restrictive covenants, the issue appears
academic in light of KRS 411 .195 which allows attorney fees, and the cases of
Farmers Bank & Trust Co . v. Brazell, 902 S.W.2d 830, 833 (Ky.App. 1995), and
CSJC Oansx, Inc. Y First NMI Bank of (Waxyson, 14 S.W.3d 563, 569 (Ky-App.
which
199E),
held said statute only applies to the original parties to the
contract.
Appellant's and the Amicus's argument that we should overrule stare
decisis, because the fees are needed to pay its bills is without merit. Collive
139 S.W.3d at 526, recognized that homeowners' associations can generally
levy special assessments for a variety of reasons, including lawsuits . Even the
Collivers, the unsuccessful parties, had to pay part of the assessment in that
case .
The property owners also argued (111.(5)) in its brief that even if their
the restrictive
property was subject to
covenants and assessments, that the
Triple Crown Subdivision Homeowners' Association, Inc. had to collect
assessments from the Promenade Homeowners' Association which in turn
collects from the property owners, and that this procedure was changed
sometime during litigation. The Appellants reply brief does not address this
will
issue and it is not addressed by the Court ofAppeals decision. This matter
need to be decided by the trial court on remand, as well as the amounts of
assessments due, costs, and interest.
For the foregoing reasons, the opinion of the Court of Appeals is reversed
and the matter remanded for further proceedings consistent with this opinion.
Minton, C. J. ; Cunningham, Noble, Scott, and Venters, JJ-, sitting. All
concur. Abramson, J ., not sitting.
COUNSEL FOR APPELLANT:
Dennis Ray Williams
Jennifer H. Langen
Adams, Stepner, Woltermann & busing, PLLC
40 West Pike Street
P.O. Box 861
Covington, KY 41012
COUNSEL FOR APPELLEES:
Gregory Wayne McDowell
Gregory W. McDowell, PSC
7415 Burlington Pike
Suite B
Florence, KY 41042
COUNSEL FOR AMICUS CURIAE:
Todd V. McMurtry
Deters, Benzinger & Lavelle, PSCC
Thomas More Park
207 Thomas More Parkway
Crestview Hills, KY 41017
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