Establishing A Subdivision Requires Careful Consideration
Recently, the WV Supreme Court decided Foster v. Orchard Dev. Co., LLC, involving the applicability and meaning of certain restrictive covenants and design guidelines affecting The Gallery subdivision in Martinsburg.
The case focused on two main issues:
- Whether covenants and design guidelines adopted by the developer are separate and distinct documents or are part of the same documents that govern construction within the subdivision, and
- Whether the covenants and design guidelines allowed the developer to unilaterally reduce the size (minimum square footage requirements) of the residences to be built in the subdivision
In this case:
- The developer recorded a Declaration of Covenants for the subdivision, establishing a homeowners' association, reserving Special Declarant Rights, establishing land use restrictions and rules, and establishing a construction review committee. Although the Declaration did not set forth minimum square footage requirements, a set of Design Guidelines for use by the construction review committee did.
- The Design Guidelines were not recorded with the County Clerk; nevertheless, the Design Guidelines were referenced throughout the Covenants.
The Litigation: A homeowner sought injunctive relief to stop construction of the town homes, claiming that they would diminish the value of his single family home within the subdivision.
The Result: After months of legal maneuvering and construction delays, the case was elevated to the WV Supreme Court. The court found in favor of the developer and builder, holding that the homeowners association followed the proper amendment procedure.
What does this mean to you? While this case does not appear to have long-lasting negative ramifications for subdivision developers, it does highlight the fact that, poor documentation and lack of clearly worded and organized subdivision documents can lead to thousands of dollars in unnecessary attorneys' fees, construction delays and/or foregone development rights. It requires proper planning to develop a set of covenants that allow for a flexible method to govern construction and plan for changing market conditions. Early legal review of all documentation can save thousands in litigation costs and site delays in the life of your project.
Click here to read a complete case analysis and summary.