Kiekel v. Four Colonies Home Association

Brief Fact Summary.

The Kiekels purchased eight units in a subdivision, Four Colonies, which was governed by an Association. The Kiekels did not live on the property. Instead, the Kiekels would rent out the units. Other owners of the subdivision complained to the Association that the Kiekels’ tenants were engaging in noxious activity. Further, the other owners complained that the Kiekles failed to maintain the property. Later, the other tenants amended the bylaws to restrict property rentals. Kiekels petitioned for a declaratory judgement and the Association filed a counter-claim on the grounds that the Kiekel’s were violating the Declaration by engaging in noxious and commercial activity. The district court denied the Kiekels’ petition and the Associations request for an injunction and held that the bylaws were not in direct conflict with the Declaration.

Synopsis of Rule of Law.

To properly change a subdivision’s property use restriction, there must be an amendment of the document that governs the use restriction.

Facts.

In 1971, a subdivision, Four Colonies, was created to be a planned-unit development. The Four Colonies Home Association (Association) governed the subdivision. Also, there was a Declaration of Covenants, Conditions, and Restrictions (Declaration), which explained ownership rights and property-use restrictions, such as restrictions on commercial use and noxious activities. Although the Declaration included lessees and tenants in its definition of a “resident,” the Declaration did not specifically forbid or authorize an owner to rent the property. Additionally, the subdivision’s bylaws incorporated enforcement and procedural provisions. To amend the Declaration, one must gather a supermajority vote of all owners. However, to amend the bylaws, one solely needed to obtain a majority vote of all the owners. Since the subdivisions creation, owners began to rent properties on the subdivision. The Kiekels owned eight units, which the Kiekels did not occupy. Instead, the Keikels rented the units out. Eventually, other subdivision owners began to complain that Keikels’ tenants were engaging in disruptive conduct. Also, the other owners of the subdivision claimed that the Kiekels failed to maintain their units. Thereafter, in 1997, the Association recommended that the owners amend the bylaws to restrict property rentals. Nonetheless, the Association later withdrew the recommendation when it determined that such action would conflict with the Declaration. In 2004, owners amended the bylaws to forbid currently rented property from being rented again once the ownership has been changed. Subsequently, the Kiekels petitioned for declaratory judgement on the grounds that the amendment was void, as it was in conflict with the Declaration. The Association counterclaimed against Kiekels on the grounds that the Kiekels were violating the Declaration by engaging in noxious activity and commercial use on the property. Further, the Association requested the court to grant an injunction to prevent the Kiekels from continuing to rent their units, thus, requiring the Kiekels to sell the units to occupying owners. The district court denied the Kiekels’ declaratory judgement claim and the Association’s request for an injunction on the grounds that the bylaws were not in conflict with the Declaration. Also, the Association could repair the Kiekels’ property and place the cost of the property’s restoration on Kiekels’ annual assessment.  

Issue.

Whether one may change a subdivision’s property use restriction by amending the document that governs the use restriction.

Held.

Yes, one may change a subdivision’s property use restriction by amending the document that governs the use restriction.

Discussion.

To properly change a subdivision’s property use restriction, there must be an amendment of the document that governs the use restriction. The issue in this case is whether the restriction on the property can be imposed through the bylaws. The Declaration, a document that governs the property owner’s property rights, does not restrict the owner’s right to rent his or her property. Also, the Declaration does not specifically forbid or allow renting, as the Declaration even defines lessees and tenants as “residents.” Also, owners, in this case, have been renting the property in the subdivision since the subdivision was created. Thus, the bylaws amendment conflicted with the Declaration because it was eliminating an owner’s right to rent his or her property. Thus, the amendment is void. Also, in light of the Association’s request for an injunction, the Kiekels did not violate the declaration’s commercial-use restrictions by renting their property because the act of renting one’s property is not a commercial activity if the lessee or tenant uses the property as a residence. Likewise, the Kiekels did not violate the noxious activity restriction because the Association did not establish that the tenants were engaging in a type of disruptive behaviour that other tenants would not engage in or that the maintenance problems were worse than those impacting other properties. Overall, the Association may assert its right to restoration to restore the Kiekels’ property and place the cost of the property’s restoration on Kiekels’ annual assessment. In the event of nonpayment, the Association may also sue the Kiekels for nonpayment. Therefore, the district court’s finding is affirmed in part and reversed in part.