Allen v. Timberlake Ranch Landowners Ass'n
| Decision Date | 28 June 2005 |
| Docket Number | No. 24,710.,24,710. |
| Citation | 119 P.3d 743,2005 NMCA 115 |
| Parties | THOMAS ALLEN and SHARON ALLEN, Plaintiffs/Counterdefendants-Appellees, v. TIMBERLAKE RANCH LANDOWNERS ASSOCIATION, a New Mexico Non-Profit Corporation, Defendants/Counterclaimant-Appellant. |
| Court | New Mexico Supreme Court |
Bruce Boynton, Grants, NM, for Appellees.
John P. Hays, Cassutt, Hays & Friedman, P.A., Santa Fe, NM, for Appellant.
{1} Defendant, Timberlake Ranch Landowners Association (Association), appeals from a district court judgment, which ruled that Plaintiffs, Thomas and Sharon Allen (Homeowners), were not bound by the obligations of membership in the Association. The district court also ruled that a lien, which the Association had placed on Homeowners' property, was invalid. The Association had placed a lien on Homeowners' property because Homeowners had failed to pay past due assessments to the Association. On appeal, the Association argues that the district court erred because the declaration of covenants (1) imposes an obligation on Homeowners to pay assessments for the maintenance of the subdivision's common areas, (2) provides for the creation of a homeowners' association, which has the authority to collect assessments against lot owners within the subdivision, and (3) grants the Association the authority to place a lien on Homeowners' property because of Homeowners' failure to pay past due assessments. The Association further argues that Homeowners had notice of the obligation to pay assessments imposed by the declaration of covenants and also had notice of the Association's authority to collect assessments and to place a lien on Homeowners' lot.
{2} We conclude that the declaration of covenants does impose an obligation on Homeowners to pay assessments for the maintenance of common areas within the subdivision. We also conclude that the Declaration grants the Association the power to collect assessments and to place a lien on Homeowners' property because of Homeowners' failure to pay past due assessments. Finally, we hold that Homeowners had notice of the obligations created by the declaration of covenants and the authority of the Association to enforce those obligations, as well as the Association's authority to place a lien on Homeowners' lot for Homeowners' failure to pay their assessments. Accordingly, we reverse the judgment of the district court.
{3} Homeowners own lot 21 in the Cloh Chin Toh Ranch Subdivision (Subdivision). The Subdivision was created by the recording of a plat of survey in the records of Valencia (now Cibola) County on December 6, 1977. The "Declaration of Covenants, Conditions and Restrictions" (Declaration) for the Subdivision was filed in April 3, 1978, by Ramah Lake Venture.
{4} The Declaration's preamble provides that it is "desirable to impose a general plan for the improvement and development" of the Subdivision. The preamble also indicates an intent to establish "covenants, conditions and restrictions" upon each of the Subdivision's lots for the purpose of "enhancing and protecting the value ... and attractiveness" of the Subdivision. Additionally, the preamble states a desire for a homeowners' association to be created with "the powers of maintaining and administering the common area and administering and enforcing these covenants, conditions and restrictions and collecting and disbursing funds pursuant to the assessment and charges hereinafter created and referred to." Thereafter, the Declaration states that all lots will be subject to "the following covenants ... liens and charges," but there follow no covenants relating to assessments, liens, or charges.
{5} In May 1986, Ramah Lake Venture filed articles of incorporation with the State Corporation Commission to form the Association. The Association became the master homeowners' association for the Subdivision. The Association's bylaws required all lot owners to be members of the Association and to pay assessments for the maintenance of the Subdivision's common areas, which include a lake and bath house, equestrian trails, hiking trails, and a community center. The Association also provides maintenance for roads within the Subdivision. The bylaws also direct the Association to enforce the restrictive covenants contained within the Declaration. Furthermore, Article 4, Section G of the Association's articles of incorporation allows the Association to place a lien on the property of a lot owner if the owner is delinquent in paying the assessment.
{6} Homeowners acquired their initial interest in lot 21 in 1990, when the lot's previous owner, Elmer Chavez, assigned his purchaser's interest in the lot to Homeowners. When Homeowners accepted Chavez's assignment of his purchaser's interest in lot 21, Homeowners signed a document indicating their agreement to be "bound by all the terms, covenants and conditions," which burdened the property at that time.
{7} In 1991, the Association, which had passed from Ramah Lake Venture to the lot owners in the Subdivision, imposed an annual assessment on each of the Subdivision's lots. Homeowners paid the annual assessment levied by the Association from 1991 through 1999. However, in 2000, Homeowners paid only a partial amount of the total annual assessment owed to the Association. After 2000, Homeowners did not pay the annual assessment levied by the Association, because Homeowners believed that only members of the Association were obligated to pay the assessment and Homeowners did not believe that they were members of the Association. Consequently, in May 2001, the Association recorded a claim of lien against Homeowners' lot. In January 2002, Homeowners filed a complaint against the Association. In the complaint, Homeowners sought to quiet the title to their lot by challenging the claim of lien that the Association had placed on the lot. The Association filed an answer to Homeowners' complaint and also filed a counterclaim against Homeowners. In their counterclaim, the Association requested that the district court enter an order awarding the Association the past due assessments owed by Homeowners. The counterclaim also sought a foreclosure of Homeowners' lot.
{8} In December 2002, the district court held a bench trial on the merits of Homeowners' complaint and the Association's counterclaim. During the trial, Homeowners argued that the Declaration did not require the Subdivision's lot owners to be mandatory members of the Association, and therefore membership in the Association was voluntary. Homeowners asserted that they had never consented to be members of the Association. Homeowners further claimed that only members of the Association were obligated to pay assessments for the maintenance of the Subdivision's common areas. Accordingly, Homeowners argued that since they had not consented to be members of the Association, they were not required to pay the assessments. Homeowners also argued that they were not required to pay assessments to the Association because they did not use or receive any benefit from the Subdivision's common areas. Thus, Homeowners claimed that the lien that had been placed on their lot for failure to pay their assessments was invalid.
{9} On the other hand, the Association claimed that the Declaration mandated that Homeowners be members of the Association. The Association further argued that the Declaration provided for the creation of an association, which would have the authority to levy and collect assessments for the maintenance of the common areas. Furthermore, the Association asserted that Homeowners had notice of the obligations created by the Declaration. Thus, the Association argued that the lien that it had placed on Homeowners' lot was valid because of Homeowners' failure to pay their assessments.
{10} After the trial, the district court entered its findings of facts based on the evidence that was presented at trial. The district court found that the Declaration neither provided for the creation of a homeowners' association nor required the Subdivision's lot owners to be mandatory members of an association. However, the district court did find that the Association was the master homeowners' association for the Subdivision. The district court further found that the Association's bylaws required all lot owners within the Subdivision to be members of the Association and to pay assessments. Furthermore, the district court found that Homeowners had neither utilized the common areas as defined by the Declaration nor received any benefits from membership in the Association.
{11} Based on its findings of fact, the district court concluded, as a matter of law, that there were no covenants running with the land that required Homeowners to be members of the Association. The district court further concluded that although the bylaws of the Association required lot owners to be members of the Association, the bylaws were those of a voluntary association and Homeowners had not consented to be members of the Association. Therefore, the district court concluded that the obligations of membership in the Association were not binding on Homeowners. Thus, the district court ordered that any lien the Association had placed on Homeowners' lot was invalid. The Association appeals from the district court's order.
{12} We will begin our discussion with an analysis of whether the Declaration provides for the creation of a homeowners' association that would have the authority to collect assessments, as well as the authority to place a lien on Homeowners' lot because of Homeowners' failure to pay their assessments. We then proceed to discuss whether the Declaration in this case includes a covenant obligating Homeowners to pay assessments for the maintenance of the Subdivision's common areas. We then turn our attention to an analysis of whether Homeowners' obligation to pay assessments runs with the land...
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