Duffy v. LANDINGS ASSOCIATION, INC.

• Decision Date: 30 June 2000
• Docket Number: No. A00A0208.,A00A0208.
• Citation: Duffy v. LANDINGS ASSOCIATION, INC., 536 S.E.2d 758, 245 Ga. App. 104 (Ga. App. 2000)
• Parties: DUFFY et al. v. The LANDINGS ASSOCIATION, INC. et al.
• Court: Georgia Court of Appeals

536 S.E.2d 758

245 Ga. App. 104

DUFFY et al. v. The LANDINGS ASSOCIATION, INC. et al.

No. A00A0208.

Court of Appeals of Georgia.

June 30, 2000.

Reconsideration Denied July 14, 2000.

Certiorari Denied January 5, 2001.

Duffy & Feemster, Dwight T. Feemster, Savannah, for appellants.

Ranitz, Mahoney, Coolidge & Mahoney, Thomas J. Mahoney, Jr., Thomas J. Mahoney III, Mary K. Hogan, John H. Oldfield, Jr., Savannah, for appellees.

RUFFIN, Judge.

This case concerns the viability of a restrictive covenant requiring that property owners pay a "transfer fee" to a marketing company upon the sale of their residence. The trial court upheld the covenant and granted summary judgment to defendants, The Landings Association, Inc. and The Landings Company. We reverse because the transfer fee covenant was not properly established in accordance with the amendment provisions of the original covenants.

Summary judgment is appropriate when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. In ruling on a motion for summary judgment, the court should construe the evidence and all inferences and conclusions arising therefrom most favorably toward the nonmovant. Our review is de novo.¹

The Landings on Skidaway Island is a 4,251-lot residential subdivision in Chatham County. On August 21, 1972, the subdivision developer, The Branigar Organization, Inc., filed a General Declaration of Covenants and Restrictions to run with the land in the subdivision. There were two provisions concerning procedures for amending the covenants.

First, § 11.1, entitled "Duration," provided that the covenants had an initial twenty-year term that would be automatically extended for successive ten-year terms

unless an instrument signed by the then owners of two-thirds of the lots and living units has been recorded agreeing to change said covenants and restrictions in whole or in part; provided, however, that no such agreement of change shall be effective unless made and recorded three years in advance of the effective date of such change, and unless written notice of the proposed agreement is sent to every owner at least ninety days in advance of any action taken.

Second, § 11.4, entitled "Modification," provided that

[b]y recorded supplemental declaration, the Developer may modify any of the provisions of this Declaration or any Supplemental Declaration for the purpose of clarifying any such provisions, provided no such modification shall change the substantive provisions of any such document or materially alter the rights of any owner established by any such document.

On May 10, 1996, Branigar filed a Supplemental Declaration to the General Declaration of Covenants and Restrictions that purported to clarify §§ 11.1 and 11.4 of the original covenants. The Supplemental Declaration amended § 11.1 to address the duration of the covenants only, not the amendment process. The new § 11.1 stated that the covenants would be automatically renewed for successive ten-year periods

unless an instrument signed by the then owners of two-thirds of the lots and living units has been recorded agreeing to terminate said covenants and restrictions in whole or in part; provided, however, that no such agreement of termination shall be effective unless made and recorded at least three years in advance of the effective date of such termination, and unless written notice of the proposed agreement is sent to every owner at least 90 days in advance of its recording.

(Emphasis supplied.) The Supplemental Declaration also amended § 11.4 to add the following language:

Except as otherwise specifically provided above ... this Declaration may be amended only by an instrument signed by the then owners of at least two-thirds of the lots and living units or in the alternative, an instrument signed by the President and Secretary of [TLA] certifying that the amendment has received the affirmative vote or written consent, or any combination thereof, of the then owners of at least two-thirds of the lots and living units.

The Supplemental Declaration left intact the provision in § 11.4 of the original covenants allowing the developer to modify the covenants for the purpose of clarification.

On December 10, 1997, Branigar recorded a Restated General Declaration of Covenants and Restrictions. The restated covenants implemented the changes to the termination and amendment procedures that were in the Supplemental Declaration and are quoted above. The restated covenants also provided that any amendments approved by two-thirds of the owners would become effective upon recording, unless a later date was specified.

The owners subsequently approved, by a majority greater than two-thirds, a Supplemental Amendment to the restated covenants. This amendment authorized the creation of a marketing company to promote the subdivision on the regional and national level. The amendment also established a transfer fee, payable to the marketing company, of up to one percent of the gross sales price of property in the subdivision. The amendment was recorded on December 30, 1997, and it did not provide for a delayed effective date.

Robert J. Duffy and Mary C. Duffy purchased a residence in the Landings on March 30, 1997. They sold the property on June 25, 1998. On the date of closing, the Duffys filed this action seeking a declaration that the one percent transfer fee was invalid.²

Pretermitting whether the transfer fee amendment violated OCGA § 44-5-60(d)(4),³ we hold that the amendment did not apply to the Duffys because it was not enacted in conformance with the applicable modification procedures. Because restrictive covenants are simply specialized contracts that run with the land,⁴ we begin by looking at the language of the covenants in question. In so doing, we bear in mind that "[s]ince restrictions on private property are generally not favored in Georgia, they will not be enlarged or extended by construction, and any doubt will be construed in favor of the grantee."⁵

The original covenants established two methods for modifying the covenants: (1) pursuant to § 11.1, two-thirds or more of the owners could vote to change the covenants, but only if the change was recorded three years before its effective date and the owners received notice of the proposed change at least ninety days before "any action taken"; and (2) pursuant to § 11.4, the developer could modify the covenants for the purpose of clarification, but could not substantively alter them or materially alter the rights of the owners under the covenants.

The 1996 Supplemental Declaration to the covenants, which purported to change the procedures for modifying the covenants, did not comply with either of these methods. It...