Relating to Real Estate

In Points Reach Condominium Council of Unit Owners, et al. v. Point Homeowners Association, 213 Md. App. 222, 73 A.3d 1145 (August 30, 2013), the Court of Special Appeals held that pursuant to the doctrine of implied negative reciprocal covenants a condominium project in Ocean Pines was part of a homeowners association and that the members of the condominium association were required to pay dues assessed by the homeowners association.
The case involved the residential development in part of Ocean Pines in Worcester County known as “The Point” or "Section 17." It originally included 124 single family homes, and subsequently 75 condominium units were constructed adjacent thereto. Certain of the owners of the condominium units brought suit to have the Circuit Court for Worcester County declare that they were not subject to the homeowners association (HOA). The Circuit Court reviewed the declaration of the homeowners association. It found provisions which seemed to indicate that all of the property in Section 17 was subject to the declaration, while other provisions stated that only certain defined lots were subject to the declaration. Moreover, another provision in the declaration stated that every owner of property within Section 17 is required to join the HOA. The Circuit Court found that the provisions of the declaration themselves were clear, but the relationship between them was not clear. In fact, they had conflicting meanings.
In light of the ambiguity in the written declaration affecting the property, the Circuit Court permitted the introduction of extrinsic evidence to ascertain the intention of the drafter of the declaration. The Circuit Court applied the doctrine of implied negative reciprocal covenants and held that the owners of condominium units are subject to the homeowners association declaration, that they must belong to the HOA, and that they must pay the assessments levied by the HOA. On appeal, the Court of Special Appeals affirmed.
The Court of Special Appeals discussed the leading Maryland cases relating to implied negative reciprocal covenants. It stated that that there are five “elements” of the implied negative reciprocal covenants doctrine: (1) a common owner had subdivided property into a number of lots for sale, (2) the common owner had an intention to create a general scheme of development for the property as a whole; (3) the vast majority of the subdivided lots contained restrictive covenants reflecting the general scheme; (4) the purchaser of the lot in question had actual or constructive notice of the condition; and (5) the property against which the application of the implied covenant was sought was intended to be part of the general scheme of development.
The Court of Appeals held that the doctrine of implied negative reciprocal covenants was not limited in its application to covenants restricting the use of property. It then found that all of the elements of the doctrine of implied negative reciprocal covenants were satisfied as to The Point, so it affirmed the decision of the Circuit Court for Worcester County.
For questions about this, please contact Ed Levin at (410) 576-1900.