Hundreds of Massachusetts Homeowner’s Association (HOA) Covenants, Conditions and Restrictions (CCR’s) May Be Void and Unenforceable
After a homeowner balked about paying a late fee, I was recently asked by a local homeowner’s association down the Cape to review their Homeowner’s Association Covenants. To my surprise, I discovered that in light of an under-the-radar 2017 Appeals Court ruling, the covenants had silently expired and gone into void and unenforceable status, with no legal ability to resurrect them. Upon further research, I learned that hundreds of HOA covenants across the state may be unwittingly facing the same situation.
Background: Declaration of Restrictive Covenants
In my situation, a “Declaration of Restrictive Covenants” for a subdivision of some 40 lots was recorded back in 1977 with the Barnstable County Registry of Deeds. The Covenants created the homeowner’s association to govern the subdivision, assess HOA fees, and imposed numerous rules and regulations on what could be done by homeowners, including regulating exterior house design and changes, installation of fences, parking of trailers and boats, and trash/recycling. The Original Restrictive Covenants did not specify a duration for which they were effective. Accordingly, by default under Massachusetts law (Mass. Gen. Laws ch. 184, §§ 26-30), the restrictions could only be in place for 30 years, with an option to extend for an additional 20 years upon an owner vote and recording of a formal extension. (Note that the restriction statute does not apply to condominiums). Although the Original Restrictive Covenants provided that the original developer, his successors and assigns reserved the right to “waive, alter, or amend” the restrictions, the document critically failed to provide a clear mechanism for if and how the restrictions could be extended in the future. In my situation, the HOA tried to extend the term of the covenants by the additional 20 years, but unfortunately did so well after the original covenants had already expired.
Berger v. 2 Wyndcliff LLC, Appeals Court (2017)
Based on my analysis of current Massachusetts law, especially new case law considering similar restrictive covenants to the one here, I concluded that the original covenants had expired and that the attempt to extend them was futile. The issue is controlled by a 2017 Appeals Court decision, Berger v. 2 Wyndcliff, LLC, 92 Mass.App.Ct. 517 (2017) which holds that restrictive covenants cannot be extended unless the original covenants contain a clear mechanism for such extension.
In Berger, in the course of developing land in Acton, a developer executed an agreement of protective covenants and easements for the benefit of future mortgagees, buyers, and owners of the land. As is common, the covenants expressly provided that they are to “run with the land” and bind the parties claiming under them “for a period of thirty (30) years from the date these covenants are recorded.” The covenants limited construction on each lot to one single-family dwelling, with a two– or three-car garage. The agreement provided that they “may be amended or revoked, in whole or in part, by an instrument signed by two thirds or more of the then owners of the lots covered hereby, said amendment or revocation to be effective upon recording thereof at the … Registry of Deeds.”
Twenty one (21) years after the original restrictions were recorded, the owners filed an amendment to provide specifically that the original duration would be thirty years from the date the original agreement was recorded, plus that the restrictions could be extended for further periods of not more than twenty (20) years upon a sufficient vote by owners. Shortly thereafter, the owners recorded an extension document purporting to extend the restrictions for the additional 20 years.
In Berger, a disgruntled owner challenged the validity of the restrictions on the basis that they did not clearly provide for a mechanism or right to extend past the 30 year term. Both a Land Court judge and an Appeals Court panel of three justices agreed. As the Appeals Court summarized, the applicable law on restrictions governing subdivisions (referred to also as a “common scheme”) is as follows: “Restrictions on land are generally disfavored, and the Legislature has established procedures by which a landowner may remove or prevent the enforcement of obsolete, uncertain or unenforceable restrictions. At the same time, the Legislature has not precluded landowners from bargaining for, and enforcing, beneficial land use restrictions that contain a lengthy, but definite term of duration. One method the Legislature has employed to address these competing interests is to limit enforcement of restrictions to 30 years generally and, while freely allowing longer durations, requiring landowners to comply with certain specific steps should they desire to impose restrictions lasting more than thirty years. Even restrictions that contain an express durational limitation in excess of 30 years may not be enforced for more than 30 years unless certain steps are taken.”
As noted above, Mass. General Laws provides a “sunset” requirement for all restrictions and extensions as a part of subdivisions: “No restriction imposed after December [31, 1961,] shall be enforceable . . . (b) after thirty years from the imposition of the restriction, unless (1) the restriction is imposed as part of a common scheme applicable to four or more parcels . . . and provision is made in the instrument or instruments imposing it for extension for further periods of not more than twenty years at a time by owners of record, at the time of recording of the extension, of fifty per cent or more of the restricted area in which the subject parcel is located, and an extension in accordance with such provision is recorded before the expiration of the thirty years or earlier date of termination specified in the instrument . . . .” See Mass. Gen. Laws. Ch. 184, § 27.
In the Berger case, the Appeals Court ruled that under the above statute, in order to impose a restriction for more than 30 years, the instrument originally creating the restriction must include a provision for extensions, and this one critically did not. The Court also added that “where extension provisions are not contained in the original instrument, the statutory scheme does not allow subsequent amendments to add new provisions for extensions.” The Court found the original language wholly lacking as to the right to extend where it only provided that the restrictions “may be amended or revoked” and nothing more. Thus, the covenants were now void and unenforceable.
Impact and What Now?
This is a great question. We are now in 2024, so the 30 year period under G.L. c. 184, § 26 would take us back to 1994.
Accordingly, any HOA Declaration of Restrictive Covenants recorded before 1994, which was not properly extended before expiring or contained the fatal defect of not having an extension mechanism at all, is now at risk of having expired unwittingly under the Berger ruling.
This situation likely affects hundreds of HOA’s in Massachusetts, with a fair amount of them being down the Cape, it appears. (Remember condominiums are excluded from the restriction statute, otherwise this would be a complete disaster across the state).
My clients were quite shocked to learn that most of their HOA covenants were now void and unenforceable. When I say “most” I mean that the rules that actively restrict use of property, i.e, design and construction rules, parking, rentals and the like, cannot be enforced. Annual dues and assessments, common area maintenance, etc. likely can be enforced as an “equitable servitude.”
Can a new set of restrictive covenants be recorded and implemented? I’m not so sure of that, given the state legislative policy of setting a hard sunset expiration period. I’m sure some HOA’s will try to get lot owner votes in place and record a new set of covenants as if they were original to the subdivision. We will have to see how this plays out at the registries of deeds and in the courts if these HOA covenants are challenged. I welcome the comments from other conveyancing attorneys and title insurance counsel.
If your homeowner’s association is facing this issue or you need further guidance on this topic, please feel free to reach out to me at [email protected].
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