Title: Anderson v. Lake Arrowhead Civic Association
Citation: N/A
Docket Number: 961284
State: Virginia
Issuer: Virginia Supreme Court
Date: February 28, 1997

Present:  Carrico, C.J., Compton, Lacy, Hassell, Keenan, and 
Koontz, JJ., and Poff, Senior Justice 
 
DAVID ANDERSON, ET AL. 
 
OPINION BY JUSTICE LAWRENCE L. KOONTZ,
v. Record No. 961284                  FEBRUARY 28, 1997 
 
LAKE ARROWHEAD CIVIC 
 ASSOCIATION, INC. 
 
 
FROM THE CIRCUIT COURT OF STAFFORD COUNTY 
 
James W. Haley, Jr., Judge 
 
 
In this appeal, we consider whether an annual maintenance 
fee assessed upon property owners of a subdivision under a 
covenant recorded with the subdivision plats is subject to 
increase by the community association which maintains the common 
areas of the subdivision.  The community association asserts that 
it has such authority either by operation of the Property Owners' 
Association Act (POAA), Code §§ 55-508 through -516.2,
1 or under 
the common law of easements. 
 
BACKGROUND 
 
The parties stipulated to the essential facts in the trial 
court.  The Lake Arrowhead Subdivision in Stafford County was 
established through the recording of plats for the subdivision's 
various sections by the developer, H. Ryland Heflin and his wife, 
Lucille W. Heflin (collectively, Heflin), between 1961 and 1962. 
 The plats included the reservation of easements for the 
individual lots over the roads and to the other common areas of 
the subdivision.  Each recorded plat was subject to identical 
restrictive covenants which were recorded by deeds of dedication 
                     
     
1The POAA was amended in 1991 and 1992.  These and 
subsequent amendments to the Act do not alter our resolution of 
the issues raised here. 
in the land records of Stafford County at the same times as the 
plats of the sections.  When Heflin conveyed his interest in an 
individual lot to a purchaser, the deed referenced both the 
easements contained in the plat of the section in which the lot 
was located and the covenants associated with that plat.   
 
Relevant to this appeal are covenants 12, 13, and 16.  
Covenant 12 granted to Heflin the power to assign "all of the 
rights and powers, title, easements and estates reserved" to him, 
provided that the assignee would have the same "obligations and 
duties with respect to the land area concerned."  Covenant 13 
required each purchaser of a lot within the subdivision to pay 
Heflin or his assignee annually $20 for the first lot owned and 
$10 for each additional lot owned "to be used for general 
maintenance."  Covenant 13 further provided that the "maintenance 
fee shall be a lien on the real estate."  Neither this nor any of 
the other covenants expressly required Heflin, or his assignee, 
to actually maintain the common areas of the subdivision.   
 
Covenant 16 reads in full: 
 
All of the above covenants shall remain in force until 
January 1, 1970, and may be renewed for each 10 year 
period thereafter by the owners of at least two-thirds 
of the lots in the subdivision known as Lake Arrowhead, 
except that covenant number 13 shall be binding in 
perpetuity. 
 
 
Lake Arrowhead Civic Association, Inc. (LACA), a Virginia 
nonstock corporation, was incorporated on December 16, 1970.  The 
articles of incorporation provided that LACA's purpose was "[t]o 
further and promote the community welfare of the property owners 
in the Lake Arrowhead Subdivision . . . and to handle and 
supervise any funds received for community betterment."  
(Emphasis added.)  A subsequent amendment added a new article 
requiring that "[e]ach owner of any lot by acceptance of a deed 
therefore, whether or not it shall be expressed in any such deed 
or other conveyance, . . . [shall] covenant and agree to pay 
[LACA]: 1) annual assessments or fees and, 2) special assessments 
for capital expenditures." 
 
By deed dated January 20, 1978, Heflin conveyed to LACA 
various parcels of land consisting primarily of the roads, lakes, 
beaches, and park areas within the subdivision.
2  The deed 
purports to convey these parcels, the common areas of the 
subdivision, "subject to all encumbrances, easements, covenants, 
restrictions and rights-of-way of record" and expressly transfers 
to LACA the power of "collection of maintenance fees."  However, 
nothing in the language of this deed imposes any duty on LACA to 
maintain the common area. 
 
In a separate deed, also dated January 20, 1978, and 
recorded contemporaneously in the land records with the deed 
conveying the common areas, Heflin and LACA purported to renew 
the covenants associated with the subdivision which would have 
expired under their terms on January 1, 1970.  This deed recites 
that the "covenants were renewed by vote of the then owners of at 
least two-thirds of the lots in Lake Arrowhead Subdivision prior 
to January 1, 1970."  It further recites that "through oversight, 
no memorandum of renewal of such covenants was ever recorded 
                     
     
2Heflin retained for himself other parcels within the 
subdivision, including an island in one of the lakes. 
among the land records."  
 
Since at least 1986, LACA has imposed upon the property 
owners an annual assessment for general maintenance and upkeep of 
the common areas of the subdivision in amounts ranging from $88 
to $123 per first lot owned in the subdivision.  In 1992, LACA 
filed a bill of complaint to enforce liens against the lots of 
those property owners who were delinquent in paying their 1991 
assessments.  LACA's 1991 assessment per first lot was $98.  From 
the dollar amounts of the delinquencies alleged in the bill of 
complaint, it appears that some property owners refused to pay 
the assessment in its entirety, while others paid $20, leaving an 
alleged delinquency of $78.  The bill of complaint further 
reflects that property owners with multiple lots were assessed 
only $10 for each additional lot owned as contemplated by 
covenant 13.  Again, it appears that some owners of more than one 
lot elected to pay $20 plus the additional $10 per additional lot 
assessed, leaving an alleged delinquency of $78. 
 
In 1995, while the 1992 suit was still pending, LACA filed a 
second bill of complaint seeking to enforce liens against 
property owners who had incurred additional delinquencies in the 
interim.  As with the 1991 assessments, it appears from the bill 
of complaint that some property owners elected to pay the 
assessment due under covenant 13, while others were alleged to be 
delinquent for the full amount assessed by LACA.  Both the 1992 
and the 1995 bills of complaint assert that the assessments were 
made "pursuant to valid authority and in accordance with the 
restrictions and covenants of the subdivision and the provisions 
of Virginia law, and [LACA's] own by-laws . . . for the purpose 
of maintenance of the common areas and common facilities."  
Neither bill of complaint specifically makes reference to the 
POAA. 
 
The property owners filed cross-bills in each suit seeking a 
declaration that the 1978 deeds renewing the covenants and 
conveying ownership of the common areas to LACA were both void.  
On that basis, the property owners asserted that LACA was without 
authority to make any assessments and was liable for any amounts 
collected under the guise of such authority.   
 
The trial court consolidated the two suits, received briefs, 
and heard oral argument.  After determining that LACA qualified 
under the provisions of the POAA to assess such sums upon the 
property owners in the subdivision as were reasonably necessary 
for the maintenance and upkeep of the common areas and, in 
addition, that LACA had that authority under the common law of 
easements, the trial court granted judgment for LACA.  We awarded 
the property owners this appeal. 
 
DISCUSSION 
1. The 1978 Deeds
 
We begin our analysis in this appeal by determining the 
effect of the two 1978 deeds between Heflin and LACA.  These 
deeds, in combination with the recorded covenants, are central to 
the parties' assertions in support of their conflicting 
positions.  The essence of the disagreement is whether in 1978 
Heflin could effectively transfer to LACA the ownership of the 
common areas, and if so, which of the restrictive covenants 
remained in force at the time of that transfer and thereafter. 
 
We are guided by well-established principles that 
restrictive covenants are not favored and must be strictly 
construed.  Mid-State Equipment Co. v. Bell, 217 Va. 133, 140, 
225 S.E.2d 877, 884 (1976).  Substantial doubt or ambiguity is to 
be resolved against the restrictions and in favor of the free use 
of property.  Friedberg v. Riverpoint Bldg. Comm., 218 Va. 659, 
665, 239 S.E.2d 106, 110 (1977). 
 
By its express terms, covenant 16 operated to terminate 
covenants 1 through 12, 14, and 15 on January 1, 1970, unless 
those covenants were renewed for each subsequent ten-year period 
by the owners of at least two-thirds of the lots in the 
subdivision.  Although the deed of renewal avers that such action 
was taken to effect that renewal for the first ten-year period, 
nothing in the land records prior to January 1, 1970, supports 
that averment.
3  LACA was not incorporated until more than eleven 
months after these covenants expired; thus, it could not have 
been the proper organization to conduct the alleged vote.  
Similarly, it was merely self-serving for LACA to assert that it 
was the proper party to represent the property owners on the 
subsequent deed purporting to renew the covenants. 
 
On these facts, we hold that the failure to record the 
renewal of these covenants in the land records prior to their 
expiration, even if "through oversight," was fatal to any attempt 
                     
     
3The record does not show whether the covenants were again 
purportedly renewed in the subsequent ten-year periods beginning 
January 1, 1980 and January 1, 1990, as would have been required 
under the terms of covenant 16. 
to revive these covenants thereafter.  Certainly, no property 
owners who acquired their interests between January 1, 1970, and 
the date the deed of renewal was recorded would be subject to the 
expired covenants.  Additionally, absent some affirmative 
evidence of the alleged vote and how it was conducted, there is 
no basis for continuing the covenants against the property owners 
who acquired their interests prior to the expiration of the 
covenants.  Any other result would run contrary to the 
presumption in favor of the right to free alienation of land and 
the strict construction of covenants that would limit that right. 
 Lipps v. First American Serv. Corp., 223 Va. 131, 135, 286 
S.E.2d 215, 218 (1982); Hutchinson v. Maxwell, 100 Va. 169, 175, 
40 S.E. 655, 657 (1902). 
 
There is no merit, however, to the property owners' further 
assertion that the deed conveying ownership of the common areas 
to LACA is void because covenant 12, concerning Heflin's power to 
assign or transfer his "rights and powers, title, easements and 
estates" to another party, expired on January 1, 1970, and was 
never effectively renewed.  Under a proper interpretation, 
covenant 12 was a restraint, reasonable in its scope, on Heflin's 
right to dispose of his property during and after the development 
of the subdivision.  Thus, the expiration of that covenant could 
not in any way restrict Heflin from disposing of his interest in 
the property.   
2. Application of the POAA
 
Having concluded that LACA holds legal title to the common 
areas of the subdivision, we must now determine whether the 
incidents of that ownership bring LACA within the operation of 
the POAA, supporting LACA's assertion that it has the power to 
levy assessments "for the maintenance and upkeep, including 
capital expenditures, of the common area," Code § 55-514, in 
addition to any fee permitted by covenant 13. 
 
The POAA is applicable "to developments subject to a 
declaration initially recorded after January 1, 1959, and 
property owners' associations incorporated or otherwise organized 
after such date."  Code § 55-508.  The POAA defines a "[p]roperty 
owners' association" as "an incorporated or unincorporated entity 
upon which responsibilities are imposed and to which authority is 
granted in [a] declaration."  Code § 55-509.  As pertinent to 
this appeal, a "Declaration" is defined by the POAA as 
 
any instrument, however denominated, recorded among the 
land records of the county or city in which the 
development or any part thereof is located, that either 
(i) imposes on the association maintenance or 
operational responsibilities for the common area . . . 
[funded by] a regular annual assessment or (ii) creates 
the authority in the association to impose on lots, or 
on the owners or occupants of such lots . . . any 
mandatory payment of money . . . per year per lot as a 
regular annual assessment in connection with the 
provision of maintenance and/or services for the 
benefit of some or all of the lots, the owners or 
occupants of the lots, or the common area. 
Id.
4
 
Reading these two definitions together, it is clear that in 
order to qualify under the POAA, an association must possess both 
                     
     
4Code § 55-508 includes a provision that a $150 minimum 
threshold for the annual assessment contained in the definition 
of "Declaration" would not be retroactively applied to 
declarations recorded prior to July 1, 1991.  Accordingly, that 
threshold does not apply to the Lake Arrowhead Subdivision. 
the power to collect a fixed assessment or to make variable 
assessments and a corresponding duty to maintain the common area. 
 In addition, these conditions must be expressly stated in a 
recorded instrument in the land records of the jurisdiction where 
some portion of the development is located. 
 
The language of the deed which conveyed the common areas 
from Heflin to LACA conveys to LACA the power to collect 
maintenance fees, but it does not expressly require LACA to 
maintain the common areas.  The deed further subjects LACA to the 
"covenants . . . of record."  At the time the deed was recorded, 
however, the only covenant remaining in force of potential 
benefit to LACA's assertion that it is subject to the POAA is 
covenant 13, binding in perpetuity through the provisions of 
covenant 16.  Thus, only if we can construe the provisions of 
covenant 13 to impose a duty on LACA to maintain the common areas 
will LACA's argument for application of the POAA have merit. 
 
By operation of covenant 13, when acquiring property in the 
subdivision, a property owner covenants to pay Heflin, or his 
assignee, specified fees "to be used for general maintenance."  
The ambiguity in this phrase is patent.  By placing the 
obligation on the property owner, covenant 13 permits Heflin and 
any assignee to collect the fees, but does not require that the 
fees be collected.  Nor does covenant 13 expressly require that 
maintenance of the common areas be undertaken.  Rather, it merely 
places a condition on the power to collect the fees by limiting 
the permitted expenditure of the funds received to payment for 
general maintenance costs.  Thus, while LACA possesses, by 
operation of covenant 13, an adequate power of assessment to 
qualify under the POAA, there is no corresponding express duty 
imposed upon LACA to actually maintain the common areas. 
 
It is not relevant that LACA may choose to exercise its 
power of assessment in order to expend the funds derived 
therefrom for maintenance of the common areas.  The POAA applies 
only to associations upon which a mandatory duty to maintain is 
imposed.  The Act has no application to an association, like 
LACA, which assumes such responsibilities voluntarily, even if 
the voluntary assumption is done as a condition of enforcing the 
property owners' covenant to pay fees for that purpose. 
 
Accordingly, we hold that LACA does not meet the definition 
of a property owners' association found in the POAA.  Absent 
qualification under the POAA, LACA's right to impose an 
assessment on the property owners, and to seek liens against the 
lots of property owners who are delinquent in paying that 
assessment, arises only from covenant 13.  That covenant limits 
LACA to assessing annually no more than $20 against the first lot 
of a property owner and $10 for each additional lot.  There is no 
mechanism in that covenant or otherwise provided by statute to 
increase this assessment. 
3. Common Law of Easements
 
LACA asserts that even if it is not subject to the POAA, it 
can make assessments against the property owners as owners of 
dominant estates with a duty to maintain the easements over the 
servient estate owned by LACA.  We disagree. 
 
It is true that the owner of a dominant estate has a duty to 
maintain an easement.  Pettus v. Keeling, 232 Va. 483, 490, 352 
S.E.2d 321, 326 (1987);  Oney v. West Buena Vista Land Co., 104 
Va. 580, 585, 52 S.E. 343, 344 (1905).  The owner of the dominant 
estate may fulfill this obligation by conducting the maintenance 
himself, or by voluntarily contributing to the maintenance costs 
of the owner of the servient estate.  Nothing in our case law 
suggests, however, that, absent a provision in the instrument 
creating the easement or a contract between the parties, the 
owner of the servient estate can impose a mandatory contribution 
to maintenance costs against the owners of the dominant estates. 
 Accordingly, we hold that LACA cannot enforce an assessment, in 
excess of that provided for in covenant 13, under the common law 
of easements. 
 
In summary, LACA is not a property owners' association as 
defined by the POAA, but merely an assignee of Heflin which 
chooses to function as a voluntary community association.  As 
such, it can continue to collect the assessment permitted under 
covenant 13 provided that it expends those fees for no other 
purpose than general maintenance.  To the extent that a property 
owner is delinquent in this assessment, LACA may obtain a lien 
against the property owner's lot or lots.
5
 
For these reasons, the judgment of the trial court will be 
                     
     
5We recognize that as a result of our decision, the property 
owners may have effectively "won the battle but lost the war," as 
the limited maintenance fee provided by covenant 13 may well be 
inadequate to maintain the common areas of this subdivision.  
However, the parties are certainly free to act to their mutual 
benefit with voluntary dues or other forms of assistance for the 
purpose of maintaining these areas. 
reversed and the case remanded for a determination of which, if 
any, of the liens sought in the bills of complaint can be 
maintained and enforced to the extent allowed under covenant 13. 
 
Reversed and remanded.