Court Opinion

ID: 5178634
Source: CourtListenerOpinion
Date Created: 2022-01-06 01:29:40.619148+00
Date Added: 2024-06-11T08:26:29.532680
License: Public Domain

JUDGE TERRY,
dissenting.
¶ 69 Because I conclude that the homeowners association declaration was properly-amended under section 38-33.3-210(1), C.R.S.2013, to add the Kelley Lots "to the Ryan Ranch Community Association, Inc. (the HOA), and I would reject the appellants’ other arguments, I would affirm the ruling of the tidal court. Therefore I respectfully dissent.
I. Additional Facts
¶ 70 In addition to- the facts described in the majority opinion, I consider the following undisputed facts to be important to the decision of this appeal.
¶ 71 In January 2001, an Official Development Plan (the Plan) was recorded with Jefferson County for the land that would become the Ryan Ranch Community. The Plan indicates that the streets, landscaping, and other common areas would be maintained by a homeowners association to be formed in the future for that purpose. Both Charles Ochsner and John Kelley signed the Plan.
¶ 72 On October 15, 2003, the Kelleys entered into an agreement with The Ryland Group, Inc. (Ryland) that stated the Kelleys’ intent to purchase the Kelley Lots from Ochsner, and agreed that when such purchase took place, the Kelley Lots would not be subject to any maintenance fee obligations of the HOA to be formed by Ryland. The agreement included a clause stating that Ry-land would take action to record any covenants necessary to exclude the Kelley Lots from the HOA It was signed by both parties. However, Ryland never' took action to record any exclusion of the Kelley Lots from the HOA.
¶73 On November 13, 2003, the Filing 1 plat was recorded by Ryland. The Declaration of Covenants, Conditions, and .Restrictions (Declaration) was recorded on March 11, 2005, formalizing the HOA as a common interest community under the provisions of the Colorado Common Interest -Ownership Act (CCIOA), sections 38-33.3-101 to -401, C.R.S.2013. Ryland acted as- the declarant for purposes of forming the HOA under CCIOA. The Declaration includes.-an obligation for homeowners to pay assessment fees to reimburse the HOA for the cost of maintenance, and for ordinary expenses of operation.
¶ 74 The Declaration provides that the additional lots-will be annexed into the HOA when (l).a plat for additional properties to be annexed is recorded and (2) either an annexation form is recorded, or a-deed.-for real property within the plat is conveyed from Ryland to a third party other than Ryland. The Declaration includes a list of real property that may be annexed to the HOA and that list contains a legal description of the Kelley Lots.
¶ 75 On May 26, 2006, the Kelleys signed a contract with Ochsner to purchase the Kelley Lots. Though it specified a clpsing date of June 10, 2005, Ochsner' and the Kelleys agreed to defer the closing of the Kelley Lots until after the Filing 2 plat was recorded.
¶ 76 On June 15, 2005, Ochsner and Ryland entered into a Memorandum of Contract that stated that the Kelley Lots would be excluded from the property to be conveyed from Ochsner to Ryland when the FOing 2 properties were purchased by Ryland. However, when Ochsner conveyed the FOing 2 property to Ryland on June 16, 2005, the deed did not exclude the Kelley Lots. Thus, the Kelley Lots were conveyed to Ryland on that date. That same day, Ryland deeded the Kelley Lots back to Ochsner, but Ochsner delayed recording of the June 16th reconveyance deed until after subsequent conveyances were made.
¶ 77 On June 22, 2005, Ochsner conveyed the Kelley Lots to the Kelleys. The Kelleys did not record the deed to the Kelley Lots that day, and, according to John Kelley, did not do so because he agreed with Ochsner to wait to finalize the purchase until after the Filing 2 plat was recorded.
¶78 Ryland recorded the Filing 2 plat-on November 17, 2005; that plat includes the Kelley Lots. The notes to the plat state that certain tracts (including those on or .adjacent *386to the Kelley Lots) are for common area landscape, utility, and pedestrian access purposes, and “shall be owned and maintained by the homeowners association.” On December 20, 2005, Ochsner recorded the June. 16 deed from Ryland that had reeonveyed the Kelley Lots to him. That same day, the Kelleys recorded the deed from Ochsner that conveyed the. Kelley lots to them.
¶ 79 The Kelleys sold Lot 6 to a contractor who built a home on that lot, and sold it to the Zimmermans. The Zimmermans’ title search disclosed that Lot 6 was subject to the Declaration and the Filing 2 plat. .
II. Discussion
A. Compliance with CCIOA
¶ 80 I conclude that the amendment to the Declaration complied with the applicable provisions of CCIOA,
1. Annexation and Amendment of Declaration
¶ 81 The majority concludes that the trial court erred when it found that certain written instruments, taken as a whole, constituted an amendment to the Declaration in compliance with CCIOA. Although I disagree with the trial court’s analysis of how the annexation and amendment were accomplished, I conclude that the Kelley Lots were properly annexed to the HOA and that the Declaration was properly amended. See Hiner v. Johnson, 2012 COA 164, ¶ 2, 310 P.3d 226 (if trial court reaches correct result, appellate court may affirm on different grounds).
¶ 82 Section 38-33.3-210 describes the procedures for exercising a development right. A declarant may add property to a common interest community that was not included at the time the declaration was recorded by exercising a development right reserved for such purpose. See § 38-33.3-103(14)(a), C.R.S.2013 (“Development rights” include “any right or combination of rights reserved by a declarant in the declaration to ... [a]dd real estate to a common interest community,” among others;). To exercise such rights, the declarant must comply with the plat and map requirements of section 38-33.3-209, C.R.S. 2013, and record an amendment to the declaration. § 38-33.3-210(1).
¶ 83 As noted above, the Declaration provides that the additional lots will be annexed into the HOA when (1) a plat for additional properties to be annexed is recorded and (2) either an annexation form is recorded, or a deed for- real property within the plat is conveyed from Ryland to a third party other than Ryland.
¶84 On November 17, 2005, Ryland recorded the Filing 2 plat, which included the Kelley Lots. On December 20, 2005, Ryland conveyed the Kelley Lots to Ochsner by deed. These two actions — filing of the plat and conveyance by deed — fulfilled the requirements of the Declaration to annex real property to the HOA.
¶ 85 Contrary to the majority’s conclusion, I conclude that the requirement for filing of an amendment to the Declaration was accomplished when the Filing 2 plat was recorded on November 17, 2005. See § 38-33.3-103(13) (defining “declaration” as including “plats”); see also § 38-33.3-209(1) (“[a] plat ... is a part of the declaration”); § 38-33.3-102(l)(c), C.R.S.2013 (in enacting CCIOA, the General Assembly intended “to give developers flexible development rights ... within a uniform structure of development of a common interest community”).
¶ 86 To the extent the majority suggests that the amendment was not effective because it was not “denominated” as an amendment, I disagree because section 38-33.3-210 contains no such requirement. And, it is irrelevant that the amendment was not accomplished by filing the form which Ryland normally uses for filing amendments. By filing the plat — a document that, by statute, is included within the definition of a “declaration” — Ryland amended the Declaration.
¶ 87 Therefore, I conclude that the Kelley Lots became part of the HOA and subject to the Declaration.
¶88 The Kelleys argue that neither Ry-land nor the Kelleys ever intended to allow annexation of the Kelley Lots. As support for this view, they cite to the October 15, 2003, Ryland-Kelley Agreement. That Agreement stated that Ryland was to record a covenant *387to exclude the lots from the HOA. However, Ryland never recorded such an exclusion, and, in my view, its side agreement cannot defeat the Kelleys’ obligation to pay the HOA fees. See § 38-33.3-104, C.R.S.2013 (“provisions of this article may not be varied by agreement.... A declarant may not ... use any ... device to evade the limitations or prohibitions of this article or the declaration.”); see' also Restatement (Third) of Property: Servitudes § 6.5' emt. e (2000) (members are not “entitled to set up agreements reached with the developer as defenses to the obligation to pay assessments.... [T] he developer does not have the power to waive the assessment obligations imposed on property within the common-interest community.”).
2. Compliance with Technical Requirements
¶ 89 I am also not persuaded by the argument of the Kelleys and the Zimmermans that the recording .of the Filing 2 plat does not comply with the portion of section 38-33.3-210(1) stating that any amendment to the Declaration must “assign an identifying number to each new unit created[,] ... reallocate the allocated interests among all units[, and] ... describe any common elements” created.
¶ 90' In my view, it was not necessary for the Filing 2 plat to comply with these technical requirements because the . annexation clause of the Declaration specifically provided for such actions to take place automatically upon the recording of a plat and a conveyance deed from Ryland. The Declaration assigned unit numbers and contained a formula that automatically reallocated interests in the common areas upon annexation of additional property. Therefore, any additional description, in an amendment, of the allocation of interests, the common elements, or the identification of unit numbers would have served no purpose. Westesen v. Olathe State Bank, 75 Colo. 340, 344, 225 P. 837, 839 (1924) (the law does not require performance of futile acts); Highlands Ranch Univ. Park, LLC v. Uno of Highlands Ranch, Inc., 129 P.3d 1020, 1024 (Colo.App.2005) (same); see also Golden Canal Co. v. Bright, 8 Colo. 144, 149, 6 P. 142, 149 (1885) (where statute required two separate filings, but a party filed one that accomplished both purposes, supreme court ruled that the single filing was sufficient to comply with statute); Burns v. Bd. of Assessment Appeals, 820 P.2d 1175, 1178 (Colo.App.1991) (“If a strict, literal, or technical interpretation of the words of a statute leads to an absurd ,.. result ... such interpretation must yield to allow the intended purpose to be carried out.”).
¶ 91 Section 38-33.3-217(3), C.R.S.2013, requires that an amendment be listed in the grantee’s index in the name of the common interest community and the association, as well as in the grantor’s index in the name of each person executing the amendment. The Kelleys and the Zimmermans argue that the amendment does not comply with this statutory requirement, and therefore the amendment was invalid. I conclude that reversal is not required on this basis.
¶ 92 When Ryland recorded the Filing 2 plat map, it listed “Ryan Ranch Filing 2” as the grantee, rather than “Ryan Ranch Community Association.” However, this was, at most, a technical defect that caused no actual prejudice to the Kelleys or the Zimmermans. See Golden Canal Co., 8 Colo, at 149, 6 P. at 149; C.A.R. 35(e) (appellate court shall disregard any error or defect not affecting the substantial rights of the parties).
¶ 93 John Kelley signed, as an owner, the Development Plan for the property that became part of the HOA and included the Kelley Lots. The notes in the plan indicate that the streets, landscaping, and other common areas would be maintained by a homeowners association. John Kelley also knew that the Kelley Lots would need to be excluded from the association, and was aware of the recording of the Filing 2 plat, which' shows the Kelley Lots as being, in part, subject to tracts owned and maintained by the association. This knowledge put him on inquiry notice that the Kelley Lots were included in the HOA. See Martinez v. Affordable Hous. Network, Inc., 123 P.3d 1201, 1206 (Colo. 2005) (“Inquiry notice arises when a party ... should have become aware of certain facts which, if investigated, would reveal the *388claim of another.” (internal quotation marks omitted)). > •
¶ 94 The record demonstrates that the Zimmermans suffered no prejudice as the title search of their property disclosed both the'Declaration and the Filing. 2 plat map, providing them with notice that their property was included in the HOA.
¶ 96 For these reasons, I conclude that the trial court'did .not err in rejecting the Kel-leys’ and the Zimmermans’ challenges to the annexation of their properties based on the provisions of CCIOA.
B. Equitable Ownership
¶ 96 Given my resolution of the CCIOA issues, I must consider the further argument of the Kelleys and Zimmermans: that the Kelleys acquired equitable ownership of the Kelley lots in May 2006, and therefore their written consent to annexation of those lots was required. I reject that argument for the following reasons:
• Cólorado precedents do not establish that a holder of equitable title in an unrecorded contract is entitled to all • the incidents of ownership of the property. See Jacquez v. Jacquez, 694 P.2d 1292, 1294 (Colo.App.1984) (“Even if we assume that the document entitled ‘contract’ had some legal effect, ... at Rest it was a conditional promise to convey analogous to an executory contract.”).
• The Kelleys and the Zimmermans would need to establish an entitlement to equitable relief from the court based on the Kelleys’ equitable title. See First Nat’l Bank of Wray v. McGinnis, 819 P.2d 1080, 1083 (Colo.App.1991) (purchaser under executory contract for sale of land becomes equitable, owner, allowing purchaser to maintain quiet title action); Bent v. Ferguson, 791 P.2d 1241, 1243 (Colo.App.1990) (same).
• Granting of such equitable relief was within the trial court’s discretion, and the court’s refusal to exercise that discretion may not be disturbed unless its ruling was manifestly arbitrary, unrea- • sonable, or unfair. See Redd Iron, Inc. v. Int’l Sales & Servs. Corp., 200 P.3d 1133, 1136 (Colo.App.2008); E-470 Pub. Highway Auth. v. Revenig, 140 P.3d 227, 230 (Colo.App.2006).
• The trial court did not abuse its discretion in denying equitable relief for the following reasons:
• The Kelleys purposely waited to close the purchase of the Kelley lots until after recording of the Filing 2 plat. The plat showed the Kelley lots as at least abutting (if not incorporating) Tracts V and X. The plat notes describe those tracts as being for common area landscape, utility, and pedéstrian access purposes, and state that the tracts “shall be owned and maintained by a homeowners association.” Thus, before completing the purchase of the Kelley lots, the' Kelleys were on at least inquiry notice of the Filing 2 plat, showing that a homeowners association would own ' these tracts affecting the Kelley lots.
• The Kelleys could have discovered prior to closing their purchase that Ryland had not recorded any documents excepting the Kelley lots from the HOA, as Ryland had contracted to do two years earlier in its agreement with John Kelley.
• The November 17, 2006, Subdivision Improvements Agreement between Ryland and Jefferson County required Ryland to provide to the County a title commitment showing that “fee simple title of all the lands in the subdivision is vested totally” in Ryland. The Kelleys, as developers of their lots, apparently beneñtted from that agreement, wherein the county approved the subdivision.
• John Kelley signed the Development Plan for Ryan Ranch, which stated that “[pjrivate streets shall be maintained by a mandatory homeowners association.”
• The court could have applied the doctrine of laches to conclude that Kelley and Zimmerman waited too long to assert the equitable ownership *389claim after receiving at least record notice of. the lots’ inclusion in the HOA. See City of Thornton v. Bijou Irr. Co., 926 P.2d 1, 73 (Colo. 1996).
¶97 For all of the foregoing reasons, Í would affirm the decision of the trial court.