CC&R Amendment Required for SGCC Agreement?

Posted by Jim Haar – Somersett Homeowner

In response to homeowner questions, the SOA Board of Directors (BOD) stated that an amendment to the CC&R’s is not required to enter into the proposed purchase agreement with the Somersett Country Club (SGCC). That is, to quote the BOD:

The proposed new deal with the SGCC is a stand-alone package.  If passed, the homeowner vote would approve the proposed deal and authorize the Board to put that specific deal in place”.

This statement appears to be contrary to Article II Section 1 of the current CC&R’s, which define the “Purpose” of the SOA, none of which deal with the purchase, annexation or leasing of real property to expand the common area.  Section 1 also states:

“The Association shall have no other purpose than those specified herein and as allowed or mandated by the Act or other applicable law, and shall expressly be prohibited from representing the Owners and occupants of Units within the Subdivision on issues of land use, planning, municipal annexation, master plan amendments, growth, area development or similar matters”

Furthermore, in the wake of the “Complaint” drafted by the Attorney General’s (AG) office (i.e., against the validity of the existing SGCC Lease Agreement), all parties signed an “Agreement To Stay Investigation” document, which stipulated the following:

“Item 1.c  All proposed amendments to the Somersett Second Amended and Restated Declaration of Covenants, Conditions and Restrictions (Declaration) and ratification of the Lease and Management  agreement, as the same may be amended, will be brought  to the homeowners of the SOA for a vote.

 Item 2.  In the event negotiations are successful, and the SOA and the Club agree to proffer amendments to the Declaration and Lease and Management Agreement and assuming homeowner approval thereof,  and together with homeowner approval of the Lease and Management Agreement, as modified, supplemented or revised, NRED agrees not to file, prosecute or proceed with the allegations presently alleged in the draft Complaint in proposed Case No. IN-12-1581.”

Given the preceeding, it is logical to conclude that the CC&R’s do need to be amended in order for the SOA to enter into the proposed SGCC purchase agreement. The SOA only has the rights given to it by the CC&R’s and the current CC&R’s don’t allow the lease that currently exists, much less what is being proposed.  The intended purpose of the Stay Agreement was to allow the SOA time modify the CC&R’s, negotiate a new SGCC agreement and send both out for a vote by the owners, and if approved, the Complaint would not be prosecuted.

The BOD has been asked where, under the current CC&R’s, they believe they have the authority to negotiate and enter into the proposed SGCC purchase agreement and whether or not legal opinions have been obtained.  To date no response has been forthcoming. In order to protect the validity of the proposed SGCC purchase agreement, and to preclude downstream problems, I suggest that legal closure between the SOA and AG attorneys is required.

3 thoughts on “CC&R Amendment Required for SGCC Agreement?

  1. With regard to the current voting on the proposed CC&R Amendments, I urge association members to vote DISAPPROVE or if the amendments are not clearly understood, to not vote at all.

    Further, association members are being asked to vote “up or down” on all 4 amendments. Due to their complexity and their long-term serious effects, the ballot should have allowed each to be voted upon individually.

  2. One more to be aware of. This is from a lawyer friend of mine: “I don’t recommend changing the documents until the statute of limitations has expired as you want to go after the developer if necessary and at times the board changes things that cause them problems in going after them later. “

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