COA: Geist Lake homeowners had authority to create association

A group of homeowners argued that their feud with the developer of their subdivision put an issue of first impression before the Court of Appeals of Indiana, but the appellate panel ruled it did not have to rule on the larger issue because of the “clear and unambiguous language” of the declaration governing the use of the homeowners’ properties.

Residents of a housing development at Geist Lake took action after a mortgage foreclosure was filed on their lots. RREF II RB-IN VM LLC bought the lots at the sheriff’s sale and then formed the Geist Lake Forest Property Owners’ Association, Inc.

Subsequently, the association sought to enforce the developer’s declaration of covenants, conditions and restrictions against the single property that was not part of the sheriff’s sale.

When the subdivision was first being developed, the developer, Vasilis Makris had constructed a freestanding outbuilding made of steel with a steel roof on that property. He then sold that lot to TT, an Indiana limited liability company.

In September 2020, the association filed a lawsuit asserting TT was violating the declaration by having a building that was non-residential, made of prohibited materials and had prohibited roofing. Among the many court filings at ensured, the Makris and TT argued RREF did not have the authority to form the association.

The Hamilton Superior Court denied the parties’ competing motions for summary judgment of the issue of who had the authority to form the association.

In the appeal that followed, the Court of Appeals addressed the authority issue, Geist Lake Forest Property Owners’ Association, Inc. v. Taso’s Toys, LLC; Taso’s Toys, LLC v. Geist Lake Forest Property Owners’ Association, Inc., and RREF II RB-IN VM, LLC, 21A-PL-2021.

“The trial court’s failure to enter findings and conclusions regarding its denial of summary judgment to the Association and RREF on this issue should not be confused with a failure to enter a final reviewable judgment,” Judge Patricia Riley wrote for the court. “Moreover, the trial court’s failure to enter findings and conclusions regarding its denial of the Association’s and RREF’s motion on the issue does not preclude our review.”

Before the Court of Appeals, the association argued the matter was one of first impression. Also, the association contended the appellate panel should find that when a declaration provides authority to a developer to create a homeowners association but the developer failed to do so, the property owners may validly form the organization.

TT countered the court should apply the plain language of the declaration and find that only the developer could incorporate the association.

“Here, we need not reach the larger question of whether subsequent property owners may always create a homeowners association if the developer failed to do so,” Riley wrote, “because we conclude that the clear and unambiguous language of the Declaration at issue here and the deed conveying Lots 1, 2, 3, 5, and 6 to RREF’s predecessor in interest provided RREF with the authority to form the Association.”

The Court of Appeals concluded RREF had the authority to form the association under the declaration and reversed the trial court’s denial of the association’s and RREF’s motion for summary judgment on that issue.