SECOND DIVISION
ANDREWS, P. J.,
MILLER and BRANCH, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules/
July 14, 2015
In the Court of Appeals of Georgia
A15A0396. CASTLE POINT HOMEOWNERS ASSOCIATION,
INC. v. SIMMONS.
BRANCH, Judge.
A real estate developer borrowed almost $2 million from a bank to develop a
fourteen-lot subdivision and signed a related security deed with the bank
encumbering seven of the lots in the subdivision. The developer subsequently created
a homeowners association and recorded certain covenants pertaining to the
development. After most of the lots were developed, the developer defaulted on the
loan, and the bank foreclosed on five of the undeveloped lots. One of the foreclosed
lots was eventually sold to Phyllis Simmons, and the homeowners association
demanded that Simmons comply with the requirements of the recorded covenants.
Simmons refused, the association filed suit, and the trial court granted summary
judgment in favor of Simmons on that ground that the covenants were not enforceable
against her because they were recorded after the security deed to the bank was
recorded and thus not a part of Simmons’s chain of title. For the reasons shown
below, we reverse.
Summary judgment is proper when there is no genuine issue of material fact
and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56 (c). We
review a grant or denial of summary judgment de novo and construe the evidence in
the light most favorable to the nonmovant. Home Builders Assn. of Savannah v.
Chatham County, 276 Ga. 243, 245 (1) (577 SE2d 564) (2003).
Construed in favor of the appellant, the record shows that on May 8, 2007, in
order to secure a loan in the amount of $1,945,858, Ross Mundy Custom Homes, Inc.
(RMCH), executed a deed to secure debt, which was recorded on June 14, 2007, to
Mcintosh Commercial Bank for property described as Lots 5, 9, 10, 11, 12, 13, and
14, Phase I, in Castle Point Subdivision as per a plat recorded on April 4, 2007. The
security deed does not refer to any restrictive covenants, but it does refer to a
recorded plat. The referenced plat does not refer to any covenants associated with the
property, but it states that “COMMON AREAS & DETENTION PONDS TO BE
OWNED AND MAINTAINED BY HOME OWNERS ASSOC.”
2
On August 8, 2007, RMCH recorded a “Declaration of Covenants, Conditions
and Restrictions for Castlepoint Homeowner’s Association, Inc.” (the “Covenants”
and the “HOA,” respectively), which, by their terms, apply to “all parties having any
right, title, or interest in any portion of the Community, their heirs, successors-in-title,
and assigns, and shall inure to the benefit of each owner of any portion of the
Community.” The Covenants provide for “mutually beneficial restrictions under a
general plan of improvement for the benefit of the owners of each portion of the
Community,” and they seek to enforce a “community-wide standard” with regard to
“conduct, maintenance, or other activity generally prevailing throughout the
Community.” According to the developer, that community-wide standard included
the installation of sidewalks along both the lots of completed homes and on the
common areas of the community, and it required a consistent architectural scheme
throughout the subdivision. There is no evidence in the record that McIntosh ever
expressly consented to the application of the Covenants to the lots subject to the
security deed.
RMCH built homes on nine of the lots and installed sidewalks on each lot
parallel to the street. RMCH, however, was unable to complete the development of
the subdivision, and on June 3, 2008, McIntosh foreclosed on Lots 9, 10, 11, 13, and
3
14 as evidenced by a deed under power. The deed under power does not refer to the
recorded Covenants, but states that McIntosh acquired the lots “subject to . . . any .
. . restrictions, covenants, and matters of record superior to the Security Deed.”
(Emphasis supplied.) McIntosh also fell on hard times and was placed into
receivership by the Federal Deposit Insurance Corporation, which then conveyed Lot
10 to Charterbank per a receiver’s deed dated September 9, 2010. The receiver’s deed
also does not refer specifically to the Covenants. Charterbank in turn conveyed Lot
10 to Simmons on August 27, 2012. The Charterbank-Simmons deed states that it
conveys title subject to “permitted exceptions,” one of which is “[a]ll matters
appearing of record,” but it does not otherwise reference the Covenants. On the same
day that Charterbank deeded Lot 10 to Simmons, Simmons paid to the Castlepoint
HOA a $250 HOA initiation fee and $250 for HOA dues for the year 2012. And in
a construction contract for her new residence, Simmons “acknowledge[d] that there
[was] a required association fee” of $250 per year.
During and after construction of Simmons’s new home on Lot 10, a dispute
arose between the HOA and Simmons about (1) whether Simmons was required to
install a sidewalk along the street-side edge of her property, (2) the color of her roof
and driveway, and (3) the fact that she installed a buried propane tank. Meanwhile,
4
on July 22, 2013, Simmons obtained a loan from Primary Residential Mortgage, Inc.
(PRM), secured by a deed to secure debt to Mortgage Electronic Registrations
Systems, Inc. (MERS), as the nominee for Primary. The Simmons-MERS security
deed includes a “Planned Unit Development Rider” (the “PUD”), signed by Simmons
on the same day, through which Simmons agreed that the secured property included
a parcel of land improved with a dwelling, together with other such
parcels and certain common areas and facilities, as described in THE
COVENANTS, CONDITIONS AND RESTRICTIONS FILED OF
RECORD THAT AFFECT THE PROPERTY (the ‘Declaration’). The
Property is a part of a planned unit development known as Castle Point.
The Property also includes Borrower’s interest in the homeowners
association or equivalent entity owning or managing the common areas
and facilities of the PUD. . . and the uses, benefits and proceeds of
Borrower’s Interest.
(Emphasis supplied). Further, the PUD, which was incorporated by reference into the
security deed, required Simmons to
perform all of Borrower’s obligations under the PUD’s Constituent
Documents. The ‘Constituent Documents’ are the: (i) Declaration; (ii)
Articles of Incorporation, Trust Instrument or any equivalent document
which creates the Owners Association; and (iii) any by-laws or other
rules or regulations of the Owners’ Association. Borrower shall
5
promptly pay, when due, all dues and assessments imposed pursuant to
the Constituent Documents.
(Emphasis supplied). On July 30, 2013, Simmons paid the HOA dues of $250 for the
year 2013.
On October 24, 2013, the HOA filed and later amended the present action,
alleging that Simmons was required to comply with the Covenants and demanding
that Simmons be enjoined from violating the Covenants and required to remove all
non-conforming features of her property. Simmons moved for summary judgment
based on all of the evidence except the Simmons-MERS security deed and PUD rider,
which neither party had placed before the court in connection with the motion for
summary judgment. The trial court granted the motion, concluding that the Covenants
did not apply to Simmons because none of the deeds in her chain of title submitted
Lot 10 to the Covenants; none of the prior owners in her chain of title ever consented
to the Covenants; Simmons’s chain of title was superior to that of the Covenants
because the deed to McIntosh was recorded prior to the Covenants; and the fact that
Simmons had knowledge of the existence of a homeowners association in 2012 and
2013 and voluntarily paid fees and dues thereto was insufficient to show that she
consented to the Covenants attaching to her property. The court also held that
6
sidewalks were not required by the Rockdale County ordinances, that Rockdale
County issued Simmons a certificate of occupancy, and that the HOA did not have
standing to enforce county ordinances.
Two weeks after the trial court’s decision, the HOA moved for reconsideration,
attached the Simmons-MERS security deed and PUD rider, and argued that these
documents showed that Simmons had consented to the Covenants. The trial court
denied the motion, finding that there was nothing in the PUD wherein Simmons
agreed that the Subject Property would be subject to the restrictive
covenants. While [Simmons] agreed in such Rider to “perform all of
Borrower’s obligations under the PUD’s Constituent Documents,” she
(the Borrower) had no obligations under such documents since they
were outside her chain of title.
The HOA timely filed its notice of appeal from both orders, and, contrary to
Simmons’s objection, the appeal is properly before us.1
We hold that summary judgment was improper because the HOA, at a
minimum, raised an issue of fact as to whether Simmons is bound by the general
scheme of the subdivision on the theory of implied covenants. Although the trial court
1
This appeal is authorized by OCGA § 9-11-56 (h) (“An order granting
summary judgment on any issue or as to any party shall be subject to review by
appeal.”).
7
correctly held that the relevant covenants were not in Simmons’s chain of title,2 it is
nonetheless true that
[w]here an owner of land subdivides it into lots for the purpose of sale,
under a general plan or scheme restricting the lots to certain uses,
restrictions that are embodied in such general plan or scheme may in a
proper case be imposed upon the lots beyond the express restrictions
contained in the deeds to the purchasers, on the theory of implied
covenants.
Kilby v. Sawtell, 203 Ga. 256 (1) (46 SE2d 117) (1948) (citation omitted); see also
McLean v. Turtle Cove Prop. Assn., 222 Ga. App. 709, 710 (1) (475 SE2d 718)
2
The development did not take on the form of a property owners’ development
until “the recordation of the declaration.” OCGA § 44-3-222. Accordingly, McIntosh
took title to the property identified in the security deed prior to the creation of the
property owners’ development and free and clear of any associated restrictive
covenants. Springmont Homeowners Assn. v. Barber, 221 Ga. App. 713 (472 SE2d
695) (1996). In Springmont, a bank took title pursuant to a security deed before
restrictive covenants stated in a declaration were imposed on the property. Id. at 713-
714. Accordingly, the bank’s security deed “had priority over the subsequently
recorded Declaration.” Id. at 714 (citation omitted). “Although the Declaration bound
those taking under the developer, it never became part of the chain of title between
the developer and the Bank.” Id. Therefore the covenants were not enforceable
against Barber, a person who purchased a lot that the bank had foreclosed upon. Id.
The Springmont court thus concluded that “[b]ecause the deed the Bank conveyed to
Barber was unencumbered by the Declaration and the Association failed to present
any evidence showing that the Declaration applied despite its clear absence from the
chain of title, summary judgment was appropriate.” Id.
8
(1996) (“[R]estrictive covenants may apply to lots in a planned development under
an implied covenant theory, even if the developer failed to comply with all
formalities, as long as the landowner had knowledge of the restrictive covenants at
the time he purchased the property.”) (citations omitted); Roth v. Conner, 235 Ga.
App. 866, 868-869 (1) (b) (510 SE2d 550) (1998); Westhampton, Inc. v. Kehoe, 227
Ga. 642, 645-646 (182 SE2d 430) (1971); Wardlaw v. Southern R. Co., 199 Ga. 97,
104 (33 SE2d 304) (1945). “[T]he need for such a rule is particularly compelling
where third parties have relied on the applicability of the covenants.” McLean, 222
Ga. App. at 710 (1) (citation omitted). “The party wishing to enforce a non-express
agreement must, of course, establish the area covered by the agreement and the
specific content of the restrictions alleged. This is usually accomplished by showing
a common grantor’s general scheme or plan for developing the property in question.”
Roth, 235 Ga. App. at 869 (1) (b).
Several facts of this case show the existence of an implied covenant and
distinguish this case from Springmont. First, the plat referenced in the McIntosh
security deed, which is in Simmons’s chain of title,3 is a “Final Subdivision Plat for
3
“Where a deed to land refers to a map or plat for a more complete description
of the land conveyed, such map or plat will ordinarily be considered as incorporated
in the deed itself.” Kilby, 203 Ga. at 257 (3) (b).
9
Castle Point Phase 1” and it shows a planned 14-lot subdivision with common areas
and a single street planned to provide access to each of the 14 lots; the plat states that
common areas and detention ponds will be owned and maintained by a homeowners’
association Thus, the HOA has shown that Simmons had constructive notice of the
common grantor’s general scheme or plan for the property in question and that a
homeowners’ association would play a role in that scheme. Second, on the day she
closed on the purchase of Lot 10, Simmons joined the HOA and paid the dues for the
year 2012. And as of that day, at least nine of the 14 properties — the properties on
which a home had already been constructed — had sidewalks already installed. Third,
when she obtained a loan on her property in July 2013, she acknowledged that Lot 10
was a part of a PUD known as Castle Point and that the PUD was governed by a
homeowners’ association and a declaration and covenants, and she agreed to be
bound by her obligations thereunder and to pay her dues, which she did during that
same month.
“He who takes with notice of an equity takes subject to that equity.” OCGA §
23-1-16. And “[n]otice sufficient to excite attention and put a party on inquiry shall
be notice of everything to which it is afterwards found that such inquiry might have
led. Ignorance of a fact due to negligence shall be equivalent to knowledge in fixing
10
the rights of parties.” OCGA § 23-1-17. Here, construed in favor of the HOA, the
above facts were sufficient to put Simmons on inquiry of the nature of the existence
of a homeowners association, the general scheme of the development, and its
declaration and covenants. See also OCGA § 44-3-223 (“Every lot owner and all
those entitled to occupy a lot shall comply with all lawful provisions of the property
owners’ association instrument.”). Accordingly, there is an issue of fact as to whether
she is bound by the HOA covenants under the theory of implied covenants. See
Westhampton, 227 Ga. at 645-646 (oral statements to owners of first three phases of
development that the restrictions imposed on those phases would apply to owners of
the fourth phase of development of the subdivision were enforceable in equity as
implied covenants against the owners of the fourth phase).
Judgment reversed. Andrews, P. J., and Miller, J., concur.
11