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Khan v. Alpine Haven Property Owners' Association, Inc.

Supreme Court of Vermont

September 2, 2016

Sarita and Nafis Khan, Eric and Katherine Gadpaille, Judith LaPointe & Robert Earley
Alpine Haven Property Owners' Association, Inc.

         On Appeal from Superior Court, Franklin Unit, Civil Division A. Gregory Rainville, J.

          Barry Kade, Montgomery, for Plaintiffs-Appellees.

          Robert A. Gensburg, St. Johnsbury, for Defendant-Appellant.

          PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.

          REIBER, C.J.

         ¶ 1. Both sides appeal in this long-running dispute involving Alpine Haven, a sprawling subdivision located along Vermont Route 242 in the Towns of Montgomery and Westfield. The dispositive question for this Court is whether the undisputed facts support the trial court's conclusion that the "chalets" within Alpine Haven constitute a preexisting common interest community (CIC) governed by Title 27A of the Vermont Statutes Annotated. The trial court found a "series of deeds" sufficient to constitute a "declaration" of a CIC under the Vermont Common Interest Ownership Act (VCIOA). Plaintiffs, who own chalets/undeveloped lots in Alpine Haven, argue that the court erred in reaching this conclusion. We agree, and therefore reverse and remand for additional proceedings. Given our conclusion, we need not reach the majority of the parties' remaining arguments.

         ¶ 2. This is the latest in a series of lawsuits, spanning more than thirty years, between defendant Alpine Haven Property Owners' Association, Inc. (AHPOA) and certain home/lot owners. Plaintiffs filed the instant complaint against AHPOA in May 2011. Plaintiffs asserted that their property is not part of a CIC and that they were not required by their deeds to be AHPOA members. Plaintiffs acknowledged an obligation to pay the reasonable costs of services provided and accepted, including maintaining the right-of-way, snowplowing, street lighting, and garbage collection. They argued, however, that they should not have to pay AHPOA for special assessments, annual meeting costs, insurance, road expansion or improvements, or any other AHPOA expenses not specified in their deeds. Plaintiffs also argued that a 2011 "Amended and Restated" declaration was not validly adopted.

         ¶ 3. AHPOA counterclaimed, asserting that Alpine Haven was a preexisting CIC. It sought a declaratory judgment regarding a member's right to "resign" from AHPOA and rescind obligations as a unit owner, including the obligation to pay assessed fees. AHPOA maintained that plaintiffs were obligated, and failed, to pay properly assessed fees. AHPOA also argued that plaintiffs had knowingly received benefits at AHPOA's expense, including road maintenance, snow plowing, lighting, garbage collection, and the administration of such services and amenities, and that it would be inequitable for plaintiffs not to compensate and reimburse AHPOA for their value.

         ¶ 4. We begin with an overview of the law governing this dispute. The VCIOA is based on the Uniform Common Interest Ownership Act (UCIOA) and it became effective on January 1, 1999. This Act "combined, in a single comprehensive law, prior uniform laws in this area (the Uniform Condominium Act (1980), the Uniform Planned Community Act (1980) and the Model Real Estate Cooperative Act (1981))." UCIOA, Pref. Note (1994). The term "common interest community" is defined for the first time in the UCIOA, drawing on the definition of "planned community" in the Uniform Planned Community Act. 27A V.S.A. § 1-103, cmt. 8. This term is "used through the [UCIOA] to refer collectively to the three particular forms of common interest community: condominiums, cooperatives, and planned communities." Id. Because the terms condominium and cooperative are precisely defined, a planned community is a catch-all for "everything else" that satisfies the general definition of a CIC. Id.

         ¶ 5. A CIC is broadly defined as "real estate described in a declaration with respect to which a person, by virtue of the person's ownership of a unit, is obligated to pay for a share of real estate taxes on, insurance premiums, maintenance, or improvement of, or services or other expenses related to common elements, other units, or other real estate other than that unit described in the declaration." Id. § 1-103(7).[1] Compare UPCA § 1-103(21) (defining "planned community" as "real estate with respect to which any person, by virtue of his ownership of a unit, is obligated to pay for real property taxes, insurance premiums, maintenance or improvement of other real estate described in a declaration").

         ¶ 6. A "declaration" means "any instruments, however denominated, that create a common interest community and any amendments to those instruments."[2] 27A V.S.A. § 1-103(13). For CICs created after January 1, 1999, declarations must contain very specific information set forth by statute, including the name of the CIC and the association; the name of each municipality in which any part of the CIC is located; a legally sufficient description of the real estate included in the CIC; a statement of the maximum number of units that the declarant reserves the right to create; a description of the boundaries of each unit created by the declaration, including the identifying number of the unit; a description of any limited common elements and, with respect to planned communities, any real estate which is or will be common elements; and numerous other items. See id. § 2-105(a)(1)-(15).

         ¶ 7. Certain provisions of the VCOIA apply to CICs that existed prior to its enactment, even though these CICs may not have a declaration that strictly complies with the statute. Id. § 1-204, cmt. 3. In taking this approach, the Act aims to "measurably increase the ability of the unit owners to effectively manage the association, and . . . help to encourage the marketability of common interest communities created under early condominium statutes or under common law." Id.

         ¶ 8. Presumably because the VCIOA encompasses CICs created under common law, the definition of "declaration" includes not only "the traditional condominium declaration with which most practitioners are familiar, " and "the declaration of covenants, conditions, and restrictions (CC&R's) so common in planned unit developments, " but also "a series of deeds to units with common mutually beneficial restrictions, or to any other instruments which create the relationship which constitutes a common interest community." Id. § 1-103, cmt. 8; see Restatement (Third) of Prop. (Servitudes), § 6.2 cmt. e. (explaining that "[b]efore declarations came into common use, the servitudes that created a common-interest community were usually set forth in the deeds to the individual lots, or shown on the face of the recorded plat").

         I. Undisputed Facts

         ¶ 9. With this legal background in mind, we turn to the undisputed facts. In the 1960s, Hubert and Caroline Daberer assembled approximately 500 acres of land to create what has become known as Alpine Haven. There was no "master plan, " site survey, or contemporaneous subdivision plat, and no overall series of permit applications or approvals. There was no "declaration" of, or bylaws for, any planned community filed or recorded at the outset of the project.

         ¶ 10. The Daberers sold some lots personally, but relatively early on, they transferred their land to two corporations that they controlled: Alpine Haven, Inc. for the Westfield portion (as of May 10, 1963) and Leisure Properties, Inc. for the Montgomery portion of the land (as of November 29, 1967). Currently, Alpine Haven contains more than eighty-five lots with homes, several undeveloped or "large lots, " several lots with some commercial activity, and three lots that AHPOA owns and maintains as common land for various purposes. AHPOA owns and maintains 4.5 miles of roads within the development, including the streetlights and snowplowing. Almost all of the lots owners depend on the private roads to access their property.

         A. Westfield Conveyances

         ¶ 11. Between 1963 and 1965, sixteen lots and/or chalets were sold in Westfield. The first deed, from the Daberers personally to the Bretons in January 1963, gave the grantees a "right-of-way leading from the main road, " and the Daberers promised to "pipe water to such construction site on said premises as may be indicated by the grantees." The deed prohibited commercial use of the property, and limited use to a home with a garage. The second deed, from the Daberers to the Racines in March 1963, contained the same right-of-way grant, the same covenant regarding use of the property, as well as a promise by the Daberers "to keep and maintain said right-of-way in good reasonable state of repair, " "supply water to said premises as now piped, " "provide garbage removal for said premises, " and maintain the existing "street lights in the area of said premises." For these services, the Racines agreed to pay the Daberers (or assigns) $100 per year.

         ¶ 12. Alpine Haven, Inc. conveyed most of the remaining lots in Westfield. The next fourteen deeds (through 1965) were similar, and all contained language similar to the Racine deed with respect to the services and facilities to be provided and maintained by the grantor, and the restrictive covenant regarding use of the property. ...

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