The Indiana Court of Appeals has ordered a couple to pay a Bartholomew County lot owner’s association $6,000 in assessment fees despite the couple’s claim that they are not members of the association.
In the case of Marvin Hamilton and Linda Hamilton v. Schaefer Lake Lot Owners Association, Inc., 03A05-1511-SC-1906, Marvin and Linda Hamilton challenged the Bartholomew Superior Court’s order to pay a total of $6,000 to the Schaefer Lake Lot Owners Association, a homeowners association for property owners on Schaefer Lake in the town of Hope.
The Hamiltons purchased a lot in Section 2 the Schaefer Lake Addition in 1973 or 1974. When the couple purchased the lot, the property was subject to the Schaefer Lake Addition Covenants, which did not mention requirements for joining the Lot Owners Association or for paying assessments to the association.
However, in 1996, owners of the Section 2 lots voted to amend the covenants to read, in part, “All lot owners in Schaefer Lake Addition, Section 2…shall be members in Schaefer Lake Lot Owners Associates, Inc.”
Then in 2002, the association adopted the Rules and Regulations of Schaefer Lake Lot Owners Associates Inc., which said that the association can determine the need for and establish the amount of an annual assessment or special assessment against each lot.
The association filed a complaint against the Hamiltons in small claims court on Sept. 19, 2013, for non-payment of the annual and special assessments set out in the association rules and regulations.
A Bartholomew Superior Court trial on July 10, 2015, found for the association and awarded a judgment of $4,240 and attorney fees of $1,760 – a total of $6,000 – plus court costs of $91 and post-judgment interest.
But the Hamiltons appealed, saying they were not required to be members of the association under the original covenants in place when they purchased the lot, and that they never signed or agreed to the 1996 amendments. The Hamiltons also said they never chose to voluntarily join the association, which could be done by paying a $15 membership fee, an amount the couple never paid.
But the Court of Appeals disagreed, saying that the 1996 amendment, which was enacted by a majority of lot owners, was not outside of the original covenants’ intended purpose.
“Further, the amendment did not ‘force’ the Hamiltons to become association members,” the court wrote in its Tuesday opinion. “They bought their lot subject to the Covenants, thereby agreeing to be subject to the restrictions and regulations in the Covenants and any approved changes to the Covenants.”
The Hamiltons also argued that the association never proved that the assessments they want the couple to pay were validly approved.
But the Court of Appeals also disagreed with that argument, writing that all assessments are required to be approved by the association’s board of directors, which decides assessments at its annual meeting in January. Prior to each meeting, a letter is sent to association members at least one week in advance with information about the current and coming years’ budgets and the amount of dues owed. An invoice of assessments is then sent out after the annual meeting.
Marvin Hamilton said he had received the letters and knew that assessments were decided at the meetings, and Linda Hamilton signed and submitted a proxy vote for herself and her husband for the 2003 annual meeting. Those facts show that the association met its burden of proof to establish the validity of the assessments, the court wrote.
Finally, the Hamiltons argued that the statute of limitations has run on any amount assessed prior to 2008. However, the couple did not raise that issue at trial, and failure to do so results in a waiver of that issue, the court wrote. Further, even without the waiver, the court said that the association’s claim is still within the statute of limitations for breach of contract. Thus, the court affirmed the Hamiltons’ obligation to pay the assessment claims to the association.