AN EASIER PATH TO ADOPTING THE POAA
By: Michael J. Zenner, Esq
The Georgia Property Owners Association Act (the “POAA”) was adopted by the Georgia Legislature in 1994. The POAA is an elective statute, which means that a community of townhomes or single family homes can decide whether or not it wishes to become subject to its provisions. In contrast, the Georgia Condominium Act is a mandatory statute which means that all condominiums in the State of Georgia are subject to its provisions.
The POAA provides a number of important benefits which make it advantageous for most communities to elect to become subject to its provisions. Specifically, the POAA (a) establishes an automatic statutory lien for unpaid assessments and other charges, thereby eliminating the need to file paper liens in the courthouse records to protect the Association’s interest (although the filing of liens can still be done and is typically recommended); (b) creates joint and several liability between a seller and a buyer for unpaid assessments owed on a lot at the time of sale, thereby motivating buyers and their mortgage lenders to make sure that all unpaid assessments are paid at or before the closing; (c) provides the Association with the statutory right to charge late fees and interest for delinquent assessments and to collect reasonable attorney’s fees actually incurred by the Association when legal action is taken against a delinquent owner; (d) gives the Association the right, in appropriate cases, to foreclose its assessment lien, subject to superior liens and encumbrances; and (e) establishes that the declaration will have perpetual duration and will never expire.
Another important benefit of the POAA is that it exempts the Association from the provisions of Section 44-3-60(d)(4) of the Georgia Code. Section 44-3-60 (d)(4) provides that “Notwithstanding any other provision . . .of any covenants with respect to the land, no change in the covenants which imposes a greater restriction on the use or development of the land will be enforced unless agreed to in writing by the owner of the affected property at the time such change is made.” In the case of Charter Club on the River Homeowners Association v. Walker, decided in 2009, the Georgia Court of Appeals held that pursuant to this statute, a property owner who had not consented to an amendment imposing leasing restrictions was not required to comply with the leasing restrictions even though the amendment had been properly adopted under the amendment provisions of the existing Declaration. Adopting the POAA exempts an association from Section 44-3-60(d)(4) of the Georgia Code and thereby assures that amendments that are duly approved by two-thirds (2/3) of the owners can be enforced against all owners, including those who vote against or abstain from voting on the amendment.
Given the Court’s decision in Charter Club, the legally prudent approach for a homeowners association that was not subject to the POAA was to engage in a two part process to adopt or amend use restrictions. First, it had to amend its declaration to submit the development to the POAA. Once submitted to the POAA, it then had to adopt a second amendment to the declaration to incorporate the new or modified use restrictions. However, given the difficulty of obtaining the required votes for any declaration amendment, some associations (and their legal counsel) took the position that an association could adopt a single amendment to simultaneously submit the development to the POAA and adopt or modify use restrictions. Fortunately, due to a recent decision by the Georgia Court of Appeals, there is now legal support for this position.
In Marino v. Clary Lakes HOA, which was decided on July 12, 2013, the existing Declaration stated that it could be amended by a majority vote of the owners. The owners, by a majority vote, adopted an amended and restated declaration which submitted the development to the POAA and included new and amended use restrictions. The Association attempted to enforce one of the new use restrictions against an owner. The owner challenged the Association’s right to enforce the restriction, taking the position that because he had not voted in favor of the amended and restated declaration, the Association was barred by Section 44-3-60(d)(4) of the Georgia Code from enforcing the restriction against him. The Court of Appeals ultimately held that the restriction could not be enforced against the owner. However, a majority of the judges on the Georgia Court of Appeals panel concluded that an amendment could be passed to existing covenants in order to (1) submit the covenants to the POAA and (2) at the same time, add additional use restrictions, provided the amendment was adopted in accordance with the amendment provisions of the original declaration and in accordance with Section 44-3-226 of the POAA, which requires that amendments to covenants subject to the POAA must be approved by “the agreement of lot owners of lots to which two-thirds of the votes in the association pertain.” Since the Clary Lakes amendment had only been approved by a majority of the Owners, the Court concluded that the restriction could not be enforced against the Owner.
Associations who desire to submit to the POAA and adopt additional use restrictions should consult with legal counsel. Where feasible, the preferred approach may still be to adopt two separate amendments. However, there is now legal support for adopting a single amendment which simultaneously adopts the POAA and includes additional use restrictions if done properly.