PROPERTY (Section 1)
Spring Semester 2013

Class Discussion Questions — Pages 620-645
Covenant Enforcement in Common Interest Communities
Interpretation of Covenants
Management of Common Interest Communities/Liability of the Association

In addition to the discussion questions for the material on pages 582-609, consider the following questions about the Nahrstedt case and the notes following the case:

1. To what extent is the Nahrstedt decision consistent (or inconsistent) with the basic approach to covenant enforcement reflected in the new Restatement (which is excerpted back on pages 603-607)? Do you agree that a no-pet covenant like the one in Nahrstedt should be enforced in the context of a condominium project? Would the same thing be true in a gated community of single-family homes?

2. Suppose that you are a developer and are preparing to develop a 400-acre parcel into a subdivision for 300 new homes. Your lawyers are preparing the CC&Rs to be used in the development. You are trying to decide whether to adopt a "no pet" covenant like the one in Nahrstedt or to instead allow the association board to enact pet restrictions by rules (which would be subject to the possibility of being changed in the future by a majority vote of the owners' association). Which approach would you choose, and why?

3. Lambert owns a condominium unit in a beach resort. The CC&Rs provide that any unit owner must obtain the prior written approval of the condo association board before he/she can legally transfer his/her unit. Under what circumstances could the condo association board refuse to approve a proposed transfer by Lambert? Can the board properly object because:

a) Lambert's proposed purchaser is a lawyer that once represented a resident in suing the condo association board?

b) Lambert's proposed purchasers are four retired couples who plan to share ownership of the unit?

c) Lambert's proposed purchaser is Justin Bieber?

4. Smith owns a lot in the covenant-restricted Quiet Acres subdivision, where each lot is limited to "single-family residential purposes only." Should this covenant prevent Smith from making the following uses? [Does the Restatement suggest a different approach for evaluating this covenant than the approach reflected in Gabriel v. Cazier?]

a) Conducting a garage sale?

b) Operating a home carpentry business?

c) Operating a home day care business for 8 children?

d) Working as a web site designer from a home office?

e) Giving swimming lessons (Gabriel v. Cazier)?

f) Operating a group home for mentally handicapped persons?

5. Bubba recently purchased a home in a premier golf development, featuring a course that has previously been listed on Golf magazine's Top 100 list. The CC&Rs for the development provide that each lot owner must belong to the Golf Club and pay a monthly fee of $500 (which entitles Club members to free greens fees). Recently, the Club's general manager decided, for revenue purposes, to make available 10 tee times per day for paying members of the public. Bubba is not happy, because the course is now more crowded, and many of the daily public golfers are not particularly good. Bubba approaches you (a local lawyer) and says that he wants to stop paying his dues until the Club manager revokes the policy and no longer allows the general public on the course. How would you advise Bubba? What additional information would you want to discover in advising Bubba as to the appropriate course of action to register his dissatisfaction?

6. What (if anything) justifies the sort of extreme deference to association decisionmaking manifested by the "business judgment rule" as articulated in the Lamden case? Do you think Lamden is correctly decided? Why should (or shouldn't) the homeowners' association be liable for the termite damage suffered by Ms. Lamden?