Breene v. Plaza Tower Ass'n
310 N.W.2d 730, 1981 N.D. LEXIS 326 (1981)
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Rule of Law:
Under North Dakota law, an amendment to a condominium's declaration of restrictions that curtails the use of an individual unit, such as prohibiting leasing, may not be applied retroactively to an owner who purchased their unit before the amendment was adopted and recorded.
Facts:
- On May 10, 1974, Janet Lucas Breene and A. William Lucas (Breene) purchased a unit in the Plaza Tower condominium.
- At the time of purchase, the condominium's recorded declaration permitted leasing, subject only to the Plaza Tower Association's (Association) right of first refusal.
- The declaration also contained a provision allowing it to be amended by a three-fourths vote of the Association's members.
- On May 14, 1979, the Association passed an amendment to its bylaws prohibiting most leasing of units by owners.
- This bylaw amendment was not recorded in the county's register of deeds office.
- On November 7, 1980, Breene formally requested permission from the Association to lease their unit.
- The Association denied Breene's request, citing the 1979 bylaw amendment.
Procedural Posture:
- Breene filed a lawsuit against the Plaza Tower Association in district court (trial court) to declare the amended bylaw invalid as applied to their unit and to enjoin its enforcement.
- Breene moved for summary judgment.
- The district court granted summary judgment in favor of Breene, ruling that any amendments to the declaration could only have prospective effect.
- The Plaza Tower Association, as appellant, appealed the district court's judgment to the Supreme Court of North Dakota. Breene is the appellee.
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Issue:
Does an amendment to a condominium's declaration of restrictions, which prohibits leasing, apply retroactively to a unit owner who purchased their unit before the amendment was adopted and recorded?
Opinions:
Majority - Sand, J.
No. An amendment to a condominium's declaration of restrictions cannot be applied retroactively to owners who acquired their units before the amendment was adopted and recorded. The court's reasoning is grounded in North Dakota statute § 47-04.1-04, which requires that a declaration of restrictions be recorded prior to the conveyance of any condominium. This statutory provision is intended to provide notice to prospective purchasers of all restrictions that will encumber their property interest. Applying a subsequently adopted restriction retroactively would nullify this notice requirement. The court rejected the Association's argument that Breene waived this statutory right by purchasing a unit subject to a declaration that allowed for amendments. It reasoned that knowledge of a general amendment provision does not constitute the voluntary and intentional relinquishment of the specific statutory right to have all restrictions recorded before purchase. The court distinguished this case from those in other jurisdictions, like California and Florida, by highlighting that those states have statutes that explicitly permit amendments to be binding on all owners, a provision absent in North Dakota law.
Analysis:
This decision establishes a significant protection for condominium owners in North Dakota, prioritizing their vested property rights and reliance interests over a condominium association's subsequent attempts to impose new use restrictions. It solidifies the principle that the bundle of rights an owner acquires at purchase cannot be retroactively diminished by a majority vote of other owners, even under a general amendment clause. The ruling creates a bright-line rule that any amendments imposing new substantive restrictions on property use are prospective only, thereby limiting the power of homeowner associations and enhancing predictability for purchasers.
