Regency Homes Ass'n v. Egermayer
243 Neb. 286, 1993 Neb. LEXIS 134, 498 N.W.2d 783 (1993)
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Rule of Law:
An affirmative covenant requiring property owners in a subdivision to pay mandatory dues to a homeowners' association for the maintenance of recreational facilities and common areas is a valid real covenant that runs with the land if it "touches and concerns" the land by enhancing the value of the properties.
Facts:
- In the late 1960s, Regency, Inc., developed the Regency subdivision, a large multi-use community with residential and recreational areas.
- On March 19, 1968, the developer recorded a Declaration containing covenants for the subdivision, which required all lot owners to be members of the Regency Homes Association (RHA) and pay annual dues for the maintenance of common facilities.
- The Declaration stipulated that unpaid dues would constitute a lien against the owner's property.
- The developer built recreational facilities, including a lake, clubhouse, parks, tennis courts, and a swimming pool, known as the Regency Lake and Tennis Club (RLTC), for the benefit of residents.
- On December 11, 1978, George and Jean Egermayer purchased a lot in Regency, with their deed stating the property was subject to all recorded covenants and restrictions.
- The previous owners of the Egermayers' lot continued to be billed by and pay RHA dues by mistake until 1987.
- In May 1987, after discovering the ownership change, RHA billed the Egermayers for the dues and assessments.
- The Egermayers refused to pay any dues to RHA.
Procedural Posture:
- Regency Homes Association (RHA) sued George W. and Jean M. Egermayer in the district court for Douglas County, Nebraska (trial court) to foreclose a lien on their property for unpaid dues.
- The trial court found the covenant was valid and ran with the land, entering a judgment of foreclosure in favor of RHA.
- The trial court denied the Egermayers' motion for a new trial.
- The Egermayers (appellants) appealed the judgment to the Supreme Court of Nebraska (highest court), with RHA as the appellee.
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Issue:
Does a recorded declaration requiring a property owner to pay mandatory dues to a homeowners' association for the operation of recreational and common facilities constitute a valid real covenant that runs with the land?
Opinions:
Majority - Fahrnbruch, J.
Yes. A covenant requiring property owners to pay mandatory dues to a homeowners' association for recreational and common facilities is a valid real covenant that runs with the land. For a covenant to run with the land, it must be intended to do so, there must be privity of estate, and the covenant must 'touch and concern' the land. The central dispute here is whether the covenant to pay dues 'touches and concerns' the land. Adopting the test from Neponsit, a covenant 'touches and concerns' the land if it affects the legal relations of the parties as landowners by imposing a burden on one interest in land which, in turn, increases the value of another interest in the same or related land. Applying this standard, the court found the covenant enhances the value of the individual lots in Regency. The RHA maintains not only the recreational club but also parks, common green areas, and provides architectural control, all of which benefit the property owners and add value to their land. The existence of these amenities was part of the original common scheme of development, they are in close proximity to the homes, and all homeowners have a right to their use, thereby satisfying the factors for a valid real covenant.
Analysis:
This case is significant as a matter of first impression in Nebraska, establishing the modern rule that affirmative covenants to pay homeowners' association fees are enforceable as real covenants running with the land. By adopting a functional, value-based test for the 'touch and concern' element and providing a clear three-factor framework, the decision provides predictability for developers and homeowners in planned communities. The ruling solidifies the authority of homeowners' associations to collect mandatory dues for the maintenance of common amenities, validating a critical tool used in modern subdivision development.
