Know the rules, restrictions of planned communities

Hundreds formed since Ohio law addressed their creation, operation

Do you live in a subdivision called a planned community, or are you looking at a home in one? If so, your rights as a landowner to use your property as you wish may be subject to some significant restrictions.

Many Ohioans living in recently built homes that are in planned communities are subject to strict standards for the construction, maintenance and use of their property. In the fall of 2010, the Ohio General Assembly adopted Revised Code Chapter 5312, which authorizes the development of planned communities and governs how they are to be formed and managed.

Since the authorizing legislation was enacted, planned communities appear to have gained wide acceptance—more than 300 homeowners' associations have been formed in Ohio, including at least a dozen already in 2016.

A planned community is defined in the statute as a residential community composed of individual lots owned by homeowners and common elements (such as streets, parks, recreational facilities and green spaces) owned by a homeowners' association. The homeowners' association, which is made up of all of the owners in the community, controls the common elements for the benefit of all owners and oversees the improvement and maintenance of the common elements through uniform fees imposed on all owners.

A planned community is established by recording a written "declaration" in the county property records. The declaration details the specific requirements and standards applicable to each lot and the common elements in the development and sets forth the rules for governing the community.

Until the enactment of Chapter 5312, planned communities were not subject to specific regulation under Ohio law, and developers who created subdivisions were not subject to any state-mandated consumer protection rules. Chapter 5312 created a modest level of consumer protection in the form of restrictions on the operation of homeowners' associations and imposed requirements for minimal due process in the event that the homeowners' association seeks to levy a monetary assessment against an owner's lot to enforce the provisions of the declaration.

A person considering the purchase of a home located in a planned community should carefully review the recorded declaration and the bylaws of the homeowners' association before signing a purchase agreement in order to become familiar with the nature and extent of the restrictions applicable to the property and to understand how the homeowners' association operates.

Planned community declarations commonly state that they are intended to preserve the aesthetic harmony, and thus the value, of the lots in the subdivision by imposing minimum design/construction standards and use restrictions. The typical declaration will include restrictive covenants regulating or, in certain cases, outright prohibiting certain uses of the lots, and will specify, often in detail, the building and landscape features and materials that are permitted. Such controls may include:

  • Prohibiting commercial uses of individual lots.
  • Imposing specific restrictions and minimum requirements for the design features and building materials used in the residences, driveways and garages built on the lots.
  • Requiring certain minimum lawn and landscaping features and regulating fences, mailboxes, accessory buildings and gardens.
  • Regulating the number, size and types of dogs and other pets that are permitted.
  • Prohibiting uses by an owner that might cause a nuisance to, or impair the enjoyment of, the property of other owners.

Most declarations also contain covenants requiring each lot owner to adequately maintain and repair the structures and landscaping on his or her lot, while requiring the homeowners' association to maintain the common elements.

A declaration may also delegate the administration and enforcement of restrictions and prohibitions to an architectural review committee (ARC), a group of owners that reviews applications for any modifications or new construction within the planned community. The ARC reviews the plans and specifications for a proposed modification or new use for the purpose of determining whether the proposal complies with all the terms and conditions contained in the declaration.

Thus, any owner who wishes to change the exterior color of his or her house, build an addition, erect a fence, install playground equipment or an above-ground pool, expand a driveway, build a fire pit or plant a garden likely will be required to apply to and obtain the prior approval of the ARC.

Planned community declarations typically set forth a number of separate grounds for disapproval of an owner's request to construct an improvement, including that:

  • The plans for the proposed improvement fail to comply with the specific requirements of the declaration with respect to building size, building materials, lot-line setbacks, design features and the like.
  • The design or the appearance of a proposed improvement is incompatible with respect to the other improvements located in the subdivision (often with a definition of "incompatibility of design" stated in terms of creating a substantial duplication of appearance. It could be in terms of color, roof configuration, window and door placement, reverse plans and house silhouettes, within a certain distance of the property in question).
  • The proposed use of the improvement is incompatible with respect to the uses of the other improvements in the subdivision.
  • Any other reason, which in the judgment of the ARC will render the proposed improvement and/or its use "inharmonious" with other improvements and/or uses in the subdivision.

A declaration will typically give the homeowners' association specific remedies for a violation of its plan-approval provisions, such as permitting the association to go to court to obtain an order compelling the homeowner to remove an unapproved improvement. Or it could levy an assessment against the property of the offending homeowner for any costs, damages and expenses (including attorney's fees) incurred in enforcing the declaration.

The declaration could also authorize the homeowners' association to itself abate any unapproved improvement, but this right is usually limited to improvements to the common elements only or to conditions on an owner's lot that constitute a nuisance, and then only after specified actual notice to the landowner.

TheIt is relatively easy to determine when a proposed improvement does not comply with the specific design and construction requirements set forth in a declaration. However, disputes can arise when an ARC denies a homeowner permission to construct a desired improvement simply because it would be "inharmonious" with the rest of the subdivision.

TheGenerally, Ohio courts require that restrictions on an owner's use of his or her property are to be strictly construed. Similarly, restrictive covenants that require the consent of a third party, such as an ARC, for construction of improvements are enforceable only if there are express standards by which the third party's consent is limited. Courts say that if such clearly stated parameters do not exist, a property owner would be exposed to an unreasonable, arbitrary or capricious granting or withholding of consent by the third party, which would violate public policy.

TheConsistent with these principles, a number of Ohio courts have refused to enforce, as being arbitrary, declarations requiring only that improvements be "pleasing" or "harmonious" or "in harmony with" existing structures, without specific standards with which to make such determinations.

TheThe experienced attorneys at Nicola, Gudbranson & Cooper can offer guidance by reviewing a planned community's declaration before the purchase; assist in obtaining the ARC's approval of a desired improvement; and challenge an arbitrary denial that is made on the basis of a subjective standard, such as being "inharmonious" with the rest of the development.

—Bruce L. Waterhouse Jr.
waterhouse@nicola.com

Bruce Waterhouse has had an active real estate law practice in Ohio for over 25 years.