Appeal from Shawnee District Court, DAVID E. BRUNS, judge.
1. Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
2. Where there is no factual dispute, appellate review of an order regarding summary judgment is de novo.
3. The interpretation and legal effect of written instruments are matters of law, and an appellate court exercises unlimited review.
4. Generally, contract rights are assignable in Kansas. However, there is a well-recognized exception to this general rule which prohibits the assignment of rights arising out of contracts involving personal and confidential relations to which liabilities are attached.
5. The enforceability of restrictive covenants has its origin in common law and has long been recognized in Kansas. Enforceability is based on the equitable principle of notice, whereby a person who takes land with notice of a restriction upon it will not be permitted to act in violation of that restriction.
6. We adopt Restatement (Third) of Property: Servitudes § 6.21 (1998), as the law of Kansas. A developer may not exercise a power to amend or modify the declaration in a way that would materially change the character of the development or the burdens on the existing community members unless the declaration fairly apprises purchasers that the power could be used for the kind of change proposed.
The opinion of the court was delivered by: Malone, J.
Affirmed in part; reversed in part.
Before MALONE, P.J., BUSER and LEBEN, JJ.
Nations Development Corporation (NDC) was the original developer of the North Country Villas subdivision, which consisted of single family homes and duplexes. In June and November 2005, NDC sold lots to Randy J. Kokenge and Lori A. Kokenge (the Kokenges) and Clampitt-Hersh Development, LLC (Clampitt-Hersh). In November 2005, NDC assigned its rights as declarant to the Kokenges and Clampitt-Hersh. As declarants, the Kokenges and Clampitt-Hersh revoked the Declaration of Covenants, Restrictions, and Easements for the subdivision as to the land owned by them. The Kokenges then began building a four-plex on the subdivision.
The other homeowners held a meeting and elected officers and a board of directors of North Country Villas Homeowners Association (North Country). North Country and the individual homeowners then filed a petition with the district court. The petition asked the district court to declare that the Kokenges and Clampitt-Hersh were subject to the Declaration's restrictions and to enjoin the Kokenges from building the four-plex. The parties filed stipulated facts, and the district court granted summary judgment in favor of North County and homeowners.
NDC, the Kokenges, and Clampitt-Hersh raise three issues on appeal: (1) The district court erred in finding that NDC could not assign its rights under the Declaration; (2) the district court erred in finding that the Kokenges and Clampitt-Hersh could not revoke or amend the Declaration as to properties owned by them; and (3) the district court erred in determining that North Country's officers and directors were properly elected.
We conclude the district court did not err in finding that the attempt by the Kokenges and Clampitt-Hersh to either revoke or amend the Declaration as to their property was unenforceable. In doing so, we adopt Restatement (Third) of Property: Servitudes § 6.21 (1998), which provides that a developer may not exercise a power to amend or modify the declaration in a way that would materially change the character of the development or the burdens on the existing community members unless the declaration fairly apprises purchasers that the power could be used for the kind of change proposed. Here, the general amendment provision of the Declaration did not sufficiently notify purchasers that the developer could make such a drastic amendment that would materially change the character of the development. Accordingly, we affirm the decision of the district court.
Factual and Procedural Background
In 1999 and 2000, Charles Nations, as president of NDC, recorded final plats for the Urban Hills Subdivision 14 and 15 with the Shawnee County Register of Deeds office. Urban Hills Subdivision 14 and 15 is a residential subdivision located north of Topeka, Kansas. The subdivision is commonly referred to as the North Country Villas (subdivision).
In February 2001, NDC filed the Declaration of Covenants, Restrictions, and Dedication of Easements of North Country Villas (Declaration) with the Shawnee County Register of Deeds office. The Declaration identified the declarant as NDC, its successors, heirs, and assigns. The Declaration imposed property use restrictions on owners of lots in the subdivision. In particular, the Declaration essentially defined "Villa Unit" to mean either a single family home or a duplex.
In April 2001, not-for-profit articles of incorporation were filed with the Kansas Secretary of State's office, creating North Country. The Declaration provided that North Country had two classes of voting membership: (1) Class A memberships were issued to all lot owners except the declarant and (2) Class B memberships were issued to the declarant. Under the Declaration, "[t]he number of Class B memberships shall, at all times, equal the number of Class A memberships multiplied by four."
From 2001 through 2005, NDC advertised the subdivision and sold lots. In June 2005, NDC sold a lot located in the subdivision to the Kokenges. On November 10, 2005, NDC sold lots to Clampitt-Hersh. On November 14, 2005, NDC sold more lots to the Kokenges.
On November 10, 2005, NDC filed an assignment of developer's rights with the Shawnee Country Register of Deeds office. In the document, NDC assigned "all of its interest as Declarant and all of its interest as a Class B membership owner in the Urban Hills Subdivisions" to the Kokenges and Clampitt-Hersh. Clampitt-Hersh then filed a document revoking the Declaration as to the lands owned by it with the Shawnee County Register of Deeds office. The Kokenges filed a similar document revoking the Declaration as to the lands owned by them.
On November 18, 2005, Clampitt-Hersh sent a letter to the subdivision's lot owners informing them that NDC had sold its "remaining land interest to the consortium of A Construction & Consulting, LLC and Clampitt-Hersh Development, LLC." The letter stated that as of December 1, 2005, it would manage the homeowners association. On November 28, 2005, Randy Kokenge filed a building permit application, requesting a permit to build a four-plex in the subdivision. The Shawnee County Planning Department issued a ...