Supreme Court Addresses Formation of Common Interest Communities Under CCIOA

In this case, the developer drafted and recorded a declaration of covenants, conditions and restrictions, established a board of directors and ultimately constructed 186 homes. At the time the declaration was recorded, Pulte did not own the property but later exercised an option to purchase it. The declaration contained two exhibits: one describing property encumbered by the declaration which listed no property at all; and another exhibit that described the annexable property which may become subjected to the declaration once certain annexation procedures as described in another section of the declaration were completed. Pulte never completed the declaration's annexation procedures before conveying the lots to each individual purchaser which included recordation of a plat of the property to be annexed and either recordation of a deed to persons other than the declarant or recordation of an Annexation of Additional Land. The Supreme Court held that recordation of the declaration and plat alone were not sufficient to create the common interest community because no land was annexed to the declaration until the lots were conveyed to persons other than the developer. The Court agreed that CCIOA sets forth certain requirements for the creation of common interest communities including recordation of certain documents, which may be called "declaration" and plats or maps, that must contain certain terms encumbering identifiable property. Here, no common interest community was created until the first lot was deeded to a purchaser. Additional property was annexed only upon the sales of subsequent lots. Therefore, the developer was not liable to pay assessments for all property that it owned prior to the time of sale of each lot.

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