At our April annual meeting it was decided to hire an attorney to review our CC&Rs and also how we run the Park View Water Association. Some members felt the Association has not been conducting business in accordance with the original articles and bylaws.
Following are the attorney's initial findings. Please review them. We will need to address these and some other issues that has been brought to the Boards attention.
Park View Water Association, Inc.
12190 W Parkview Drive
Post Falls, Idaho 83854
Re: Covenants, conditions, and restrictions (CC&Rs): multiple sets and solution
Dear Board of Directors of the Park View Water Association,
I have reviewed approximately two dozen documents related to the use of real property in the
Park View Addition. Those documents are listed on the enclosure with this letter.
In short, owners in the Park View Addition have to comply with two sets of restrictions, the
first of which originated with the original subdivision and platting of the various parcels, and
the second set is documents related to the incorporation of the Parkview Water Association.
The first set of documents originated in a"Notice of Restrictions" recorded December 3, 1975
in the Kootenai County Recorder's office as instrument number 688209. That set of restrictions
was amended with a seven-page document recorded May 11, 1977 as instrument number
729875. Unfortunately, the first "Notice of Restrictions" did not provide for the creation of a
corporate entity to enforce those restrictions, which means that each individual owner has to
file a lawsuit against another individual owner if they believe a restriction is being violated. In
my experience, this type of lawsuit rarely occurs, because of the hostility and friction it
generates in the neighborhood. Without enforcement, any given owner's use will devolve
toward whatever they want to do, and the general value of all the parcels will decline.
The second set of documents relate to the Park View Water Association, specifically the
Articles of Incorporation dated April 13,1977, the unrecorded Rules and Regulations of the
Water Association signed June 1, 1977, a Warranty Deed granting the water system to the
Association recorded June 7,1977 as instrument number 732832, and the unrecorded Bylaws
for which I only have pages 1 through 10. Since page 10 ends so abruptly, 1 believe there may
be signature pages or additional provisions present on page 11 or later. Whatever those
provisions may be, 1 did not need them to prepare this letter.
I procured a title report from Pioneer Title Company for the land owned by the Water
Association, which is IM 5 of Block 2 of the Park View Addition plat. I have enclosed a copy
of that title report for your review. Please let me know if you'd like copies of any of the
documents on the enclosed list. Review of those documents confirmed the restrictions
applicable across the subdivision, except those related to the Water Association.
Initial Letter to Park View Water Association, Inc. - 1
After that substantive review, my legal opinion is that the value of the properties in the Park
View Addition is substantially lower due to the confusion created by this double set of
documents, and the enforcement issues raised by both. I'm going to recommend that the
property owners get together and make changes to those documents so that the covenants and
restrictions applicable to real property arc blended with the governance of the water system in
such a way so that both are dramatically simplified, and a particular property owner will know
exactly what they can and can't do. Additionally, with the proper corrective documents, the
Board of Directors will find its job much easier.
This will require a new set of documents for the governance of the subdivision that blends the
Water Association governing documents with the restrictions applicable to the use of land in
the subdivision, and the former documents that are causing all the confusion and enforcement
issues can be disclaimed in the public record so they are of no further force and effect.
I don't think the proper approach is for me to draft a template initially. For the number of
parcels in Park View, I think the better result will be obtained if a meeting of the property
owners is held for the express purpose of considering my findings and my suggesting
alterations to the documents. The input of the property owners is critical to the success of
creating new documents of governance. These meetings are always somewhat exciting, but
unless you listen to each owner's concerns, the rules cannot be hashed out properly to
everyone's satisfaction.
During such a meeting, after review of the current governance issues, I would propose certain
changes be made in order to reach the stated goals of simplicity and clarity for enforcement
purposes, and to increase the marketability of each parcel. This would probably be a two or
three hour meeting, and would best be scheduled on a Saturday morning or Sunday afternoon
so that a majority of owners could attend. I would on your behalf lead a discussion reviewing
the provisions of each governing document individually, so that every concern of a particular
owner is addressed. I have a screen and a projector, and if you don't have a meeting room that
would hold all the owners, we could schedule a room at the Post Falls Library or other
location.
Even if the outcome of the meeting(s) is that no documents are altered, each individual
property owner will understand why their property is worth a lower amount in the market. That
fact, in and of itself, should drive the property owners to want to alter the governing
documents. Simplicity is better! However, there are no guarantees, and some will want to keep
the status quo, even though their properties will be worth less money and make them more
difficult to sell. As long as this is a conscious choice, I don't think the Board can do much
about it. All you can do is make the case, and hope the required numbers ofowners agree.
The Board and I should meet to talk about such a meeting at your convenience.
The original Notice of Restrictions, instrument number 688209, allows "a majority of the
property owners [to] agree to change said covenants, in whole, or in part." Notice, p. 2. The
Amended Declaration of Protective and Restrictive Covenants, instrument number 729875,
allows "a majority of the then owners of the lots . .. agreeing to change said covenants in
Initial Letter to Park View Water Association, Inc. — 2
whole or in part." Am. Peel. CC&Rs, sec. C-l. So, under the rules originating with the original
plat of the Park View Addition, only a majority is needed. According to the plat, there are 34
parcels in the Park View Addition, including the lot owned by the Water Association.
Therefore, 18 owners are needed to alter these rules.
The Articles of Incorporation for the Water Association allow alteration of the Articles by
"affirmative vote of two thirds ofall eligible votes." Art. Of Incorp.. Art. X. Also, the Bylaws
can be altered, "by the affirmative vote of two thirds of the members present at such meeting,"
if a quorum exists, "which shall be a majority of the eligible votes, [and] shall be present
through members and proxy." Art. Of Incorp.. Art. XI. Membership in the Water Association
is limited to "each owner of an improved property in any residential subdivision which shall be
served by the water system or systems of the Corporation." Art. Of Incorp.. Art. VI.
Since the Association is not served with water, it is not a member of the Corporation, thus, two
thirds ofthe eligible votes to alter the Articles would be 22 of 33 total parcels, but the Bylaws
(once a quorum of 17 votes is reached] can be altered by "two thirds of the members present at
such meeting."
Since the Rules and Regulations of Park View Water Association, Inc. do not state how they
can be changed, they could be changed pursuant to the last line of them, which is by adoption
of the Board of changed rules. R&R, pp. 2-3.
Therefore, when considering how to change all the governing documents, the governing
documents for the Water Association have the highest number of eligible votes required to
alter them. This means that if you blend the rules together the Water Association rules will
apply to alter them, although it is important to understand that the new rules could initiate a
lower standard for future alterations or amendments. This is one subject at the meeting.
Please let me know how you would like to proceed. I envision that a new set of governing
documents, including my time spent at various meeting(s) could cost the Association between
$5000 and $8000. However, I think any realtor would support me in my supposition that each
individual parcel could be worth at least that amount less if you maintain the status quo.
Please let me know how you would like to proceed.
Sincerely,
Arthur B. Macomber
Attorney at Law
Enc. List of documents reviewed
Initial Letter to Park View Water Association, Inc.
