Real Estate – Subdivision Declarations – Fence Approval

The board of a homeowners’ association that has the power, under the community’s recorded declaration, to grant variances from the community’s design guidelines, acted in accordance with that power when it approved a variance to allow a homeowner to construct a fence that purportedly extends beyond the rear plane of a house, and the circuit court sustains the association’s demurrer to a challenge to that decision by an unhappy neighbor, except for the neighbor’s claim of ultra vires acts.
Defendant association correctly observes that plaintiffs may not assert a cause against it pursuant to Va. Code Sect. 55-515, in that, insofar as the instant complaint, it is not a lot owner or one entitled to occupy a lot. However, that does not end the inquiry of standing relative to the complaint. Plaintiffs challenge the erection of the fence based upon the rights afforded them under the declaration. It is readily conceded that the declaration is a contract. Accordingly, to the extent plaintiffs would otherwise be entitled to relief, they have standing.
Plaintiffs contend they are aggrieved by the actions of the board of the association and of the individual defendants, and are entitled to declaratory and injunctive relief and payment of costs. The complaint is predicated on five theories of recovery: the unlawful approval of the fence by the association in violation of the recorded declaration; inequitable enforcement by the board in the application of the design guidelines in violation of the “fairness” provision of the declaration; a failure to give prior notice of the board action in accordance with the contractual due process provision of the declaration; various ultra vires actions of the board in approving the fence in contravention of the powers granted by the declaration; and a breach of contract based upon the alleged lack of conformity of the approved fence with the goals relating to the aesthetic and qualifies of the community set forth in the declaration.
This controversy does not involve the use of common ground or the assertion that plaintiffs have a protected property right in the individual defendants’ lot in the Loudoun Valley Estate Community. Instead, plaintiffs seek review of the decision of the board that, it is suggested, has been made in violation of the express terms of the declaration. Insofar as the individual defendants are concerned, the harm allegedly suffered by plaintiffs is one shared by others in the community. Should plaintiffs fail in their pursuit of the action against the board, the pendent action against the individual lot owners must fail. In sum, the instant alleged transgressions involve the nature of a decision made within the context of authority expressly delegated to the board by the contract documents.
In the instant case, the guidelines provide that no fences extending forward of the rear plane of the house are permitted in Loudoun Valley Estates. Through approval of a variance, the Khans were granted a variance to erect their fence forward of the rear plane of the house. However, the parties do not agree that the variance was granted in accordance with the express terms of the declaration. Specifically, that the variance was granted upon “a specific finding stating the variance or exception in a written instrument which shall be part of the records of the Association.” The board, in ensuring compliance with this command, would establish precedent for future applicants asserting “equitable treatment” in the review of their proposals.
The court, provided the board has acted in accordance with the power granted to it to vary the application of the design guidelines, does not believe the instant case sufficient to withstand demurrer. In accordance with the “business judgment rule,” directors’ decisions must be a “business judgment” as opposed to one requiring the board to construe a statute or corporate bylaw.
In the instant case, the power granted the board by the declaration to grant variances arises from the provisions of the guidelines. The exercise of that power is expressly limited to equitable procedures and findings that are made a part of the written records of the association. The court’s review of the underlying merits of the complaint is limited in scope and confined to cases of bad faith, fraud, breach of trust, gross mismanagement, or ultra vires acts. The instant pleadings do not sufficiently plead facts to justify findings under any such theories of recovery. To the extent the pleadings suggest ultra vires actions through the use of procedural defaults, they are sufficient to withstand demurrer.
The fact that the board by variance permitted the individual defendants a deviation from the design guidelines not consistently followed throughout the community does not, itself justify further judicial scrutiny. While fairness, equitable treatment and consistency of application may be reason supporting a need for written findings in this case, they are not claims that plaintiffs have standing to independently pursue in this case involving approval by the board of a third party’s request for a variance.
Bennett v. Loudoun Valley Home Owners Ass’n (Horne, J.) No. CL00042301, July 30, 2007; Loudoun County Cir. Ct. VLW 007-8-184, 7 pp.