When Your Condominium Was Established Matters   2 comments

A common mistake that owners (and sometimes even attorneys) make is to apply the terms of a statute without considering that the statute might not apply due to the age of the covenant or condominium declaration involved. A stark example of this is the recent Denhardt v. 7 Bay Traders LLC, 673 S.E.2d 621 (2009) case.

The Declaration of Condominium for Campbellton Court Condominiums was filed in January of 1972. This predates the Georgia Condominium Act by several years, as the Act was adopted on October 1, 1975. The Georgia Condominium Act was enacted to replace an older act known as the Apartment Ownership Act from 1963. However, the Apartment Ownership Act was never repealed and still applies to condominiums that were created under its terms.

Edward Brown bought a unit in the Campbellton Court Condominiums and gave a deed to secure debt to Advanced Mortgage Corporation. Brown then granted a deed to secure debt to Parkway Mortgage in 1989. In June 2005 the Parkway Mortgage deed to secure debt was transferred to 7 Bay Traders LLC. The original deed to secure debt in favor of Advanced Mortgage Corporation was satisfied and cancelled in December of 2006. In December 2006, the association assigned its interest in unpaid condominium assessments and liens on Brown’s unit to Eddie Denhardt. Then, in 2007, 7 Bay Traders LLC foreclosed on Brown’s unit. Denhardt sent a notice of judicial foreclosure pursuant to the Georgia Condominium Act and filed a petition to enforce his lien.

7 Bay Traders LLC filed a motion for summary judgment, arguing that Campbellton Court was created in 1972, prior to adoption of the Georgia Condominium Act. The trial court granted summary judgment to 7 Bay Traders LLC, finding Denhardt failed to show the declaration had been amended to submit Campbellton Court Condominium to the Act, and noted he should have enforced his lien under the Apartment Ownership Act.

Denhardt appealed, arguing that the Georgia Condominium Act should apply and that public policy arguments support that application. However, the appeals court disagreed and upheld the trial court’s finding that Denhardt failed to show that the Act applied to his case. The appeals court noted that the Georgia Condominium Act expressly states, “Nothing contained in this article shall be construed to affect the validity of any provision of any instrument recorded prior to Oct. l, 1975.”

Early on, Denhardt made the mistake of relying on the wrong law. At the end of the day Denhardt lost his interest in the unpaid assessments and liens on Brown’s unit, as well as had to pay for attorneys’ fees.

Unfortunately, this is not the only trap for the unwary with respect to the application of statutes that apply to the interests of associations in Georgia, as the Georgia Property Owners Association Act and O.C.G.A. Section 44-5-60 (which limits the time for a covenant to be effective) have twists and turns of their own. It is important to contact an attorney early on when dealing with these statutes to ensure that you do not make one of these expensive missteps.

By Amy H. Bray, a partner in our Commercial Real Estate Department

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2 responses to “When Your Condominium Was Established Matters

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  1. My bylaws were enacted in 1974 and ammended twice before 1980.

    would ga code have changed anything for my bylaws?

    My bylaws state that a 2/3 majority is required to ammend the by laws.

    Also, if the owners do no participate, their no participation does not give consent.

    Mike Hord

    • The answer to your questions still depends on other facts involved. In these cases, just like anything else having to do with the law, minor facts can have big effects on the answers. Typically, before I would advise any client, I would want to see a copy of the documents at issue and talk with them to find out more about the situation.

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