CASTLE POINT HOMEOWNERS ASSOCIATION, INC.
This Opinion is Uncorrected and subject to revision by the court.
BRANCH, Judge. Andrews, P. J., and Miller, J., concur.
A real estate developer borrowed almost $2 million from a bank to develop a fourteen-lot subdivision and signed a related security deed with the bank encumbering seven of the lots in the subdivision. The developer subsequently created a homeowners association and recorded certain covenants pertaining to the development. After most of the lots were developed, the developer defaulted on the loan, and the bank foreclosed on five of the undeveloped lots. One of the foreclosed lots was eventually sold to Phyllis Simmons, and the homeowners association demanded that Simmons comply with the requirements of the recorded covenants. Simmons refused, the association filed suit, and the trial court granted summary judgment in favor of Simmons on that ground that the covenants were not enforceable against her because they were recorded after the security deed to the bank was recorded and thus not a part of Simmons's chain of title. For the reasons shown below, we reverse.
Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56 (c). We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant. Home Builders Assn. of Savannah v. Chatham County, 276 Ga. 243, 245 (1) (577 S.E.2d 564) (2003).
Construed in favor of the appellant, the record shows that on May 8, 2007, in order to secure a loan in the amount of $1,945,858, Ross Mundy Custom Homes, Inc. (RMCH), executed a deed to secure debt, which was recorded on June 14, 2007, to McIntosh Commercial Bank for property described as Lots 5, 9, 10, 11, 12, 13, and 14, Phase I, in Castle Point Subdivision as per a plat recorded on April 4, 2007. The security deed does not refer to any restrictive covenants, but it does refer to a recorded plat. The referenced plat does not refer to any covenants associated with the property, but it states that " COMMON AREAS & DETENTION PONDS TO BE OWNED AND MAINTAINED BY HOME OWNERS ASSOC."
On August 8, 2007, RMCH recorded a " Declaration of Covenants, Conditions and Restrictions for Castlepoint Homeowner's Association, Inc." (the " Covenants" and the " HOA," respectively), which, by their terms, apply to " all parties having any right, title, or interest in any portion of the Community, their heirs, successors-in-title, and assigns, and shall inure to the benefit of each owner of any portion of the Community." The Covenants provide for " mutually beneficial restrictions under a general plan of improvement for the benefit of the owners of each portion of the Community," and they seek to enforce a " community-wide standard" with regard to " conduct, maintenance, or other activity generally prevailing throughout the Community." According to the developer, that community-wide standard included the installation of sidewalks along both the lots of completed homes and on the common areas of the community, and it required a consistent architectural scheme throughout the subdivision. There is no evidence in the record that McIntosh ever expressly consented to the application of the Covenants to the lots subject to the security deed.
RMCH built homes on nine of the lots and installed sidewalks on each lot parallel to the street. RMCH, however, was unable to complete the development of the subdivision, and on June 3, 2008, McIntosh foreclosed on Lots 9, 10, 11, 13, and 14 as evidenced by a deed under power. The deed under power does not refer to the recorded Covenants, but states that McIntosh acquired the lots " subject to ... any ... restrictions, covenants, and matters of record superior to the Security Deed." (Emphasis supplied.) McIntosh also fell on hard times and was placed into receivership by the Federal Deposit Insurance Corporation, which then conveyed Lot 10 to Charterbank per a receiver's deed dated September 9, 2010. The receiver's deed also does not refer specifically to the Covenants. Charterbank in turn conveyed Lot 10 to Simmons on August 27, 2012. The Charterbank-Simmons deed states that it conveys title subject to " permitted exceptions," one of which is " [a]ll matters appearing of record," but it does not otherwise reference the Covenants. On the same day that Charterbank deeded Lot 10 to Simmons, Simmons paid to the Castlepoint HOA a $250 HOA initiation fee and $250 for HOA dues for the year 2012. And in a construction contract for her new residence, Simmons " acknowledge[d] that there [was] a required association fee" of $250 per year.
During and after construction of Simmons's new home on Lot 10, a dispute arose between the HOA and Simmons about (1) whether Simmons was required to install a sidewalk along the street-side edge of her property, (2) the color of her roof and driveway, and (3) the fact that she installed a buried propane tank. Meanwhile, on July 22, 2013, Simmons obtained a loan from Primary Residential Mortgage, Inc. (PRM), secured by a deed to secure debt to Mortgage Electronic Registrations Systems, Inc. (MERS), as the nominee for Primary. The Simmons-MERS security deed includes a " Planned Unit Development Rider" (the " PUD" ), signed by Simmons on the same day, through which Simmons agreed that the secured property included
a parcel of land improved with a dwelling, together with other such parcels and certain common areas and facilities, as described in THE COVENANTS, CONDITIONS AND RESTRICTIONS FILED OF RECORD THAT AFFECT THE PROPERTY (the 'Declaration'). The Property is a part of a planned unit development known as Castle Point. The Property also includes Borrower's interest in the homeowners association or equivalent entity owning or managing the common areas and facilities of the PUD ... and the uses, benefits and proceeds of Borrower's Interest.
(Emphasis supplied). Further, the PUD, which was incorporated by reference into the security deed, required Simmons to
perform all of Borrower's obligations under the PUD's Constituent Documents. The 'Constituent Documents' are the: (i) Declaration; (ii) Articles of Incorporation, Trust Instrument or any equivalent document which creates the Owners Association; and (iii) any by-laws or other rules or regulations of the Owners' Association. Borrower shall ...