In a decision announced last week, the Kentucky Supreme Court affirmed the validity of assignments of developer rights in subdivisions. The case, Your Community Bank, Inc. v. Woodlawn Springs Homeowners Association, Inc., concerned whether our client, Your Community Bank, could enjoy the rights of the developer under the subdivision’s declaration of covenants, conditions and restrictions. Your Community Bank stepped into the developer’s shoes when it accepted an assignment of developer’s rights from the developer’s estate and a deed to several lots in lieu of foreclosing on the subdivision. The original developer exempted itself from paying annual lot dues to the homeowners association until a home was built on a given lot. When the homeowners association asserted a lien for unpaid lot dues on vacant lots, Your Community Bank asserted that it had ALL the rights and responsibilities of the original developer, including the exemption.
The Nelson Circuit Court agreed but the Court of Appeals reversed. Your Community Bank appealed, and the Kentucky Bankers Association found the case compelling enough to file a friend of the court brief. The Kentucky Supreme Court found that the assignment of developer’s rights was valid and that Your Community Bank did not need to pay lot dues until a home was built on a given lot.
Although the case contains little sweeping language, the holding is important for banks and developers alike. If the Court of Appeals opinion had been left in place, banks and successor developers would have had no idea what development rights could or couldn’t be assigned, stalling redevelopment of unfinished projects throughout Kentucky. With this opinion, the Kentucky Supreme Court reasserted that a deal is a deal.
– Cliff Ashburner, Louisville