HOA Restriction Requiring a Golf Course

by Edward
(Ann Arbor, Mi)

Visitor's Question: I live in Michigan in a community covered by an HOA and a restriction agreement. The property was developed in 1956 to include 400 home sites and a private, separate golf course. In other words, the golf course operation is not owned by or managed by the HOA. The land of the golf course is part of the subdivision and covered by the restriction agreement.

The restriction agreement says that the land used by the golf course can only be used as a golf course. In recent years, golf courses around the country have closed in record number. The number of people who golf have decreased dramatically. In our own community, the residences who choose to pay to belong to our private golf course has dropped to less than 19%. In the last 5 years, our golf course has gone into bankruptcy, was brought back to life by a private investor 3 years ago, and has failed again last year. The current owner claims to have lost $400,000 a year in each of the last 3 years. He has opened his books to residents and this appears to all be true.

He has presented a plan to the HOA asking to be allowed to use the existing golf course property to build 80 homesites on 20% of the land and to turn the rest of the land into walking paths, nature areas and similar.

In the last 6 months, the golf course operator has informed the HOA that he cannot financially open the course this spring. Without agreeing to this plan, he will be forced to let the land just sit as is.

Would a court force a restriction agreement to remain in effect if the owner can demonstrate that the changing nature of society is causing him a financial hardship? He has tried to sell the land to other golf course operations and has failed. Might a court allow him to sell the land to a developer who would agree to use the land for a limitated number of similar home sites and recreational/ park land.

Thank you.

Editors Reply: This is a tricky situation. We have to point out to developers and property owners that they should be extremely careful not to assume that current fashions and trends in recreation, homes, and economics are not guaranteed to last forever.

The golf course idea probably looked like a sure bet at one time, but now many more than 400 homes would be required to have a sufficient market in most locations. A better restriction would have talked vaguely about recreational uses for the benefit of the residents, or about open space values.

Of course the answer to the direct question about whether a judge would allow a change on land uses depends on applicable state law and case law, as well as the reasoning of a particular judge.

But we would say that if we owned the golf course, it would be worth a shot. As you point out, not only the golf course owner, but also the whole subdivision, has a stake in the outcome here. Quickly an abandoned golf course can become an unkempt mess in many climates, helped along by the amount of fertilizer that many golf courses have used.

It would be best if the golf course owner and the HOA could combine forces to seek an injunction allowing the deed restriction to be vacated, if that is allowed under your state law. A show of support from the HOA and from individual property owners probably would help tilt the judge's decision.

In fact you should research what is required to change a deed restriction in your jurisdiction. If many of the original home owners are still in place, it might not be impossibly difficult to simply lift the restriction. But many states require close to 100% agreement from the original owner of the property or his or her heirs.

This site does not give legal advice as such, so you do need an a Michigan-licensed attorney. Probably you have one or two of those among your home owners, so try for some pro bono legal advice. Be prepared for the fact that an attorney may feel that he or she can represent only the HOA or only the golf course operator and not both.

In the process of resolving this matter--and we are optimistic that you can--don't contribute toward history repeating itself. While the golf course owner's plan of 80 homes and then walking trails and green space sounds very sensible right now, think about what would happen if walking trails cannot be maintained in the future, or become unpopular and therefore a problem.

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