Utah Court of Appeals
Can developers assign HOA withdrawal rights after selling all their property? Todd Hollow v. Homes at Deer Mountain Explained
Summary
Todd Hollow sought to nullify an HOA lien after attempting to withdraw its apartment complex from the HOA using rights assigned from the original developer. The district court ruled the withdrawal invalid because the developer had no property left to withdraw when it assigned its rights.
Analysis
In Todd Hollow v. Homes at Deer Mountain, the Utah Court of Appeals addressed whether a developer can assign its right to withdraw property from a homeowners association after the developer has sold all its property in the subdivision.
Background and Facts
Todd Hollow owned an apartment complex within the Deer Mountain Resort Subdivision, which was governed by CC&Rs recorded by the original Master Developer. The CC&Rs included a Reduction Option allowing the Master Developer to withdraw property “to the extent that such land and Improvements are owned exclusively by Master Developer.” By 2005, the Master Developer had sold all its remaining property in the subdivision. In 2012, the Master Developer assigned all its rights to Todd Hollow, which then attempted to withdraw the apartments from the HOA. When the HOA recorded a lien for unpaid assessments, Todd Hollow filed a wrongful lien petition under Utah Code section 38-9-7.
Key Legal Issues
The court addressed whether the district court had authority under the Wrongful Lien Act to adjudicate the validity of the withdrawal, and whether the Master Developer’s Reduction Option survived and was assignable after it no longer owned any property in the subdivision.
Court’s Analysis and Holding
The court applied the invited error doctrine, finding that Todd Hollow could not challenge the district court’s authority after inviting the court to rule on the withdrawal’s validity. On the substantive issue, the court applied contract interpretation principles, noting that “an assignor cannot assign rights he or she does not have.” Since the Master Developer owned no property when it made the assignment, it had no Reduction Option to assign. The withdrawal provision was tied to actual ownership—the developer could only withdraw property it “owned exclusively.”
Practice Implications
This decision emphasizes that property-specific rights in HOA governing documents cannot survive the transfer of the underlying property. Practitioners should carefully examine the language of withdrawal provisions and the assignor’s current property interests when drafting or reviewing assignment agreements involving HOA rights.
Case Details
Case Name
Todd Hollow v. Homes at Deer Mountain
Citation
2015 UT App 190
Court
Utah Court of Appeals
Case Number
No. 20130767-CA
Date Decided
August 6, 2015
Outcome
Affirmed
Holding
A developer’s right to withdraw property from a homeowners association expires when the developer no longer owns property subject to the withdrawal provision, and such expired right cannot be assigned.
Standard of Review
Correctness for interpretation of contracts and restrictive covenants
Practice Tip
When drafting or analyzing assignment agreements involving HOA withdrawal rights, carefully examine whether the assignor still owns property subject to the withdrawal provision at the time of assignment.
Need Appellate Counsel?
Lotus Appellate Law handles appeals before the Utah Court of Appeals, Utah Supreme Court, California Court of Appeal, and the United States Court of Appeals for the Tenth Circuit.
Related Court Opinions
About these Decision Summaries
Lotus Appellate Law publishes these summaries to keep practitioners informed — not as legal advice. Each case turns on its own facts. If a decision here is relevant to your matter, we’re happy to discuss it.