Can homeowners associations collect assessments despite defective founding documents? Hi-Country Estates v. Frank Explained

The Utah Supreme Court’s decision in Hi-Country Estates v. Frank addresses a critical question facing many homeowners associations: whether technical defects in founding documents can invalidate an association’s authority to collect assessments after decades of operation.

Background and Facts

The Hi-Country Estates Homeowners Association was established in 1973 when Charles Lewton signed protective covenants and incorporation documents covering approximately 2,000 acres. However, Frank alleged that Lewton owned less than 1% of the property he included within the HOA boundaries, including the lots Frank’s trusts purchased in 2009. While previous owners had paid assessments since 1979, Frank refused to pay, arguing the HOA lacked authority due to these founding defects.

Key Legal Issues

The case presented two primary questions: (1) whether governing documents created without proper ownership are absolutely void or merely voidable, and (2) whether homeowners association authority can be ratified through collective member conduct over time, even without written ratification.

Court’s Analysis and Holding

The court first clarified that the governing documents were voidable, not absolutely void, citing its earlier decision in WDIS II involving the same HOA. Voidable documents can be ratified, unlike absolutely void ones. The court then extended the rationale from Swan Creek Village Homeowners Ass’n v. Warne to find that decades of member conduct—including paying assessments, participating in meetings, and accepting HOA services—constituted ratification of the HOA’s authority. The court rejected Frank’s argument that ratification required a signed writing under the Statute of Frauds, distinguishing the agency context in Bradshaw v. McBride.

Practice Implications

This decision provides important guidance for HOA validity challenges. Courts will apply principles similar to adverse possession and boundary by acquiescence when evaluating long-standing associations. Property owners who wish to challenge HOA authority based on founding defects should act promptly, as extended periods of acquiescence and benefit acceptance will likely constitute ratification. The decision also clarifies that collective conduct can establish ratification without formal written agreements in the HOA context.