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Wednesday, 08 April 2009 16:07

Multi-family unit OK’d by judge, but court rules against proposed expansion

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The neighborhood covenants of a Maggie Valley homeowners association were put to the test in court recently.

A developer sued the Sherwood Forest homeowners association after they tried to block his foray into rental condos. David G. Baker, formerly of Charlotte, wanted to develop a six-unit condo and extend town water and sewer to the property. The only problem — the covenants of Sherwood Forest forbade multi-family units. The covenants define Sherwood Forest as a neighborhood of single-family houses.

Baker attests that he wasn’t aware of the covenants when he purchased an existing home in the subdivision in 2006, and that no one, including his Realtor, informed him of their existence.

“He felt the information he received when he purchased it was that he was entitled to (build the condo),” said Baker’s attorney, Bryant D. Webster of Black Mountain.

Apparently, the conflict between Baker and the homeowners association started when residents of the subdivision witnessed construction work on the property and notified the homeowners association that it appeared to be in violation of the neighborhood covenants, according to the lawsuit.

The existing home on the lot already had the makings of a multi-family unit, Baker argued. The three-floor house had a separate kitchen and bath on each floor, as well as a coin laundry in the basement.

But this is where the situation gets murky. Both sides agreed that the property was used to house members of the same extended family up until it was sold in 2003, which would explain the separate kitchens. However, Baker contended that in 2005, the property was entered into a multi-leasing situation, with three separate, unrelated individuals renting out each floor.

The homeowners association didn’t agree. It claimed the leases that Baker presented as evidence were insufficient proof that the unit was ever rented out by floor, according to the lawsuit. And members of the homeowners association filled out sworn affidavits attesting that they only became aware of the multi-family use of the property after Baker bought it in 2006. They said there was nothing in the external appearance of the building to indicate it was used as a multi-family unit, and that there were never more than one or two cars there at any given time.

Baker ended up suing the homeowners association to construct his six-unit condo. His main defense was that the homeowners association failed to complain about the multi-family nature of the structure within the required six-year statute of limitations, which he claims started ticking when the unit was first built.

“We felt it was a very strong argument that ... they had not exercised those rights within the applicable time period,” Webster said.

In a judgment handed down March 23 in Haywood County Superior Court, neither party was a clear winner, or a clear loser. The court found that Baker’s structure had been used for multi-family purposes in the past, and could continue to be used as such. However, the court restricted Baker to the three units — one on each floor — and didn’t grant him permission to build three more like he had planned. It also didn’t grant Baker rights to town water and sewer.

“What the court did was in essence split the baby and found that ... it would not be fair to prevent Baker from using it as a three-family unit, but that it would not be permitted to be anything more than that,” said Homeowners Association Attorney Bill Cannon of Waynesville. “The covenants of the subdivision remain intact.”

Cannon said he believes most of his clients — in total, the owners of 38 separate homes named in the lawsuit — were satisfied with the outcome.

Bryant said he felt “both sides got some of what they wanted.” However, he questioned whether the judge should have allowed the six condos Baker wanted since it was already classified as a multi-family structure.

“Our position is multi-family is multi-family, and once that is permitted, whether (Baker) does six units or three is of no real difference,” Bryant said. “Obviously the court didn’t see it exactly that way and we certainly respect the process and the wisdom of the judge who decided, and sometimes getting some of what you want is the best you’ll do.”

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