Kiekel v. Four Colonies Home Association

The Four Colonies subdivision was created in 1971 as a planned-unit development. The Four Colonies Home Association (the Association) (defendant) governed the subdivision. A Declaration of Covenants, Conditions, and Restrictions (declaration) addressed ownership rights and property-use restrictions, including restrictions on commercial use and noxious activities. The declaration did not expressly prohibit or permit the renting of property, though it included lessees and tenants in its definition of resident. The subdivision’s bylaws included enforcement and procedural provisions. Amendment of the declaration required a supermajority vote of all owners, but amendment of the bylaws required only a majority vote. From the time of the subdivision’s creation, owners rented their properties. The Kiekels (plaintiffs) were non-occupying owners of eight units, which the Kiekels rented out. Other subdivision owners complained about the disruptive conduct of the Kiekels’ tenants and the Kiekels’ failure to maintain their units. In 1997, the Association proposed a bylaws amendment to restrict property rentals. The Association withdrew the proposal after determining that it conflicted with the declaration. In 2004, owners amended the bylaws to prohibit currently rented property from being rented after a change in ownership. The Kiekels filed a petition for declaratory judgment, claiming that the amendment was void, because it conflicted with the declaration. The Association filed a counterclaim, asserting that the Kiekels were violating the declaration’s noxious-activity and commercial-use restrictions. The Association sought an injunction to prevent the Kiekels from renting their units and to require the Kiekels to sell the units to occupying owners. The district court denied the Kiekels’ claim and the Association’s request for an injunction, finding that the bylaws did not conflict with the declaration and that the Association could also restore the Kiekels’ property and add the restoration costs to the Kiekels’ annual assessment.