ATLANTA—Drafting covenants, conditions and restrictions (“CC&Rs”) for mixed-use developments can be complex and the documents typically evolve as developments progress. How you do navigate amendments and non-compliance?
GlobeSt.com caught up with Jeremy D. Cohen, a partner at Hartman Simons & Wood LLP, to get some insight in part three of this exclusive interview. You can still the first three parts: Developers Face Unique Challenges When Multifamily and Retail Collide; What Mixed-Use Developers Need to Know About CC&Rs Now; and The Biggest Mistake Developers Make When Drafting CC&Rs.
GlobeSt.com: What should you do to enable or prevent future amendments to CC&Rs?
Cohen: You certainly do not want to prevent future amendments. CC&Rs get amended all the time as you need the ability to amend the CC&Rs in the future to address developmental issues which may have arisen over the first couple years of the project's operation and which were not contemplated at the outset.
It's hard to predict exactly what the problems will be until the project is actually open and running. At the outset, CC&Rs are allowed to be amended by the developer and then, to the extent certain portions of the project may have been sold, by the then current owners of the project.
If a master association is formed as part of the CC&Rs, then once management has been turned over by the developer to the association, the CC&Rs can be amended by a vote from the association's board of directors, which is made up of the underlying members. Attorneys do the best they can with the information they are given at the outset knowing amendments will occur in the future. Also, it is also useful to allow CC&Rs to be amended for specific portions of the project without affecting the project on the whole.
GlobeSt.com: What is the best way to handle non-compliance of CC&Rs?
Cohen: Typically, under a CC&R, any owner can send notice to another owner telling them they are not in compliance. Then, they have a certain number of days to comply with the notice and remedy the problem.
If they do not effectuate a cure within such time period, then the CC&Rs usually allow for the owner to cure the problem at the expense of the non-compliant owner. If the non-compliant owner does not reimburse the performing owner such costs, the CC&R typically allows for the performing owner to file a lien against the non-compliant owner's parcel, which will require the non-compliant owner to pay such lien prior to being able to sell or transfer ownership of its parcel.
ATLANTA—Drafting covenants, conditions and restrictions (“CC&Rs”) for mixed-use developments can be complex and the documents typically evolve as developments progress. How you do navigate amendments and non-compliance?
GlobeSt.com caught up with Jeremy D. Cohen, a partner at
GlobeSt.com: What should you do to enable or prevent future amendments to CC&Rs?
Cohen: You certainly do not want to prevent future amendments. CC&Rs get amended all the time as you need the ability to amend the CC&Rs in the future to address developmental issues which may have arisen over the first couple years of the project's operation and which were not contemplated at the outset.
It's hard to predict exactly what the problems will be until the project is actually open and running. At the outset, CC&Rs are allowed to be amended by the developer and then, to the extent certain portions of the project may have been sold, by the then current owners of the project.
If a master association is formed as part of the CC&Rs, then once management has been turned over by the developer to the association, the CC&Rs can be amended by a vote from the association's board of directors, which is made up of the underlying members. Attorneys do the best they can with the information they are given at the outset knowing amendments will occur in the future. Also, it is also useful to allow CC&Rs to be amended for specific portions of the project without affecting the project on the whole.
GlobeSt.com: What is the best way to handle non-compliance of CC&Rs?
Cohen: Typically, under a CC&R, any owner can send notice to another owner telling them they are not in compliance. Then, they have a certain number of days to comply with the notice and remedy the problem.
If they do not effectuate a cure within such time period, then the CC&Rs usually allow for the owner to cure the problem at the expense of the non-compliant owner. If the non-compliant owner does not reimburse the performing owner such costs, the CC&R typically allows for the performing owner to file a lien against the non-compliant owner's parcel, which will require the non-compliant owner to pay such lien prior to being able to sell or transfer ownership of its parcel.
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