## Facts

- A developer recorded a 1972 declaration of covenants for a large residential subdivision, providing that the covenants would run with the land.
- The declaration included (1) an owner-driven amendment process requiring approval by two-thirds of owners, advance recording three years before effectiveness, and 90-day written notice to all owners, and (2) a developer “supplemental declaration” power limited to clarifications that could not change substantive provisions or materially alter owners’ rights.
- In 1996–1997, the developer recorded a supplemental declaration and related instruments that purported to “clarify” the amendment provisions and added a covenant requiring sellers to pay a transfer fee of up to 1% of the gross sales price to a subdivision marketing entity.
- The homeowners sold their property in 1998, and the association/marketing entity sought to collect the transfer fee in connection with the sale.
- The homeowners sued for declaratory and related relief, arguing the transfer-fee covenant was a substantive change that was not validly adopted under the declaration.
- The trial court granted summary judgment to the association and marketing entity, upholding the transfer-fee covenant.

## Issues

1. Whether the developer’s limited power to issue supplemental declarations “for the purpose of clarifying” provisions permitted adoption of a new transfer-fee covenant.
2. Whether the transfer-fee covenant was validly adopted under the declaration’s owner-driven amendment procedure requiring supermajority consent, notice, and advance recordation.

## Decision

- The Court of Appeals of Georgia reversed the grant of summary judgment for the association and marketing entity.
- The court held the transfer-fee covenant was not properly established under the amendment provisions of the original declaration.
- The court concluded the transfer fee was a substantive change that materially altered owners’ rights and therefore could not be imposed under the developer’s clarification power.

## Legal Principles

- Summary judgment is proper only when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law; appellate review is de novo with evidence construed in favor of the nonmovant.
- A developer’s authority to modify a declaration by supplemental declaration is constrained by the declaration’s text; when limited to “clarifying” changes, it cannot be used to impose substantive new burdens or materially alter owners’ rights.
- Substantive amendments to restrictive covenants must be adopted in strict compliance with the declaration’s specified owner-approval, notice, and timing requirements.
- A covenant added without compliance with the governing amendment procedures is unenforceable.

## Conclusion

The court invalidated the transfer-fee covenant because it imposed a new financial obligation that exceeded the developer’s limited clarification authority and was not shown to have been adopted through the declaration’s required owner-amendment process, requiring reversal of summary judgment for the defendants.


Duffy v. Landings Ass'n, Inc., 245 Ga. App. 104, 536 S.E.2d 758 (Ga. Ct. App. 2000)