## Facts

- Fairways Development General Partnership (the developer) began developing the Fairways planned unit development (PUD) in the early 1980s.
- The PUD was planned to include about 90 villas, but only five villas were built; the last was completed in 1982.
- The recorded declaration granted the developer superior voting rights in the homeowners’ association (Association) until the PUD reached “virtual completion.”
- The declaration created a mandatory Association and assigned it responsibility for maintaining common areas, funded through assessments charged to each villa.
- The declaration required 90% of villa owners to amend the declaration and 100% of villa owners to dissolve the PUD.
- The developer owned one villa and also held undeveloped parcels that were not subject to the villa-based assessments.
- In 1982, the developer executed a deed purporting to convey common areas to the Association, which had not yet been formed; the deed was not recorded until February 1987.
- In February 1987, the Association held its first meeting, and on the same date the developer recorded the deed conveying the common areas to the Association.
- When the common areas were turned over, they were in substandard condition and there was no fund or reserve to pay for needed maintenance and repairs.
- In March 1987, the Association notified the villa owners that the Association would begin maintaining the common areas, but existing assessments were insufficient to cover the costs.
- The villa owners proposed that the developer contribute assessments in proportion to its voting power or that the PUD be dissolved and converted into a subdivision; the developer rejected both proposals.
- The villa owners sued the developer (and related parties), seeking dissolution or other equitable relief and asserting that the developer’s control and actions harmed the owners.
- A master-in-equity refused to dissolve or reform the PUD and denied the owners other requested relief; the villa owners appealed.

## Issues

1. Under the declaration, was the Association (rather than the developer) responsible for maintaining and repairing the common areas, and did the developer have obligations concerning the condition and financing of the common areas when conveyed?
2. Could a court order dissolution or restructuring of the PUD despite the declaration’s requirement of unanimous owner consent to dissolve?
3. Did the developer’s retained superior voting power and control over the Association create a fiduciary duty to the villa owners, and if so, did the developer breach that duty by actions surrounding turnover of substandard common areas and refusal to support higher funding?

## Decision

- The court held that the declaration placed primary responsibility for common-area maintenance on the Association and rejected the owners’ attempt to shift ordinary maintenance responsibility to the developer simply because the PUD was incomplete.
- The court affirmed the refusal to dissolve the PUD, treating dissolution as an extraordinary remedy barred by the declaration’s unanimity requirement absent a sufficient equitable basis.
- The court reversed in part and remanded, holding that the developer’s retention of superior voting control could give rise to fiduciary-type duties in organizing and controlling the Association and in turning over common areas, and that further proceedings were required to determine appropriate relief consistent with those duties.

## Legal Principles

- A recorded PUD declaration generally controls the allocation of maintenance responsibility for common areas, and courts enforce that allocation absent a recognized equitable ground to intervene.
- A developer that retains superior voting power and effective control of a homeowners’ association may owe fiduciary or quasi-fiduciary duties to owners regarding the association’s organization and operation during the period of developer control.
- A controlling developer may not use association governance and voting control primarily to protect its own economic interests at the expense of owners when exercising control over turnover, budgeting, and related decisions affecting common-area obligations.
- Dissolution of a common-interest community is a rare remedy; when wrongdoing is shown, equity may favor narrower corrective relief rather than terminating the community regime.

## Conclusion

The court enforced the declaration’s assignment of common-area maintenance to the Association and upheld the denial of dissolution, but it ruled that the developer’s retained superior voting control could create fiduciary duties concerning the Association’s formation and operation and the turnover of common areas in poor condition without funding; it therefore affirmed in part, reversed in part, and remanded for further proceedings and appropriate equitable relief.


Goddard v. Fairways Development General Partnership, 426 S.E.2d 828 (1992)