## Facts

- Cooley’s Rift was a large residential development in Franklin County, Tennessee, marketed as low-density with significant wilderness/conservation land.
- The original developer recorded a declaration of covenants and formed a homeowners’ association (HOA).
- The declaration authorized amendments by a 75% vote of the HOA membership.
- Promotional materials highlighted preservation goals and limited homesites but also stated plans were preliminary and subject to change without notice.
- After lots were sold, the development stalled following the original developer president’s death.
- New Life Development Corporation acquired unsold lots and additional property to continue development.
- New Life proposed a substantially different plan that reduced open space, added a golf course, and increased density by adding more than 500 homes.
- To implement the new plan, the HOA amended its charter/bylaws and the declaration/restrictive covenants.
- Existing homeowners who bought relying on the original conservation-oriented scheme sued to challenge the amendments and enforce asserted limits arising from the original plan and plat.

## Issues

1. Whether amendments to an HOA’s governing documents and restrictive covenants, adopted under a recorded 75% amendment provision, are enforceable against existing owners.
2. Whether Tennessee courts must subject such amendments to substantive judicial review for reasonableness, and what that standard requires.
3. Whether a general plan of development or implied restrictive covenants arising from the plat and surrounding circumstances limits the scope of permissible amendments.

## Decision

- The Tennessee Supreme Court held that amendments adopted pursuant to an authorized amendment clause are not automatically invalid, but they are limited by a substantive reasonableness requirement.
- The Court rejected both extremes: (a) a purely procedural rule validating any properly adopted amendment regardless of effect, and (b) a rule effectively requiring unanimous consent for substantial changes.
- The Court adopted a reasonableness framework consistent with Restatement (Third) of Property: Servitudes § 6.10.
- The Court remanded for application of the reasonableness analysis to the specific amendments and for related fact-finding, including whether implied restrictions exist and how they bear on purchaser expectations and the amendments’ validity.

## Legal Principles

- A recorded amendment provision in restrictive covenants and HOA instruments is generally enforceable, but it does not authorize unlimited rewriting of the development’s basic character.
- Amendments to common-interest community servitudes must be substantively reasonable in light of the development’s original scheme and the legitimate expectations of existing owners.
- In assessing reasonableness, courts may consider whether an amendment materially changes the community’s character or materially increases burdens on existing owners in an arbitrary, oppressive, or unreasonable manner from the standpoint of an ordinary purchaser.
- Implied restrictive covenants arising from a general plan of development are disfavored and must be clearly supported by evidence, but proof of a general scheme may inform the reasonableness inquiry by defining reasonable purchaser expectations.
- Compliance with amendment procedures (e.g., voting thresholds) is necessary but not sufficient if the amendment’s substantive impact on existing owners is unreasonable.

## Conclusion

The Tennessee Supreme Court held that HOA covenant amendments passed under an authorized supermajority clause remain subject to a substantive reasonableness limit tied to the community’s original scheme and owners’ reasonable expectations, and it remanded for application of that standard to amendments that would substantially increase density and reduce promised open space.


Hughes v. New Life Dev. Corp., 387 S.W.3d 453 (Tenn. 2012)