## Facts

- A developer created a subdivision and, in 1979, recorded a declaration establishing a homeowners association with power to impose and collect assessments.
- The original corporate association was involuntarily dissolved in 1986 for failure to maintain corporate filings.
- A lot owner later formed a new corporation using the same name and articles; for years, owners treated it as the governing association by paying assessments, electing boards, and operating under the declaration.
- The association levied an assessment in 1989; some owners did not pay.
- In 1994, Jeff Warne bought several lots at a tax sale; the tax sale extinguished existing liens on those lots, including any lien securing unpaid 1989 assessments.
- In 1996, the association imposed a $5,900 “special assessment” aimed at covering the 1989 shortfall; it was levied only against certain lots and credited owners who had previously paid the 1989 assessment.
- Warne refused to pay; the association sued and later sought recovery against Alicia Warne (a minor) after Jeff conveyed the lots to her.

## Issues

1. Whether the post-dissolution homeowners association had authority, under the declaration and owner ratification, to levy assessments.
2. Whether a tax sale extinguishing an assessment lien also eliminates the association’s general power to levy later assessments for common expenses.
3. Whether the 1996 assessment was authorized by the declaration or was an impermissible, nonuniform attempt to reimpose an extinguished 1989 obligation on selected owners.

## Decision

- The Utah Supreme Court vacated the district court’s summary judgment for the association and entered judgment for Alicia Warne.
- The court held the re-incorporated association was a valid association authorized to assess because owners had ratified its authority over time.
- The court held the tax sale extinguished the lien securing the 1989 assessment but did not extinguish the association’s general authority to levy future assessments.
- The court held the 1996 assessment was unauthorized and unenforceable because it operated as a selective revival of the extinguished 1989 assessment and departed from the declaration’s assessment scheme.

## Legal Principles

- Long-term owner conduct recognizing and operating under an association can ratify the association’s authority despite corporate discontinuity from dissolution and re-incorporation.
- A tax sale may extinguish existing assessment liens on the property sold, but it does not, by itself, terminate an association’s continuing power to levy future assessments permitted by governing covenants.
- Assessment authority is limited to what the declaration permits; courts will not infer power to impose selective, nonuniform charges or to reimpose obligations extinguished by tax sale absent clear authorization.
- When a declaration contemplates uniform or proportionate sharing of common expenses, a shortfall from unpaid prior assessments must be addressed, if at all, through a properly structured assessment imposed in conformity with that scheme, not by targeting only certain owners or crediting others to recreate an earlier charge.

## Conclusion

The court upheld the association’s general authority to assess and recognized that a tax sale eliminates prior assessment liens, but it invalidated the association’s 1996 levy because the declaration did not authorize a selective, credit-based assessment functioning as a revival of extinguished 1989 obligations; judgment was entered for the lot owner.


Swan Creek Village Homeowners Ass’n v. Warne, 134 P.3d 1122 (Utah 2006)