Q&A: Community Not as Advertised

Q I purchased a home that was incorporated per the public offering statement as an age-55-restricted and gated adult community. It currently is neither an age-restricted community (as stipulated in the federal law), nor a gated community, as advertised in the public offering statement. This issue has already been brought to the attention of our board to no avail. What can I do?

—Disappointed Resident

A “While the Public Offering Statement (‘POS’) is a critical document, the master deed (or declaration of restrictive covenants) generally governs the association,” says Marlton-based attorney David R. Dahan, a shareholder with the firm of Parker McCay. “Therefore, the first order of business is to review the master deed/declaration to confirm that the age restriction is indeed in effect. I would be surprised if it is not because it would be unusual for a community to be marketed as an age-restricted development and later modified to eliminate that restriction. Assuming that the age restriction is in effect, but keeping in mind the limited facts I have been given, I cannot understand why your board would not enforce it.

“Age-restricted communities are extremely common and such a restriction is generally enforceable. The age restriction is typically the most important reason owners elect to reside in such communities because such owners prefer to live in a community with their peers and not with children or younger adults. The fact that the age restriction was marketed in the POS to attract buyers is proof of this paramount desire by selected owners. An association has a duty to take steps to make sure that the age restriction is complied with by regularly verifying that the owners and residents satisfy the age criteria. The board should be pressed for its reasoning as to why it has chosen not to enforce this restriction. Initially, you should request alternative dispute resolution with the association. The association is required by statute to offer this informal proceeding to you as a means to try to resolve this issue. At a minimum, this will flush out the board’s rea soning for not enforcing the restriction. If this proceeding does not result in an acceptable resolution to you, you have the right to commence legal action to compel the association to enforce the age restriction (as the alternative dispute resolution proceeding is not binding). Another related concern for the association is the Fair Housing Act (FHA), which prohibits housing discrimination based on familial status. However, an exception exists for age-restricted communities if certain requirements under the Fair Housing Act are satisfied. If the association is only selectively enforcing the age restriction, an argument could be made that such conduct constitutes discrimination under the Fair Housing Act.

“With respect to the reference of a gated community in the POS, it is once again necessary to review the master deed/declaration as well as other governing documents (including any adopted rules and regulations) to confirm if there was any promise of a gated community. It is quite common for an association to subsequently modify amenities that are initially offered for a variety of reasons. Remember, the POS is prepared before construction commences. Thereafter, circumstances may change that cause an association to eliminate certain amenities. Consequently, it is possible that such an amenity may be eliminated by a board or owners upon obtaining a requisite number of votes. Therefore, it is critical that you review any amendments to the governing documents to confirm whether a gated community was finally to be established. If there was a promise of a gated community and the association has not taken any valid action to eliminate it, then the board should deliver on that promise. Again, you should request alternative dispute resolution. If this does not lead to a resolution, then you have the right to commence legal action to enforce that promise.”

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