Judge Freeman’s Rulings, 7/3/24

Homestead judge nixes $93-a-month fee

• By Cal Bratt For the Tribune  Jul 3, 2024 Updated 14 hrs ago

Amount reverts to $36 for now; also, some homeowners’ group is required 

BELLINGHAM — The judge in the Lynden-centric Homestead case, at a Whatcom County Superior Court hearing on July 3, voiced the general shape of his decisions regarding the golf residential community that has been embroiled in a lawsuit for more than four years. A two-week trial wrapped up in May.

In a key ruling, Judge David Freeman said he is invalidating the maintenance fee increase to $93 a month that MJ Management LLC put in place for 2020, triggering the legal action by a group of plaintiffs. That means the rate is back to $36 a month.

The judge said MJ did not have legal authority to act as it did.

Freeman said, however, that he finds authority in the Master Declaration, a 1992 document, for the declarant (or owner) to set fees as needed for the general maintenance of the entire Homestead property in north Lynden, including its golf course. Maintenance is not limited to Common Open Spaces, he said.

The original declarant was 1990s Homestead developer James Wynstra. The owner now is 18 Paradise, a company headed by British Columbia entrepreneur Mao Hua “Morris” Chen. Around the 18-hole golf course — which has been closed since Aug. 1, 2023, by the dispute — are more than 600 properties as part of the Homestead Planned Residential Development.

On another key point, Freeman said it is clear in the PRD Ordinance of the City of Lynden, and also in recent state law regarding community associations, that a homeowners association (HOA) is supposed to be formed for a development such as Homestead. 

However, the judge said he cannot force an HOA in this instance, since it comes about only upon the owner’s transfer of Common Open Spaces, about nine acres in all, “and the issue of property ownership is not before me,” he added. 

He said later that this was an issue he “struggled with the most” and it is “an ongoing issue for the declarant.”

Already during the hearing, attorneys and intervenors asked if there would be more court direction on how this could work, and the judge said a homeowners’ representative group might have to be more advisory to the owner than controlling actual property for now.

As of July 3, there was no written statement from Freeman. The hearing was strictly verbal. And a next hearing has been set for 2 p.m. Friday, July 26, for attorneys to make their arguments within the framework of Freeman’s stated rulings so far. Attorneys can submit proposed findings of fact and conclusions of law to Freeman.

People huddled in groups talking after the 35-minute courthouse hearing was over.

Jim Obermayer, a Homestead resident with experience on an HOA board elsewhere, said most people have no idea what’s involved in having a formal homeowners association. He said that one for Homestead would take at least nine people to run properly and would cost at least $65 per month per homeowner property.

Matt Skinner, one of four Homestead property owner intervenors opposed to the lawsuit, asked what will be the accounting done for those who have paid in the $93 per month or for those who have paid in nothing for Homestead maintenance over the last four years. 

Skinner said he favors an advisory committee to the owner that could help with enforcing Homestead community standards while leaving property management to those who know it.

“We can’t tell the owner what to do with his land,” Skinner said.

Steve Zehm, one of the 11 plaintiffs in the case, handed out a sheet summarizing grievances. They include: that homeowners should not have to pay maintenance fees for the golf course, only for the common spaces; that the owner does not provide accountability for the maintenance fees; and that the owner does not allow establishment of an HOA.

Zehm claims Homestead is the only Planned Residential Development in Lynden not turned over to an HOA.

End of Tribune Article

Comments on Steven Zehm’s list: 1. Judge ruled maintenance fees are not just for maintenance or common open space but also includes the golf course (see italicized paragraph above). This was confirmed by testimony from golf course experts in trial but Mr. Zehm is choosing to disregard Judge Freeman’s ruling.

2. Mr. Zehm is aware the owner, 18 Paradise, cannot send an account of our fees or any communication, to homeowners, because we are in an active lawsuit against 18 Paradise. With both sides having lawyers, communication can only be done through lawyers or with them present. If Mr. Zehm truly wanted accountability, he and the other plaintiffs would make a decision to settle, submit it to the judge for approval, and once lawsuit was officially ended, we could then openly communicate with 18 Paradise.

3. Regarding establishing an HOA; the judge confirmed our advisory HOA was established in our CCRs, the mayor confirmed the intent was clear in our CCRs, and most homeowners understand we have an HOA per our CCRs. The only group who refuses to accept this are the 11 plaintiffs who claim if the common open space was conveyed to the “invalid, defunct HOA” (the judge’s words) incorporated by Mr. Andersson, we’d only have to pay $8.33 each month (the plaintiffs’ words). The golf course/golf management experts who testified at our trial quoted $93 as the bare minimum to maintain Homestead.

Summary of Judge Freeman’s Rulings by Party & Declaration:

Judge Freeman quoted our Master Declaration throughout the hearing, as well as Jim Wynstra’s testimony at trial on the purpose and goals for Homestead’s planned residential development as a benefit for homeowners and Lynden.  Judge Freeman explained he not only looked at what WAS said but also what was NOT said in our Declaration to determine intent.

Article 1: The Declaration “shall be liberally construed…”

Article 1.2: The Master Declaration is a “…set of covenants running with the land or equitable servitudes…” which are binding on Declarant and property owners.  

Judge Freeman believes our Declaration provides a definition of common open space.

Article 3.2: As long as Declarant owns COS, parcel owners are granted license to use the COS subject to their payment of fees to manage and maintain COS.

Articles 3.2 & 3.5: The Judge looked at the language of these articles and noted 3.5 outlined the process for Declarant to be paid fees.  

The COS benefits the entire community and Declarant can raise rates on an annual basis.

Article 3.3:  Declarant is responsible for “costs and expenses of maintenance of and improvements to the COS…”  Judge Freeman noted it was clear the Declarant was responsible for maintenance.  

Judge Freeman referred to Lynden’s PRD ordinances, the RCW 64.90 (2018 HOA law), and our Declaration to show an HOA is required for Homestead.  

Intervenor Roger Dowling asked if the HOA could be an “advisory committee.”  The judge replied “advisory” would be the only form the HOA could be, without any COS to manage/maintain.  

Intervenors: 1. Andersson & Davis’ HOA is invalid/defunct so cannot be imposed on homeowners

2. Our HOA remains in advisory capacity only, since there is no COS being conveyed that would require an HOA to manage/maintain.

3. Maintenance fees are not limited to maintenance only, nor for COS only, but for a broader application. 

Plaintiffs: 1. 6th and 7th amendments dismissed based on lack of authority 

2. $36 is the maintenance fee retroactive to Jan. 2020

3. Plaintiffs counsel stated they will file an appeal for dismissal of CPA.  

MJ:  Attorney Jeffrey Possinger (for MJ) asked judge if $93 can be recovered from Jan. 2020 but judge said the fee is set at $36. 

18 Paradise: 1. It was over-reach for MJ to raise the fees to $93 as an agent without permission from the owner, 18 Paradise.

2. Article 3.5 in CCRs states declarant can be paid fees and the process for this is outlined

3. Declarant can raise rates on an annual basis per CCR 3.5e

Regarding Article IV in our CCRs, the judge would not be addressing ownership of COS.

The parties were to submit proposed Findings of Facts/Conclusions of Law.  Each party will have a significant amount of time to argue the Final Orders at the July 26th Hearing, beginning at 2:00 pm.