A new HOA decision

In the recent case of Justice Holdings, LLC v. Glade Springs Village Property Owners Association, Inc., the Supreme Court of Appeals of West Virginia ruled that an HOA can terminate contracts between itself and the declarant (usually the developer) “without penalty “ if the contract was entered into before an HOA board was elected by the HOA members. The majority understood “without penalty” to mean not only that an Association can terminate a contract without something like a termination fee, but also apparently that the Association can terminate its obligations under the contract, such as the obligation pay back loans. This decision has potentially significant consequences for HOAs that entered into agreements before there was an executive board elected by unit owners. The effect of this decision may also depend on whether your HOA has opted out of certain provisions of the HOA code sections. If you are an HOA board member or homeowner with questions about this decision, please give me a call.