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The first part of this article addresses Georgia Code Section 44-5-60, which is the Georgia statute that generally pertains to the duration of restrictive covenants, and the Georgia appellate court cases that have addressed that Code Section. The second part of his article addresses how Code Section 44-5-60 relates to the Georgia Property Owners’ Association Act (commonly referred to as the “POA”).

I. CODE SECTION 44-5-60

Georgia Code Section 44-5-60 used to provide that covenants restricting land to certain uses would bind the land for twenty (20) years, and at the end of the twenty (20) years, those restrictive covenants would automatically expire. This Code Section was adopted before the explosive growth of residential subdivisions at a time when restrictive covenants upon land were generally not favored. With the growth of residential subdivisions, however, covenants have steadily become recognized as protecting home values and have become more and more favored by the Georgia courts and legislature.

As a result, the Georgia legislature amended Section 44-5-60 in 1990 to permit owners affected by restrictive covenants to vote to continue those covenants ten (10) years beyond the initial twenty (20) year period. The Georgia legislature again amended Section 44-5-60 in 1991 to increase the ten (10) year extension period to twenty (20) years. Finally, in 1993, the Georgia legislature amended Section 44-5-60 to state that restrictive covenants in subdivisions of fifteen or more lots shall run for an initial period of twenty (20) years and shall thereafter automatically renew for successive periods of twenty (20) years, unless fifty-one percent (51%) of the lot owners vote to terminate the restrictive covenants. This statutory automatic renewal became effective on July 1, 1993 and is the current law in Georgia.

The changes to Section 44-5-60 have caused many issues for community associations. For instance, what about covenants that were recorded before July 1, 1993? Would those covenants receive the benefit of the statutory automatic renewal that became effective on July 1, 1993 and would thus not expire after twenty (20) years? Also, prior to July 1, 1993, many developers had recognized the benefit of restrictive covenants continuing beyond their initial twenty (20) year period and had included various provisions within the covenants themselves that provided for renewal of the covenants. These pre-1993 renewal provisions either provided for automatic renewal or required the approval of at least a majority of the lot owners to renew the covenants after the initial twenty (20) years. Are such pre-1993 automatic renewal provisions in the covenants themselves valid? These issues and others have been addressed by the Georgia appellate courts in the following cases. The cases are discussed in chronological order.

A. Appalachee Enterprises, Inc. v. Walker, 266 Ga. 35, 463 S.E.2d 896 (1995).

The original covenants in this case were recorded in September 1973 and did not contain any type of extension or renewal provision. A property owner seeking to terminate the covenants argued that the covenants should be interpreted pursuant to Section 44-5-60 as it existed prior to July 1, 1993, so that the restrictive covenants would expire twenty (20) years after the date they were recorded in the land records. The association, on the other hand, argued that the 1993 amendment to Section 44-5-60 applied, therefore requiring the covenants to be automatically renewed for an additional twenty (20) years. The Georgia Supreme Court agreed with the property owner and held that the 1993 amendment to the Code Section did not apply retroactively to restrictive covenants recorded before July 1, 1993. Accordingly, the Court concluded that the covenants in this case that were recorded in September 1973 expired twenty (20) years after they were recorded in September 1993.

B. Canterbury Forest Association, Inc. v. Collins, 243 Ga. App. 425, 532 S.E.2d 736 (2000).

The original covenants in this case were recorded in June 1975 and likewise did not contain any type of extension or renewal provision. The association attempted to amend the original covenants to add an automatic renewal provision. The Court of Appeals determined that the amendment was invalid because the covenants did not originally contain a renewal provision, and under Code Section 44-5-60, the pre-1993 covenants could not be amended to include a renewal provision that would extend the covenant beyond their original twenty (20) year duration.

C. Bowan v. Walnut Mountain Property Owners Association, Inc., 251 Ga. App. 91, 553 S.E.2d 389 (2001).

The original covenants for this community were also recorded prior to 1993. But unlike the covenants in the first two cases discussed above, these original pre-1993 covenants permitted renewal by an affirmative vote of two-thirds of the owners. The original covenants also required that the owners’ signatures be recorded with the statement of renewal. There were approximately 1000 lots in the community, and the association decided (due to the expense) not to record all of the owners’ signatures. Instead the association recorded a statement that the signatures were on file in the association’s office.

The Court of Appeals held that the renewal provision within the covenants did not conflict with Section 44-5-60, as it existed before or after July 1, 1993, and as long as the association complied with the renewal provision described in the covenants, the covenants could be renewed in compliance with the covenants themselves to extend beyond the initial twenty (20) years. The Court also held that even though the association did not record the owners’ signatures, as required by its renewal provision, the vote to renew the covenants was still valid because recording such signatures was only a ministerial act and because the amendment stated all of the signed consents were incorporated into the amendment and on file with the association records.

D. Turtle Cove Property Owners Association, Inc. v. Jasper County, 255 Ga. App. 560, 560, 566 S.E.2d 368 (2002).

The original covenants were recorded prior to 1993 and provided that they were valid for twenty (20) years, after which time the covenants would automatically renew for twenty (20) years, unless a majority of the owners voted to terminate them. The trial court ignored the automatic renewal provision in the covenants and held that the covenants expired after the initial twenty (20) years. The Court of Appeals reversed the trial court’s decision holding that the automatic renewal provision within the original covenants themselves was valid and that it did not conflict with Section 44-5-60, as it existed before or after to July 1, 1993. The Court of Appeals thus concluded that automatic renewal provisions in pre-1993 covenants are valid.

E. Arbor Station Homeowners Services, Inc. v. Dorman, 255 Ga.App. 866, 567 S.E.2d 102 (2002).

The original covenants were also recorded prior to 1993 and contained an automatic renewal provision similar to the one in the Turtle Cove case discussed immediately above. The association presumed the covenants had automatically renewed and sued a lot owner to collect unpaid assessments owed pursuant to the covenants. The owner, however, must not have read the Turtle Cove decision and contended that the covenants had expired so there was no longer an obligation to pay assessments. The trial court agreed with the owner and held that because the covenants were recorded prior to 1993, they expired after the initial twenty (20) years, despite the automatic renewal provision within the covenants themselves and despite the Turtle Cove case. According to the trial court ruling, the owner was only obligated to pay assessments until the date the covenants expired, and since that date had already passed, no assessments were awarded to the association.

The Court of Appeals similarly ignored its recent decision in the Turtle Cove case and held that the duty to pay assessments is not a covenant restricting land to certain uses. The Court of Appeals explained for the first time that a covenant to pay assessments is instead an affirmative covenant rather than a restrictive covenant, and since Section 44-5-60 only applies to restrictive covenants, it does not apply to affirmative covenants, such as an affirmative covenant requiring an owner to pay assessments. Accordingly, affirmative covenants, regardless of whether they were recorded prior to July 1, 1993, do not terminate under Section 44-5-60.

F. Bickford v. Yancey Development Company, Inc., 276 Ga. 814, 585 S.E.2d 78 (2003).

In 1977, the owner of a 165 acre tract of land recorded covenants against the tract which provided the land would only be used for residential development and restricted the size of the lots to a minimum of two acres. In 2000, Yancey Development Company purchased a portion of the undeveloped tract of land and announced that it intended to subdivide its newly acquired property into 80 half-acre parcels for residential development. Adjoining property owners, including Bickford, sued the developer to obtain an injunction against any lots less then a minimum of two acres, as required by the 1977 covenants. The covenants did not have an automatic renewal provision.

The trial court and the Court of Appeals concluded that the pre-1993 covenants expired twenty (20) years after they were recorded pursuant to Section 44-5-60, as it existed prior to 1993. The case was then appealed to the Georgia Supreme Court. The Georgia Supreme Court discussed its 1995 decision Appalachee Enterprises, which is the first case discussed above. The Georgia Supreme Court stated: “We conclude that the 1993 revision to Code Section 44-5-60 applies only to covenants established after the revision became effective on July 1, 1993.” The Supreme Court additionally stated: “We also believe that sound public policy concerns mandate that Code Section 44-5-60’s automatic renewal provision be applied only to covenants established after July 1, 1993.” The Court then stated: “As for all restrictive covenants established before July 1, 1993, they are governed by Code Section 44-5-60 and thus are deemed unenforceable after a period of 20 years.”

That last quoted sentence from the Georgia Supreme Court caused more questions than answers because it stated that all pre-1993 covenants expire at the end of twenty (20) years. But what about the pre-1993 covenants that include renewal provisions in the covenants themselves, such as in the Walnut Mountain and Turtle Cove cases discussed above? In both of the those cases, the Georgia Court of Appeals concluded that renewal provisions in pre-1993 covenants can extend the covenants beyond their initial twenty (20) years.

G. Sweeney v. The Landings Association, Inc., 277 Ga. 761, 595 S.E.2d 74 (2004).

A little over a year after the Bickford case, the Georgia Supreme Court has an opportunity to address covenants that were recorded in 1972 that included an automatic renewal provision. In that case, a property owner, Sweeney, argued that the covenants had expired twenty (20) years after they were recorded. In disagreeing with the property owner, the Georgia Supreme Court concluded: “Here, the covenants expressly provide that, after twenty (20) years, they will renew automatically at successive 10-year intervals unless two-thirds of the residents objected. That provision is valid and enforceable under contract law.” In reaching that decision, the Georgia Supreme Court relied upon the Turtle Cove and Walnut Mountain cases discussed above.

The law is thus now settled for now that pre-1993 covenants that include a renewal provision will be renewed and extended in accordance with the renewal provision.

II. THE GEORGIA PROPERTY OWNERS’ ASSOCIATION ACT

The Georgia Property Owners’ Association Act (or “POA”) was adopted in 1994. One of the important benefits of the POA is that it has a provision that states Code Section 44‑5‑60 shall not apply to any covenants contained in any instrument submitted to the POA. That means, in our opinion, that if a community’s covenants were recorded prior to 1993, submission to the POA now would eliminate the possibility that the covenants will expire after twenty (20) years. Also, as part of the amendment process when we submit a community’s covenants to the POA, we will generally include an amendment that the covenants will be for a perpetual duration. Although Canterbury Forest, discussed above, provides that under Code Section 44-5-60, pre-1993 covenants cannot be amended to include a renewal provision that would extend the covenant beyond their original twenty (20) year duration, that case did not address the POA which specifically excludes Code Section 44-5-60. This is still an open issue for the courts, but our opinion is that to best protect the community, opting into the POA to eliminate the provisions of Code Section 44-5-60 is the best option.