OCTOBER, 2021
www.diamondheadms.org
VOL. 38, NO. 10
From the desk of the President By Ernie Knocloch
he deadline for this article was September 10th, so there’s a possibility that changes after the deadline have occurred. The info I’ve included comes from discussions with various attorneys and residents plus reading present MS laws dealing with non-profit organizations. The original documents setting up the Property Owners Association were written around 50 years ago. MS laws at the present time concerning POA’s/ HOA’s are relatively still undeveloped. The POA is incorporated under the MS Non-Profit laws. Some of the original documents have wording that either contradicts itself in various other documents or, at least, is open to interpretation. Unfortunately, as far as I know, the wording has never been adjudicated to provide legal answers to our specific issues. Additionally, given the unique nature of Diamondhead with its substantial amenities, which is now also incorporated as a city, means that what little bit of law is out there is not always directly on point. For instance, some believe that all covenants have expired
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since the original documents were written over 50 years ago. Amendments to the 30+ sets of covenants were made at various times so others believe that the covenants expire 50 years after the amendments were made. Based upon the action taken in 2010 when the majority of members voted to move the covenants into the Bylaws without expiration dates, other people believe that the covenants never expire. As mentioned above, as far as I know, none of the items listed above have any specific, legal answers. It has been suggested that the POA request a legal opinion from the MS Attorney General to provide guidance on these issues. The MS Attorney General provides legal opinions only to public officials and public bodies, so that approach will not work. As such, through the years, several legal opinions have been provided to the board by multiple attorneys which have guided how we are operating with respect to covenants and collections. Others have suggested that the POA go to court and ask for a declaratory judgment as to these issues.
DEADLINE FOR THE NOVEMBER ISSUE OF DIAMONDHEAD NEWS IS OCTOBER 10TH
From what I understand, a declaratory judgment can only be obtained if every property owner is served plus all mortgages companies that are involved with any property. There are approximately 5,000 parcels of property involved, so this approach is basically impossible to accomplish. The one item that everyone seems to agree upon is that the POA exists in perpetuity and does not just go away no matter what legal answers are eventually determined. The POA has the fiduciary responsibility to maintain and operate amenities valued in the $20 million range. The POA is continuing its fiduciary duty by collecting dues and pursuing collections against members who do not pay their dues. It is anticipated that in one of these collection cases someone will raise these issues as a defense. We are confident that the actions taken by prior boards in 2010 cured the issue, although we also understand that a court may ultimately disagree. The result of any such case is certain to be appealed by whichever side loses. Should that happen, the entire process may take several years to get final, legal answers from the MS Supreme Court. The collection of dues is imperative to maintaining and
operating amenities here in Diamondhead and we will continue to act in good faith and in the best interests of our commu-
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nity until such time as there is a case that gives us a final and direct ruling on any of the issues to the contrary.
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