Deerfield News Connection

July 19, 2024

 

Fields Development Company Effectively Assigns  

Developer Rights to Family Members

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Expansion of Holdings and Control

 

On May 2, 2024, Fields Development Company updated the Covenants, Conditions, and Restrictions (CCRs) of Deerfield Resort to broaden the definition of "Developer", among other changes. As defined in Exhibit A of the amendment, the developer’s property now includes not only Fields Development Company but also the property of closely affiliated family members and entities such as Fields Real Estate, Rae Alan Properties, and The Greens at Deerfield*, as well as properties owned by Scott and Lisa Fields, and Paul and Madeline Fields. This change nearly doubled the property identified under Fields Development Company's ownership within Deerfield Resort, expanding from 43 acres to 84 acres when combined with family member properties. These revised CCRs give Fields Development Company and greater authority over more property identified for future development activities within the resort. 

 

Property Owner Protections Under Law

 

In a Homeowners Association (HOA), the "Developer" is the entity responsible for creating the community, establishing the CCRs, and managing the initial development and sale of properties. The developer’s rights enable it to make decisions about the community's development, property use, and governance. To ensure consistency and fairness, these rights cannot be transferred unless explicit provisions are incorporated in the initial CCRs. Deerfield Resort's CCRs have never and currently do not include such provisions.

 

Tennessee law mandates that change to a planned community’s development must align with the overall plan and not solely benefit the developer. Significant changes affecting property owner’s rights require majority approval from the owners and filing in the county’s real estate records. Such assignments are regulated to prevent conflicts of interest and protect property owners from unfair practices. However, Deerfield Resort property owners did not have the opportunity to approve the assignment of developer rights, nor were these assignments documented in public real estate records.

 

The original developer may assign its rights through an “arm's length” transaction only.  An arm's length transaction is a deal made by two parties freely and independently of each other, with fair terms based on market value. In contrast, a non-arm's length transaction occurs between related parties, like family members or entities with a close relationship, where the terms may be biased and not reflect the market value. Tennessee law requires disclosure of all related-party transactions to prevent abuse and protect property owner’s interests. Fields Development Company did not disclose its transactions with related parties.

 

Once developer rights are assigned or transferred in a non-arm's length transaction, these rights cannot be restored by transferring the property back to Fields Development Company. Therefore, Fields Development Company remains the sole developer of Deerfield Resort; no family-owned companies share these rights or authority.

 

Violations of Property Owner Rights

 

Fields Development Company's actions have raised significant concerns regarding compliance with legal standards and property owner protections:

 

• Right to Transfer Development Rights:  Fields Development Company did not clearly outline the transfer of developer rights in the CCRs, leaving property owners unaware of the potential for these types of critical changes.

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• Failure to Notify or Seek Approval:  Deerfield Resort property owners were not informed prior to the transfer of developer rights, depriving them of the opportunity to participate in decision-making processes.

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• Benefit to Developer:  Changes made primarily benefited Fields Development Company without ensuring alignment with the community's overall development plan or obtaining necessary majority approval from property owners.

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• Documentation and Disclosure:  Fields Development Company neglected to properly document these transfers in public records or disclose related-party transactions, violating legal requirements intended to safeguard property owner’s interests.​

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Fields Development Company effectively assigned developer rights to family members without proper disclosure or documentation, constituting a conflict of interest and violating property owner rights.

 

Significance of Developer’s Actions

 

The seriousness of these infractions cannot be overstated. Fields Development Company's actions demonstrate a deliberate effort to maintain control over the development and governance of Deerfield Resort, effectively sidelining property owners and their rights. By not allowing property owners to participate in the decision-making process, Fields Development Company has undermined the fundamental principles of fair governance and transparency that are supposed to govern HOA communities. This exclusion not only erodes trust but also sets a dangerous precedent for future governance and development within the community. The developer's maneuvers appear aimed at consolidating power and control, ensuring that the interests of Fields Development Company and its affiliates are prioritized over those of property owners.

 

Conclusion

 

Fields Development Company has significantly impacted the development landscape by exempting their properties from restrictive covenants and securing unchecked development rights for themselves and their family members. This has resulted in scattered pockets of non-compliance within the community, disrupting the intended uniformity of an HOA. With developer rights assigned to family members and the lifting of HOA restrictive covenants on these properties, Fields Development Company, its family members, and their entities can potentially undertake new development projects, adjust land use plans, and make significant changes that could alter Deerfield Resort’s landscape and character. This move grants them autonomy over construction and land use without conforming to community standards or contributing to common area upkeep. Once a community is established under HOA governance, all members, including developers, should abide by the same rules to uphold fairness and equality within the community.

 

Changing the makeup of the development from mainly single-family residences to commercial or multifamily development, or exempting themselves from minimum square footage requirements, requires approval from the property owners. Significant changes like these must align with the overall development plan and are subject to Tennessee law, which mandates majority approval from the owners and proper documentation in the county’s real estate records. Without adhering to these legal requirements, the developer cannot unilaterally make such changes. Other entities that were effectively assigned developer rights, such as Fields Real Estate, Rae Alan Properties, and The Greens at Deerfield, as well as properties owned by Scott and Lisa Fields, and Paul and Madeline Fields, do not legally hold these rights due to the improper actions taken by Fields Development Company and outlined in this summary. It should be noted that once developer rights are transferred to a family member, they cannot be reinstated by transferring properties back to Fields Development Company.

 

Additional Information

 

For further details, refer to the July 14, 2024 Connection on HOA exemption and June 13, 2024 Connection on CCR amendment. 

 

 

* A property on Exhibit A of the CCR amendment that is currently listed as owned by The Greens at Deerfield, parcel number 100E B 02100 000.