Mandatory membership is one of the most significant trends in the club industry during the last 15 years.Â Mandatory membership is a community structure whereby residential property owners all contribute to the payment of expenses for and have access to recreational facilities associated with the residential community.Â Mandatory Membership has significant benefits for the community:
- Feasibility. Mandatory membership provides a guaranteed source of dues funding, plus additional revenue from owner spending.
- Affordability of Club Membership. Mandatory membership helps a club keep dues affordable.Fairness. Mandatory membership ensures that all property owners who benefit from the recreational facilities share in their costs.
Property owners in some communities have challenged mandatory membership.Â Mandatory membership should be structured to minimize the risk of a challenge and strengthen the club’s position.
- Relationship Between Club and Community. The relationship between the residential property and the club should be highlighted in the mandatory membership covenant or implementing document.
- Easement.Â Easement language can be incorporated into the mandatory membership covenant to give property owners a real property interest in the club.
- Grandfathering-In Owners. Success of defending a challenge to mandatory membership is enhanced if current owners are not required to be club members, but their subsequent purchasers would be required to join the club.
- Approval of Purchasers. There should either be no application approval requirement for property purchasers or there should be a mechanism to allow the selling owner to secure a property sale if a purchaser is rejected.
- Amendment to Governing Documents. If an amendment to the community governance documents is planned in order to implement mandatory membership, such documents and applicable case law should be reviewed to assess the risk of a challenge to the association’s power to amend the documents.Â Â In some cases, avoiding an amendment would be recommended, in which case,Â the community membership may be structured by agreement between the club and the community association without amending the community governance documents.
- Fairness and High Owner Approval Goal.Â It is important for the success of defending a challenge to a mandatory membership program that it be perceived as a fair program, which is desired by a large segment of the community.Â A high owner vote approval should be sought.Â Property owners who do not use the facilities should pay no more than a fair amount commensurate with the club’s benefit to the owner.Â The membership program should include benefits for owners who do not golf or play tennis.
Mandatory membership is one of the most important tools to enhance the viability of a club in a residential community, and is also one of the most controversial both politically and in the courts.Â Clubs and communities can structure mandatory membership to reduce the risk of the successful challenge
Glenn A. Gerena
Glenn A. Gerena, a shareholder with the national law firm of Greenberg Traurig, P.A., concentrates his practice on structuring, documentation for, and restructuring club membership programs.Â You can read more about the author at http://www.gtlaw.com/People/GlennAGerena, and read more club related articles by the author at http://www.hospitalitylawcheckin.com.
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