A Georgia developer claimed declarant rights it never had — and lost a RICO verdict
A Georgia developer claimed declarant rights it never had — and lost a RICO verdict
2026-09-10 · Georgia · Courts
What happened. The Georgia Court of Appeals has upheld fraud and racketeering verdicts against an entity that purported to exercise declarant rights over a Rabun County development after those rights had already been lost — while vacating a punitive-damages award of roughly $1.9 million per household as constitutionally excessive.
Kingwood International Resort, LLC v. McMurry, No. A25A2035, decided 16 March 2026. Doyle, P.J., with Markle and Padgett, JJ., concurring. Published; affirmed in part, vacated in part, remanded.1
The chain of title, and where it broke
Kingwood, LLC recorded the 2006 declaration for The Overlook at Kingwood. Then:
- 2010 — it lost its interest to a United Community Bank foreclosure;
- 2011 — the Secretary of State administratively dissolved the association, and nobody re-formed one under the POA Act;
- Great Oak bought the bank's interest;
- 2015 — Kingwood International Resort (KIR) bought Great Oak's interest.
Kingwood then executed a “First Amendment” purporting to assign declarant rights to KIR. On the strength of that, KIR issued:
- a Second Amendment raising assessments;
- a Third Amendment forcing all lot owners into Kingwood Country Club membership; and
- a Fourth Amendment abolishing the 1,200-square-foot minimum home size — and then began building under it.
The holding on declarant rights
The trial court held KIR was never the declarant, and the Court of Appeals affirmed, relying on Armstrong v. Roberts, 254 Ga. 15 (1985) — “A developer of a subdivision who reserved [certain] authority… no longer possesses that authority after divesting himself of his interest in the subdivision” — and Chisholm v. Danforth, LLC, 352 Ga. App. 682 (2019).
Kingwood had nothing to assign in 2015, because it had lost its interest in 2010. All four amendments were void.
Fraud, RICO, and the numbers
Fraud and Georgia RICO claims went to a jury, which returned per-household compensatory awards from $600 to $10,000, trebled under RICO to $1,800 to $30,000. It then found specific intent to harm and awarded $1,931,818.18 in punitive damages to each of the 11 households.
The Court of Appeals affirmed the fraud and RICO verdicts and the declarant ruling — and vacated the punitives on due-process grounds: “the ratio of the amount awarded for compensation and punitive damages, even given the Defendants' wealth and repeated instances of bad behavior, is excessive.”
It listed the ratios — 1:207, 1:56, 1:57, 1:237, 1:331, 1:135, 1:320, 1:567, 1:119, 1:65, 1:133 — and invoked State Farm v. Campbell and BMW v. Gore: “in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.”
The administrative dissolution is the detail to notice
Buried in the chronology is a fact that should worry a great many Georgia communities: the association was administratively dissolved by the Secretary of State in 2011, and nobody re-formed it.
That is not exotic. Under Georgia law a nonprofit corporation — which nearly every Georgia association is — must file an annual registration between 1 January and 1 April. The Secretary of State may dissolve an entity that fails to deliver its annual registration with all required fees and penalties within 60 days of the due date, or that has been without a registered agent or registered office for 60 days or more. Reinstatement under O.C.G.A. § 14-2-1422 is available only within five years of dissolution.
For a volunteer-run Georgia HOA the consequences are severe and usually discovered late: a dissolved association's authority to sue, to record liens and to contract is clouded, and title companies flag it at closing. In Kingwood, the absence of a functioning association is precisely what left the field open for an entity with no declarant rights to record four amendments unopposed.
Two registries, two calendars, from January
This gets harder before it gets easier. From 1 January 2027, a Georgia association carries two independent annual state filings on two different calendars:
- the Corporations Division annual registration, due by 1 April; and
- the new Chapter 43-17A registration statement, which expires 31 December and must be renewed by that date at $100, with the governing documents and a financial statement no more than a year old attached.2
Miss the first and the corporation dies. Miss the second and, under § 43-17A-2(a)(2)(A), the association cannot collect fines or fees, record liens or start foreclosures.
We could not find any published count of how many Georgia associations are currently administratively dissolved; the Secretary of State does not publish it. That figure is the single most useful unknown in Georgia community-association law right now, because it is also the number of associations that will discover a problem when they try to make their first Chapter 17A filing.
What owners in a developer-controlled Georgia community should check
Kingwood is a roadmap for the questions that matter at and after turnover:
- Does the entity claiming declarant rights still own lots? Under Armstrong, declarant authority does not survive divestment of the interest in the subdivision. Foreclosures, deeds in lieu and bank sales all break the chain.
- Is the association in good standing? A five-minute check on the Secretary of State's business search. If it is dissolved, everything the association has done since is exposed, and the five-year reinstatement window is running.
- Were the amendments validly executed? Each of the four in this case was recorded and looked regular. Recording is not validity.
- Who is on the board, and how did they get there? The court dismissed all claims against the association itself as derivative-only — consistent with Boaz and St. Michael's Bay the same year. Owners suing the developer succeeded; owners suing their own association would have faced the derivative gate.
What the punitive ruling means
It is a limit on the award, not a criticism of the finding. The court affirmed the jury's conclusion that this was fraud and racketeering, and affirmed the treble damages under Georgia RICO. What it vacated was a punitive multiplier in the hundreds.
On remand the compensatory figures — $600 to $10,000 per household, trebled — anchor whatever punitive award follows. Applied to a single-digit ratio, the practical outcome for these eleven households is dramatically smaller than the verdict, which is worth stating plainly for owners reading the headline number.
What to watch next
The remand, and whether Georgia RICO becomes a more common vehicle in developer-control disputes. Treble damages plus attorney's fees make it attractive; the difficulty is that it requires proving a pattern of predicate acts, which a single bad amendment will not supply. Kingwood had four.
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