Why the power is not illusory

The court's answer is that discretion constrained is not discretion unlimited. “While it is true that the agreed upon provision reserved broad discretion to modify the rules and regulations, Vivos' discretion was not unqualified or absolute, as Sindorf contends.” It quoted the general rule that “an obligation under a contract is not illusory if the obligated party's discretion must be exercised with reasonableness or good faith,” and the landlord-tenant formulation that a provision requiring a tenant to keep rules the landlord imposes from time to time “reserves in the landlord the power to make reasonable rules only.”

The source of the constraint is South Dakota's own implied covenant, from Schipporeit v. Khan, 2009 S.D. 96: a valid contract carries “an implied covenant of good faith and fair dealing [that] prohibits either contracting party from preventing or injuring the other party's right to receive the agreed benefits of the contract.”

The four-part test

Then the sentence to write down. Any modification “needs to be reasonable, made in good faith, enforced in a non-discriminatory manner, and not adopted for the purpose of depriving any tenant of the benefit of their lease or evading the lessor's obligations under the lease.”

Restated at the holding: modifications are enforceable “so long as they are reasonable, made in good faith, equally enforced, and not adopted for the purpose of evading the lessor's obligations under the lease or depriving any tenant of the benefit of their lease.”

A footnote goes further. The court set out the six Uniform Residential Landlord and Tenant Act factors for a valid rule — that it promote convenience, safety or welfare; be reasonably related to its purpose; apply to all; not be vague about what it prohibits; not exist to evade the landlord's obligations; and be noticed to the tenant when adopted — then observed that “[a]lthough South Dakota has not adopted the URLTA or the revised URLTA, these same requirements can be derived from the implied covenant of good faith and fair dealing.”

That is the quiet move in the opinion. South Dakota has no statute imposing a reasonableness standard on community rules. The court located one in contract law instead.

The precedent is an association case, and that is not incidental

To show that such constraints work, the court reached back to Thousand Island Park Association v. Tucker, 65 N.E. 975 (N.Y. 1903). The facts it recited are a community association almost exactly: an association developed an 800-acre tract, subdivided it into lots that “it leased to individuals . . . for the purpose of erecting cottages thereon,” each for 99 years, each subject to a condition that the tenant keep rules the landlord “should from time to time impose.”

And the analogy the New York court drew, quoted approvingly here, is the one that carries this case into HOA territory: the association's power to make new regulations was compared to a corporation's ability “to modify or repeal by-laws and to enact new ones,” a power that in either case cannot be used to “disturb a vested right” or, as the South Dakota court put it, the benefits of the bargain.

The court also told Sindorf what he should have anticipated, again in Thousand Island's words: he should have “naturally expect[ed] the possibility of new regulations regarding the enjoyment of his property so as to prevent giving scandal or offense to” other members of the community.

How far this reaches a South Dakota HOA

State the posture honestly. This is a landlord-tenant detainer case. It does not apply a statute to an association, and no association was a party. It reaches associations by the court's own analogy — to a community association's rule-making power and to corporate bylaw amendment — rather than by direct application. That is a strong signal, not a holding about HOAs.

Within that limit it is genuinely useful. Most South Dakota associations are nonprofit corporations whose boards amend rules under a reserved power in the declaration or bylaws, and the analogy the court chose was precisely to corporate bylaw amendment. Our South Dakota governing statute page covers that corporate layer.

“Equally enforced” is the element with teeth. Non-discriminatory enforcement appears in both formulations of the test, and it is the same defect that destroyed the covenant in Hood v. Straatmeyer the year before. Two different doctrinal routes, one recurring failure.

Notice was doing work. The thirty-day written notice requirement is cited in the court's reasoning about why the discretion was qualified. A rule-amendment power with no notice period would have been a different case.

What the court reserved

Two questions were left open on the record. First, the lease separately said it “cannot be changed or modified except by written agreement by the Parties” — a clause in obvious tension with the rules-modification power. The court declined to reach it because it was not argued, noting it “seems better suited to an argument not made on appeal that Vivos breached the agreement.” Second, an uninhabitability theory under SDCL 43-32-8, raised for the first time on appeal, was declined.

Both are live on remand, and the first is the one that matters generally: what happens when an instrument contains both an amendment-by-agreement clause and a unilateral rule-making clause. That is a common drafting pattern, and South Dakota has not resolved it.