Background
Bryan Kratzer and Becki Moore own a home in The Ridge at Echo Valley, a residential development in Norwalk, Iowa that abuts the Echo Valley golf course. Both the development and golf course are owned by United Properties Investment Company, L.C. and Echo Valley Investment Company, L.C. (collectively “UPI”). The development is governed by a Declaration of Covenants, Conditions, Restrictions and Easements that requires homeowners to obtain approval from an Architectural Review Committee (ARC) before constructing any improvements, and imposes a fifty-foot building setback for properties abutting the golf course.
In August 2022, Kratzer began constructing a substantial outbuilding on his property facing the golf cart path without obtaining ARC approval. UPI’s representative repeatedly warned Kratzer that the structure violated the covenants—both for lack of ARC approval and for encroaching within the fifty-foot golf-course setback—and sent a cease-and-desist letter. Kratzer nonetheless completed the outbuilding, placing it approximately twenty feet from the lot line by his own admission. Kratzer also displayed a series of politically provocative and profane signs and flags facing the golf course, prompting complaints from golf course members and causing UPI to avoid scheduling tournaments or tours near that area of the course.
UPI filed suit in April 2023 against Kratzer, Moore, and Maxwell Midwest Holding Company, LLC—the entity that retained legal title to the property under the parties’ installment land sale contract. After a bench trial in June 2024, the district court found multiple covenant violations, ordered deconstruction of the outbuilding and a separately erected pre-cut shed, imposed a $100-per-day monetary charge accruing from May 10, 2024 until full compliance, awarded UPI $24,000 in trial attorney fees, and dismissed Maxwell from the case. Kratzer and Moore appealed; UPI cross-appealed the dismissal of Maxwell.
The Court’s Holding
The Iowa Court of Appeals affirmed the district court’s finding of covenant violations and the associated remedies in nearly all respects. The court rejected Kratzer and Moore’s argument that the ARC lacked a quorum, making ARC approval impossible, because that argument was never raised at trial and thus was not preserved for appellate review. Similarly, the court declined to consider Kratzer and Moore’s theory that only a twenty-foot accessory-building setback applied, as that argument was also unpreserved. On the merits of the setback violation that was preserved, the court found sufficient evidence to affirm: Kratzer himself admitted the outbuilding stood only twenty feet from the lot line, well short of the fifty-foot requirement applicable to golf-course-abutting properties, and the exception for detached garages and in-ground pools did not extend to the outbuilding.
The court likewise declined to review the $100-per-day monetary charge because Kratzer and Moore failed to preserve that issue below, and their attempt to invoke an “illegal sentence” exception drawn from contempt case law found no support in breach-of-contract jurisprudence. On attorney fees, the court affirmed most of the district court’s $24,000 award but remanded for the district court to address three billing-entry categories it had not ruled on: entries related to a trespass notice, discussions with Norwalk public officials, and a media inquiry response. The court instructed the district court to modify the fee award—or not—based on its findings regarding those entries.
On cross-appeal, the court affirmed dismissal of Maxwell, holding under longstanding Iowa precedent that under an installment land sale contract the vendor retains only a security interest in the legal title, while equitable ownership passes to the purchaser. A judgment against the vendee becomes a lien on the land inferior to the vendor’s security interest, and Maxwell’s interest as contract vendor was not directly implicated by the covenant violations of Kratzer and Moore. Additionally, the court awarded UPI $12,717.25 in appellate attorney fees under the covenants’ fee-shifting provision and assessed 80% of appellate costs to Kratzer and Moore.
Key Takeaways
- Arguments not raised at trial—including impossibility of ARC compliance due to lack of a quorum and alternative setback interpretations—are waived and will not be considered on appeal, even in equity cases reviewed de novo.
- A homeowner’s own trial admission about a setback measurement can be decisive evidence of a covenant violation, particularly where the court credits the developer’s representative over the homeowner on credibility.
- Under Iowa law, a contract vendor holding bare legal title under an installment land sale contract is not a necessary party to a covenant-enforcement action against the purchaser; the vendor’s security interest remains superior to any lien that may arise from the purchaser’s violations.
- Attorney fee awards in covenant-enforcement cases are remandable when the trial court fails to address all specific objections raised by the fee-paying party, even after a post-trial motion to enlarge findings.
Why It Matters
This decision reinforces the enforceability of residential restrictive covenants and the wide latitude courts give developers and HOAs to impose monetary charges and compel deconstruction of noncompliant structures. The case is a cautionary tale for homeowners who proceed with construction after being told—multiple times, in writing—that it violates applicable restrictions: error-preservation rules will foreclose most arguments not squarely presented at trial, and fee-shifting provisions in covenants can generate substantial financial exposure well beyond the cost of the underlying dispute.
The court’s treatment of the installment land contract issue also provides useful clarification for practitioners structuring real estate transactions in Iowa. Developers and title holders who retain legal title as security under contract-for-deed arrangements are not required to be parties to covenant-enforcement suits, and their security interests will not be subordinated to equitable liens arising from the purchaser’s conduct. Attorneys representing developers in similar enforcement actions should note the court’s guidance on timely appellate fee affidavits—filing immediately after oral argument was specifically commended.