Vivos xPoint converted 575 decommissioned military bunkers into a survivalist community. The bunkers originally stored munitions in 1942, but were empty in 1967 when Vivos bought them and offered the bunkers for purchase or lease.
Daniel Sindorf signed a 99-year lease with Vivos for a bunker, and paid the “Bunker Structure Rent” of $35,000. The lease contained an addendum incorporating community rules and regulations, which were subject to change by Vivos subject to furnishing 30 days advance notice.
The rules, as contained in the addendum when Sindorf leased his bunker, prohibited situations posing health and safety risks. As well, all bunker lessees must refrain from threatening or harassing other lessees, their guests, and Vivos’ personnel.
The rules further regulated the storage and discharge of weapons within the community. A 2021 amendment precluded brandishing weapons.
Sindorf was involved in an altercation where it is alleged that he brandished a weapon in the presence of a Vivos employee and the employee’s girlfriend. Sindorf evidently admitted drawing a weapon, but claimed he was protecting himself from the couple’s dogs.
Based on a rules violation, Vivos sent an eviction notice to Sindorf. When Sindorf did not vacate, Vivos filed an eviction lawsuit. Sindorf defended the claim based on a theory of an illusory lease, claiming that since Vivos could amend the rules at any time, the lease is unenforceable.
The circuit court agreed with Sindorf, determined that the lease was illusory, and granted Sindorf’s request to dismiss Vivos’ eviction petition.
Vivos appealed.
The Supreme Court led with “A promise is illusory when it fails to bind the promisor, who retains the option of discontinuing performance.” If a party can unilaterally modify an agreement such that the party relieves itself of its promises, then there is no meaningful mutuality. This renders an agreement illusory and unenforceable.
The Court determined that the ability to modify community rules hardly makes a contract illusory. As well, Sindorf knew at the time he paid the “Bunker Structure Rent” that the rules and regulations could change, after the 30-day notice period had elapsed.
The Court reminded the parties that at least in this State, all parties are automatically charged with “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.”
Then, citing New York case authority, the South Dakota Supreme Court added that all new rules must be reasonable and enacted in good faith.
The circuit court’s order is reversed; the case is remanded for a full trial. See Vivos xPoint Investment Group v. Sindorf; Supreme Court of South Dakota Case #31074-r-MES; April 22, 2026: https://cases.justia.com/south-dakota/supreme-court/2026-31074.pdf?ts=1776957730.
My thoughts:
Since every shared community has rules and regulations, this Court likely had little choice but to uphold the rights of POAs, HOAs, landlords, and lessors to adopt new regulations and change existing rules. As a matter of commercial practicality, there is hardly a choice.
Yet this Court cites the reasoning as an obligation to act reasonably and in good faith. Many States do not have this obligation in the realm of real estate. So, might there be a different outcome in a different State?
Past that point, why is this argument framed solely around illusory contracts; why wasn’t a theory of adhesion contract advanced? I am guessing – could be wrong – that the parties had disproportionate bargaining power and at least with regard to incorporation of future rules, Sindorf had no realistic chance of eliminating or negotiation that provision.
Stuart A. Lautin, Esq.*
* Board Certified, Commercial and Residential Real Estate Law, Texas Board of Legal Specialization
Licensed in the States of Texas and New York