In practically every discussion of topics related to HOA governance, it is important to remember that one size does not fit all. Consider how the following factors can define the simplicity or complexity of covenant enforcement:
- State laws vary widely such as board authority versus membership votes to adopt or amend governing documents, rules and resolutions, requirements for hearings and limitations on fines.
- Covenant/rule violations are less personal when consistently enforced by a management company based on written procedures and policies adopted by the board. Enforcement may be interpreted more personal for self-managed boards.
- Covenant/rule enforcement is significantly more challenging when there is a legacy of non-enforcement or selective enforcement.
- Issues vary by type of association. Condominiums and townhomes deal frequently with issues of noise and parking. Single family associations on the other hand deal more frequently with home additions, fences, landscaping, and playground equipment.
Covenant/Rule enforcement is one of the most difficult aspects of running a homeowners association.
The Board has a duty to reasonably enforce the covenants and rules, and avoid risking liability to the board, committee members or to the association. At the same time, board members are residents with neighbors and friends in the community. Covenant enforcement can result in personal attacks, disharmony, and polarization.
Enforcing the association’s covenants/rules can cause destructive emotional conflicts in associations. Two fundamental undercurrents collide:
- It is my land, and nobody can tell me how I can use it.
- The use of one’s land affects the neighbor’s rights, and the rights of subsequent purchasers.
Violators can become emotional about the enforcement action taken. Neighbors can become emotional about a lack of enforcement action taken.
Why Have Rules
- Protect the property values and assets of the community.
- Required by the governing documents.
- Legal Obligation – A board and its individual members are considered agents of a corporation and are liable for the actions of a nonprofit organization.
- Avoid court rulings against the association and expensive legal fees for poorly developed or enforced rules.
- Promote community harmony.
Who Breaks the Rules? Violators can be lumped into four categories:
- Uninformed homeowners – This results frequently with first time homebuyers who are not familiar with the HOA concept, to experienced but apathetic homeowners, to culturally diverse communities where knowledge and language barriers compound issues. Use educational opportunities such as a welcoming brochure, email and website to inform.
- Procrastinators – Use procedure and persistence.
- Hardship cases – often willing to remedy the violation when they understand the escalating costs of enforcement and that the associations may be willing to waive the fines for compliance and/or arrange a payment plan.
- Defiant homeowners – a threatening initial communication will often result in a defensive and threatening response. Do not confront. Follow procedure and try to prevent escalation. Be prepared to consult with the association’s attorney.
In all situations, the association should open the door to establishing communications and expressing a desire to work together to address the issue.
Two Types of Rules
Architectural Guidelines typically apply to the exterior appearance of the property. Some examples:
- Decks & Patios
- Sheds and Outbuildings
- Boat & RV Parking
- Satellite Dishes
- Exterior Colors
- Building Materials
- Playground Equipment
Rules typically apply to issues where the behavior of one resident, tenant, or visitor has an adverse impact on a neighbor. Some examples:
- Use of Common Areas
- Pet Restrictions
- Solicitation & Yard Sales
- Garbage & Trash
- Leasing Restrictions
- Age Restrictive
- Single Family Use
- Residential Use/Business Use
Without regular inspections, covenant violations often go undetected which makes enforcement more difficult. Sometimes a delivery of building materials and knowing that an architectural review application has not been approved is sufficient to inquire. Sometimes the scope of work is expanded without approval. The board, architectural review committee and management company should watch for any new construction activity and respond immediately. Emotions will be elevated if a homeowner is advised that a project cannot proceed and may have to stop completely. In extreme situations, it may be necessary for the association’s attorney to file an injunction stopping work. The board should also know it’s authority to enter private property in order to inspect.
Sources of Authority
As a Board Member or Director of a homeowner association, you have certain powers, duties and authority that are required in most cases by federal and state laws; local ordinances, and association documents. This includes covenant and rules enforcement.
Liability of Corporate Boards of Directors
What liability do corporation board of directors members have in their board positions? Not as much as you might expect. Corporate board members have a good deal of latitude within the scope of their duties as corporate board members. Board members must be free to act in the interest of the shareholders in order to run the association in the best way they see fit. That said, most boards purchase Directors and Officers insurance (D&O) to protect themselves and the association against lawsuits.
Boards should not become involved in neighbor versus neighbor disputes. Whenever possible, the Board should refer enforcement of certain covenant violations to local or state authorities. Municipal code enforcement of abandoned cars and animal control are two examples.
Avoiding Lawsuits & Defenses for Failure to Enforce the Covenants/Rules
Ultimately, an association’s approach to covenant enforcement is critical. The association should insure that it timely, consistently and uniformly enforces its documents, including the covenants and restrictions. Associations should understand the failure to timely, uniformly and consistently enforce the documents, subjects the association to defenses which could preclude enforcement, both with respect to the individual case at hand as well as future cases. As such, an association which postpones or allows deviations from the requirements of its documents is putting itself and its future enforcement actions in jeopardy. Many associations fail to realize that significant defenses can arise by virtue of their failure to enforce their documents timely, uniformly and consistently. Such defenses include, but are not necessarily limited to the following:
- Laches – which in layman terms means simply by virtue of the passage of time, the association’s rights may become stale and unenforceable (i.e., if the association fails to timely enforce a provision, it may lose its right to enforce it);
- Selective Enforcement – which in layman terms means the association should be precluded from enforcing against Mr. Jones that which it does not enforce against Mr. Smith.
- Waiver – which in layman terms means a relinquishment of a known right (i.e., the association must have a right and knowingly and voluntarily relinquish the right)
- Estoppel – which in layman terms means in fairness, in equity, the association should be precluded from enforcing a provision by virtue of some previous action or potentially some inaction.
Check Your Documents for a No Waiver Clause
Many association documents have language that states in no event shall the Association’s failure to enforce any covenant, restriction or rule provided for in the Declaration, the Bylaws or the Rules constitute a waiver of the Association’s right to later enforce such provision or any other covenant, restriction or rule.
Other Enforcement Measures
- Suspension of Voting Rights
- suspension of Use of Recreational Facilities and Common Areas
Use of Government Agencies to Enforce
- Health Department for multiple families in a single unit
- Inspections & Zoning for fence or sheds, setback requirements, commercial use of residences, abandoned vehicles, building permits
- Police for traffic on public streets and possibly towing
- Fire Department for parking that interferes with fire lanes; also, hazardous materials
- Animal Control for lease laws, waste removal, number of pets, nuisance, dangerous pets, exotic animals
Avoiding Covenant/Rule Violations
- Education and Communication is Key
- New Member Welcome Package
- Email Reminders
- Reminder enclosure in mailed annual meeting notice and assessment increase notice.
- Lease Requirements & Educating Tenants
- Review and amendment of governing documents for outdated and conflicting provisions.
Solutions for Associations That Have Failed to Enforce the Covenants/Rules
A common scenario is the self-managed association that has over time neglected to set rules and consistently and effectively enforce them. The appearance of the community has crossed a ‘threshold point’ where residents frequently complain. The association may be operating without an active board. Typically, a few residents are encouraged to run for office and a new board is elected with a mandate to ‘straighten things out”. This is a difficult process; however, it only becomes more difficult if unaddressed over time.
- Conduct an informal inspection of the community and make a list of violations.
- Review the association’s documents with particular attention to approved rules and policies that have been previously distributed to residents.
- Consult with an HOA attorney regarding laws that may have changed and the risks/rewards and costs of enforcement. For example, a board or architectural review committee that failed to respond to a written request in a prescribed time frame may be unable to enforce the covenant/rule.
- Inform the residents with a Notice that the Board is Reviving Overlooked Rules
The Notice should address the following:
- The value to the community of having rules
- That previously overlooked rules will once again be enforced in a fair and consistent manner.
- List those rules that will be enforced and provide copies of rules that have been previously adopted.
- That rules will generally not be enforced retroactively. Consult with an attorney regarding retroactive enforcement.
- Provide reasonable grace periods based on the type of violation for residents to comply with the revised rules.
Summary of Recommendations
- Educate residents with periodic email reminders.
- Conduct regular inspections.
- Review the governing documents with regard to architectural control.
- The association should maintain a book of adopted resolutions and rules that is supported by meeting minutes.
- Utilize the resources of a management company and or attorney who is experienced in homeowner association laws for your state.
- Associations should adopt a specific covenant enforcement procedure via a resolution.
- Associations, using the adopted covenant enforcement procedure, should uniformly, timely and consistently enforce the covenants/rules regardless of the violation and regardless of the violator.
- Adopt resolutions/rules where needed that specify specific policies for covenant/rule enforcement.
- Maintain D & O Insurance and consult with your agent regarding exposure to ‘exclusions’.