When is One Story One Story?

When the documents say how tall it is. And when it does not say how tall one story is, there is a very good chance that language in the governing document limiting a structure to one story will be unenforceable as a restrictive covenant.

In a recent Colorado Court of Appeals decision, Allen v Reed, 155 P.3rd 443 (Colo. App. 2006) the appellate court reversed the trial court’s granting a permanent injunction ordering the defendants to remove their A-frame addition to their home, which contained a bedroom loft suite. The lawsuit did not involve the Association, but was an action between two homeowners regarding an interpretation of the Association’s restrictions limiting structures to one story.   It was unclear whether the Association Board had the authority to enforce and there was no existing architectural control committee to enforce the restriction.

The Association covenants had at its purpose the development of a harmonious and attractive development of the property. To achieve this end the covenants restricted heights on all homes to not more than one story measured from the finished grade. Unfortunately, the covenants did not provide any specific measurements for determining the height of one story above finished grade; nor the definition of finished grade. Additionally, there was no language in any of the documents which supported the Plaintiffs' ("Allens") contention that the covenant restrictions were to protect the views of the homeowners. The Defendants' ("Reeds") A-frame blocked the Allens' view of the lake.

The trial court adopted the definition of one story from the Uniform Building Code ("UBC") which is: "the distance of living space from floor to ceiling." The Allens also relied on the UBC and expert testimony that finished grade meant from the finished grade of the original dwelling, but such language was not in any of the documents utilized. The trial court concluded the bedroom loft made it a two story building; measuring from the floor to the floor of the loft to the ceiling. Therefore the trial court granted the injunction and ordered the Reeds to remove the A-frame addition.

The Reeds appealed. Their position was that there was no definition of one story or finished grade in any of the governing documents and therefore the terms, especially “one story” was ambiguous and unenforceable.

The Court of Appeals agreed with the Reeds and reversed the trial court’s decision that the Reeds had to remove the addition. The Appellate Court in its decision relied on the following general principals of law, among others:

  • Terms of a covenant are ambiguous when they are susceptible of more than one reasonable interpretation. The appellate court pointed out the ambiguity in the term “one story.” “One story” can be from the outside finished grade to the roofline or from the inside from the finished grade to the bedroom loft suite below the roofline as the trial court defined it; or it could be 23 feet as built by the Defendants, or 35 feet as restricted by the County regulations. There are 3 logical interpretations which make the use of “one story” ambiguous. As the Appellate court highlighted, the failure to prescribe a numerical number to one story renders the language susceptible of more than one interpretation.
  • When the language of a covenant is unclear, courts will resolve all doubts against the restriction and in favor of free and unrestricted use of property. Language restricting use of real property has to be clear and discernable from the documents themselves. In this matter the Allens contended that the intent of the documents was to protect homeowners’ view of the lake. But they could not point to any language in the documents that upheld their contention. The court of appeals rejected their position, and agreed with the Reeds that Colorado courts “resolve all doubts against unclear restrictions in favor of free and unrestricted use of property.” This is a clear example of an unclear restriction where the principal applies; e.g. if the restrictive language does not state with specificity that the purpose is to protect lake views, the courts can not create a definition or add language to prevent owners free and unrestricted use of their property; here,to construct an addition even if it blocks a neighbor’s view.
  • Colorado courts will refuse to rewrite covenants or add terms that are not contained in the covenants.  The trail court also adopted the definition of “finished grade” from the UBC. The appellate rejected that definition because it was not in the covenants and could not be used even if experts testified as to the industry standards. The appellate pointed out that the trial court erred by adding terms, here the definition of “finished grade” from the UBCto the covenants – especially since no where in the covenants is any reference made to the UBC. 

The Appellate Court, based on the facts presented in this matter, made the right decision in upholding the right of property owners to keep their addition in the face of unclear and ambiguous language in the governing documents.

While the argument is persuasive that the intent was to protect views, the courts do not want to become the arbiter each time there is a dispute between what the language clearly states versus what the hidden or implied intent was.   If the courts did undertake the task of defining words like one story, finished grade or what a harmonious development plan was to reach an outcome that was not stated, the principals of law would only become suggestions. It would open the floodgates to protracted litigation over definitions.

In auditing Association documents, Boards should undertake a systematic review of all of its restrictions, rules and regulation to determine if they enforceable; and if not, determine which ones are so substantive that they should be amended to eliminate the ambiguity that would make them unenforceable.