Colorado Homeowners Association Law Blog

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.

Those of us that work in the community association industry have been closely following the path of the New Jersey case of Committee for a Better Twin Rivers v. Twin Rivers Homeowners Association. On July 26, 2007, the New Jersey Supreme Court announced its decision, affirming the trial court and reversing the court of appeals, in determining that, under the New Jersey Constitution, the homeowners association’s rules restricting signage did not violate the right of free speech, that the constitutional right of free speech is not absolute, and citizens may waive or otherwise curtail their rights. A little background is helpful to understanding this case, and what its implications are to those of us in Colorado.

The good faith acts of directors of profit or non-profit corporations which are within the powers of the corporation and within the exercise of an honest business judgment are valid.  Rywalt v. Writer Corp, 526 P.2d 316, 317 (Colo. App. 1974).

It is educational to review the Rywalt case, above, to show the deference the courts will give to Board decisions. In this case, a group of homeowners sued the Association in an attempt to prevent the Association from entering into an agreement with the developer to build a second tennis court on the common area close to the plaintiffs' homes. The cost of the tennis court would be borne by the developer. The plaintiffs argued, among other things, that the Association's decision was arbitrary and capricious.

The Jefferson County District Court ruled last week that a condominium association can prohibit smoking in their four-unit building.   The Heritage Hills #1 Condominium Owners Association amended its bylaws to ban smoking after an owner complained about smoke seeping into her unit.  The District Court upheld the bylaw change stating that second hand smoke "constitutes a nuisance" similar to "extremely loud noise."  Click here to read an article on this ruling recently published in the Denver Post. 

You may recall we reported earlier this year on a New Jersey case that made community associations subject to the state constitution, and therefore subject to free speech provisions of the constitution.

If you're interested in hearing more about the New Jersey case that extends state constitutional rights to private HOAs, NPR released a story yesterday. The voice of the Community Association Institute is notably missing, but it is still useful to hear how the case is being reported. The story does end noting that 71% of homeowners are happy with their associations.

Recently, a New Jersey court issued a decision regarding homeowner associations that has caused quite a stir among associations, owners, and professionals serving associations.

We have received a number of questions about whether SB 100 limits an Association's ability (acting through its board of directors) to make changes to its common elements - as an example, can the board change hardscape landscape improvements to irrigated sod? While SB 100 does a number of things, including imposing a number of additional requirements on the association's board of directors, the simple answer is that it does not restrict the board's authority to make this type of decision.

In a recent decision, the Colorado Supreme Court has affirmed the authority of Associations to seek damages from subcontractors for defective construction. The HOA filed a lawsuit against the developer, the contractor and various subcontractors for defective construction of the project. The HOA settled with the developer and general contractor before trial. The trial court dismissed the negligence claim against the subcontractors before trial.

In consideration of filing a construction defect or similar lawsuit, the importance of reviewing governing documents as well as the underlying construction documents and reports is of the utmost nature in this day and age when legislatures and Developers work to limit access to courts.

A homeowner association board of directors has a fiduciary duty to the association and its members. That fiduciary duty requires the board members to act in good faith and for the benefit of the association as a whole. Board members also have a duty of loyalty and a duty to deal impartially with beneficiaries, or members. Board members should remember the role of their fiduciary duty to the association when considering or making requests that affect the individual, private interests of any board member. One Colorado case provides a useful illustration for how boards might handle potential breaches of the fiduciary duty.