When Covenants Collide with the American Dream

Most covenant-controlled communities have at least one owner that does not play by the rules. The mere mention of covenants may conjure an image of that purple house, untended lawn, or RV owner in your own neighborhood - that house that becomes a sort of sideshow within the community due to the on-going battle between the association and the owner. On the rare occasion, failure to abide by the covenants results in a dream deferred.

In homeowner associations, the American ideals of individualism and property rights clash with the social construct of common interest communities. Owners who violate their association covenants, allowing the situations to escalate to the local news headlines and beyond, do not evidently buy-in to the "common interest" concept. But sometimes the conflict between association and owner, manifested in the covenant violation "hold-out" scenario, stems from more rudimentary issues: education and participation.

We generally advise our clients to take a proactive approach to covenant enforcement. We offer the following suggestions for educating owners and encouraging participation to avoid protracted legal battles:

1. Provide notice of covenants and rules.
Associations can and should take steps to educate members on the covenants and rules and regulations. For example, an association may implement a new homeowner orientation program to ensure that owners learn about the covenants that apply within the community. Even if an association does not hold orientation sessions for new members, the association can distribute packets to new owners that include information such as board meeting times and location, property manager contact information, recommended vendors, and rules and regulations. In addition, if the board adopts new rules and regulations, the association should provide each owner with a copy of the new rules.

2. Allow member participation at member meetings.
The homeowners that comprise an association have the right to participate, subject to conduct of meeting rules, at member meetings. Homeowner association boards should not underestimate the benefits of listening to members and ensuring that members feel as though their voices are heard. Members that feel valued may contribute more to the association as a whole.

3. Hold special meetings to inform members of potential changes to rules and solicit member input on the proposed rules.
Associations should notify members of the proposed rules and, where applicable, the rationale for such rules. Allowing member participation prior to enacting new rules may ease an association's burden of enforcing the rules later through increased member buy-in and rules that reflect the values of the association's constituency.

4. Follow uniform procedures for the enforcement of covenants, including notice and hearing and the imposition of fines.
When faced with covenant violations, homeowner association boards must have a plan in place for how to notify the owner, provide an opportunity for a hearing, impose fines, and, in some cases, proceed with litigation. In Colorado, last year's Senate Bill 100 modified the Colorado Common Interest Ownership Act (CCIOA) to require that each homeowner association governed by CCIOA adopt a responsible governance policy that addresses each facet of covenant enforcement. Commonly, covenant violations that come to our office have gone through the following steps:

a.The association, through the board or a managing agent, notified the owner of the covenant violation by mail on at least three separate occasions.

b.In the notices to the owner, the association advised the owner of (1) the action that he or she must take to correct the violation; (2) the opportunity to meet with the board on a set date or to request a meeting within a set period of time; and (3) a fine that the association would apply if the owner did not correct the violation within a specific number of days.

c.The owner failed to reply to any of the notices. The association subsequently applied fines to the owner's account and, finally, turned the matter over to the attorney.

Many covenant documents contain provisions that allow associations to enter an owner's property and correct the covenant violation at the owner's expense. While, in some cases, association self-help may make sense, we generally do not advise associations to engage in self-help to enforce their covenants. In other words, we dissuade associations from entering the property of another to correct an on-going covenant violation without first obtaining a court order allowing such action. When all other attempts to achieve owner compliance fail, we recommend that associations pursue injunctive relief through the court system by seeking a court order that requires the owner to correct the violation within a set period of time. If the owner then fails to take the necessary action, the association may receive permission from the court to remedy the problem and charge any costs incurred to the owner. This approach helps to protect associations from owners' allegations of trespass and/or damages.

5. Seek legal counsel when a violation goes unresolved, especially after the Association has followed its covenant enforcement procedures.
Applicable statutes of limitations, potential abandonment of the covenants, and selective enforcement all may impact an association's ability to enforce its covenants. In Colorado, associations must act quickly to preserve their rights to prosecute some covenant violations, such as those that involve the construction of improvements. Documentation of all correspondence between the association and the non-compliant owner, as well as the association's current rules and regulations and information concerning other similar violations and actions to enforce, will assist counsel in advising the association.

Of course, these steps will not alleviate all covenant enforcement issues. But, hopefully, these proactive measures will reduce the need for homeowner association enforcement action.