Lately I have been running into folks who have had a lot to say about how boards of HOAs are enforcing use restrictions in the declarations for their communities (commonly referred to as "covenants") and the rules and regulations which I will refer to as the "rules." While there are always two sides to every story, I thought it would be useful to to address some basic concepts which every board should be aware of when dealing with enforcement issues. So here we go:
1. Boards have a fiduciary duty to enforce the use restrictions in the declaration for their HOAs and the rules. Owners have a legal obligation to comply with the use restrictions and rules.
2. While Boards have the duty to enforce use restrictions and the rules, boards also have the authority under Colorado law to examine the unique circumstances behind particular violations and to exercise their reasonable business judgment on a case by case basis to determine whether to enforce or how far they should go with enforcement.
3. As a general rule, board members are also homeowners in their associations. That means the board members also have a legal obligation to comply with the use restrictions and rules. Compliance for board members is not optional! In fact, if board members are not in compliance, how can they expect to require or enforce compliance from other owners? Also, board members should be careful not to inappropriately give preferential treatment to their neighbors, family or friends.
4. Boards do not have the authority to levy a fine against an owner for a violation unless they first give that individual notice of the alleged violation and an opportunity for hearing to determine whether the violation occurred.
5. Associations are required to adopt and follow a policy which addresses enforcement of covenants and rules. This policy must include notice and hearing procedures and the schedule of fines. This policy must also be adopted and followed before levying fines for violations.
6. It is always best to obtain voluntary compliance with use restrictions and rules. One great way of doing this is to remind folks in the community of common violations. While some owners purposely violate use restrictions or rules – others may simply not be aware of them.
7. It is important for boards to review the use restrictions and rules on a routine basis to determine whether they still make sense and fit the priorities of the community as it has evolved. Use restrictions in declarations and rules can be changed. However, talk with your legal counsel for advice on requirements for making amendments and to review the changes for enforceability. Also, it’s always a good practice to build consensus in the community when contemplating changes to use restrictions and rules.
While the area of enforcement can be rather involved and complicated, this blog posting is intended to give boards a broad overview of things you should to take into consideration when enforcing use restrictions and rules. Since enforcement is never a favorite function of boards, hopefully this posting will help promote a process which is smooth and equitable.