J and N Realty Blog posts about Governance. Homeowners Association Management services to HOAs in and around Los Angeles.

Rules Enforcement

A Focus on Covenant Enforcement

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 frequently deal 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:

  1. It is my land, and nobody can tell me how I can use it.
  2. 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 frequently results 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 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:

  • Fences
  • Decks & Patios
  • Sheds and Outbuildings
  • Boat & RV Parking
  • Satellite Dishes
  • Mailboxes
  • Exterior Colors
  • Building Materials
  • Pools
  • Playground Equipment
  • Landscaping

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
  • Parking
  • Solicitation & Yard Sales
  • Garbage & Trash
  • Noise
  • Leasing Restrictions
  • Age Restrictive
  • Single Family Use
  • Residential Use/Business Use

Inspections

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 is 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 ensure 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 concerning 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
  • Websites
  • 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.

Suggestions:

  • 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 are 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 or rules where needed that specify specific policies for covenant/rule enforcement.
  • Maintain D & O Insurance and consult with your agent regarding exposure to ‘exclusions.’

 

Drafting Rules

 

Although many may not realize this, but drafting rules is a form of art.  It is an art in the sense that you have to know when it is too much, when it is too little, when it needs clarification, and when it conflicts with the law.  For this reason, it is always recommended that draft rules be reviewed by an association’s attorney prior to finalization.  Unfortunately, however, this does not always happen, and associations may find themselves in hot water attempting to enforce unlawful, or otherwise unenforceable, rules.

To assist you with the preparation of an initial set of rules, we have compiled specific examples and tips of what NOT to do:

  • Do NOT write rules that conflict with provisions of your declaration, bylaws, or articles of incorporation:

Example:

Declaration provides:

All parking spaces in the common area parking lot must be designated as guest parking and may not be utilized by owners.

Rule provides:

No owner may park in the common area parking lot unless he/she has obtained prior written approval from the board.

  • Do NOT write rules singling out children:

Examples:

⇒ No child under 14 may be on common area after 8 p.m. without adult supervision.
⇒ All tricycles and toys must be removed from common area after use.
⇒ Children may not run around or be involved in horseplay in the pool area.

  • Do NOT write rules containing unclear or ambiguous terms:

Examples:

⇒ No unsightly objects may be kept on decks.
⇒ No offensive behavior is allowed in the pool area.
⇒ All commercial vehicles must be properly screened from view.

  • Do NOT write rules that are unreasonable:

Examples:

⇒ No owner may retain a contractor without prior board approval.
⇒ Garage doors may only be open when entering and exiting the garage and may not be open for more than 15 seconds.
⇒ Absolutely nothing may be kept on patios or decks.

  • Do NOT write rules that conflict with State or Federal laws:

Examples:

⇒ No satellite dishes or other antennae may be installed on townhome roofs.
⇒ In the event, an owner shall violate these rules, and an immediate fine of $100 will be imposed.
⇒ No signs or flags of any kind may be placed on the lots.

  • Do NOT write rules treating certain religions differently than other religions:

⇒ Christmas lights and decorations may be put up 45 days before the holiday and taken down 30 days after the holiday.
⇒ The only religious activities the clubhouse may be utilized for are events sponsored by a local church.
⇒ No religious activity may be performed in the clubhouse, except that one Christmas mass may be held in December of each year.

Board of Directors

Most homeowners associations in California are formed as non-profit corporations.  A corporation is governed by and acts through its Board of Directors.  (See, Corporations Code Section 7210.)  The Board’s rights and powers as set forth in its governing documents are subject to the Corporations Code and the Davis-Stirling Common Interest Development Act.  (See, Corporations Code Section 7210 & Civil Code Section 1363.)  In what can only be described as a little knowledge is not always a good thing, confusion often arises as to the validity of the Board’s action when homeowner members perceive that a Board’s decision was not made in accordance with Robert’s Rules of Order.  Assuming that the Board had statutory authority to make such a decision, the action is not invalidated simply because of a purported breach of parliamentary etiquette.

Contrary to popular belief, “[t]he law does not require formal procedures during board meetings.  Nevertheless, board meetings are likely to be more productive and less frustrating for participants, if formal procedures are adopted and followed.”  (See, B.E. Bickel, 2012 Condominium Bluebook, p. 44.)  For this reason, many homeowner association Bylaws provide for the use of Robert’s Rules of Order, or some other form of parliamentary procedure, to be used during Board Meetings.  Unfortunately, confusion as to the scope and application of Robert’s Rules of Order sometimes presents an obstacle to the expeditious conduct of business.

For example, there is a common misperception that, pursuant to Robert’s Rules of Order, the President of the Association cannot vote on an action unless it is necessary to break a tie.  As pointed out on The Official Robert’s Rules of Order Web Site, “Frequently Asked Questions,” “it is not true that the president can vote only to break a tie.  If the president is a member of the voting body, he or she has exactly the same rights and privileges as all other members have, including the right to make motions, to speak in debate, and to vote on all questions.”  (Emphasis added.)

In a homeowners association, the President of the Corporation is typically a member of the Board of Directors.  Pursuant to Corporations Code Section 7211(c), “[e]ach director shall have one vote on each matter presented to the board of directors for action.”  As the President is part of the voting body, he or she can make motions, speak in debate, and vote on all questions unless the Bylaws expressly provide otherwise.

Not surprisingly, there is no authority that allows a member to repudiate an action of the Board that was made within the scope of its discretion vested by its governing documents, the Corporations Code, or the Civil Code simply by asserting a breach of Robert’s Rules of Order. “The law respects form less than substance.”  (See Civil Code Section 3528.)   The use of parliamentary procedure is intended to facilitate the orderly conduct of a Board meeting, as opposed to frustrate the operation of the Association.  In raising and ruling on parliamentary objections, common sense and fair play should be overriding factors.  If the Board has authority to act, and the appropriate number of directors as dictated by the governing documents approve the resolution, the action of the Board should be upheld.