ENFORCEMENT

Enforcing your governing documents should be clean and simple. You don't need a Tibetan monster.


The X-Files Arcadia taught us to follow the rules...OR ELSE! How has enforcement changed at your CIC since 1999?

Privitization and Its Discontents: Common Interest Communities and the Rise of Government for "the Nice."

SETTING THE TONE

Paula A. Franzese's Privatization and Its Discontents: Common Interest Communities and the Rise of Government for "the Nice." (ABA's The Urban Lawyer, Summer 2005, Vol. 37, No. 3) provides a scathing rebuke of many wayward CIC restrictions and enforcement regimes. Sign up for a free JSTOR account and enjoy!

"The absence of meaningful checks and balances on homeowners' association authority is a portent for abuse. The potential for autocratic rule is compounded by less than participatory governance structures and resident apathy."


"Examples of bad judgment abound as associations go about their work."


"Unhappy residents can be deterred from challenging existing leadership regimes for fear of reprisals."


"Aggressive homeowners' associations have prompted what some describe as a "budding national backlash.""

PENALTIES


The singular goal of enforcement is compliance, not punishment. This means that penalties for violating rules, restrictions and covenants must be reasonable. Courts are likely to reject penalties that do not suit the offensiveness and/or harm of particular violation. If you believe a $1,000 fine is a reasonable penalty for leaving a rubbish bin on the curb overnight, think again.

Colorado passed HB22-1137 in June 2022 (effective date August 09, 2022) limiting the total amount of fines for any single violation to $500 if there is no threat to public safety or health.

REMEDIES


Learn from history...and don't necessarily try to fix it. Courts have ruled in multiple cases where communities assume they have the right to: 1) reject an application for work already completed, 2) remove an improvement, and 3) recover all their attorney's fees. Here are three examples:

  • Arbitrary and Capricious Approvals

    • In Schwindt v. Omar, the California Court of Appeals (fourth district, division three) found a Board’s arbitrary and capricious decision to allow one owner to alter their property does not bind the court to a remedy involving removal of the alteration.

  • While the barn remained intact, the Warriner’s were left to reimburse their association’s $25,000 legal fees.

  • Remedies Limited by Ambiguity

    1. Precision of language in your governing documents matters, especially when it comes to a court of law. In Homes Association of Cedar Hills v. Craig, the Oregon State Court of Appeals found that language in the association’s declaration could be reasonably interpreted two different ways and, without any evidence of intent provided by either party, resolved the ambiguity in favor of the defendants and against the party responsible for drafting the language: the association.


Carefully consider reasonable remedies and don't assume you can 'CTRL+ALT+DELETE.' Courts are savvy.


READ CIC Rules: 8 Commandments for Development and Enforcement

DISCRETION


You've heard it again and again: statues vary by state. Enforcement also varies, but there are best practices your community can follow. After reading Condo Board is Required to Enforce the Rules (based on Florida statutes), one might conclude that enforcing every covenant and restriction in exacting fashion is a universal mandate, but common interest communities have discovered this is not always the best path forward. Case law has uncovered that not all restrictions (especially when it comes to rules and regulations) are reasonable. Experience has taught many CICs that it is better to offer avenues for homeowners to engage in certain activities and forms of expression than to ban X, Y or Z outright and that specific situations bring highlight the failings of overly broad restrictions.

Washington State's WUCIOA statute that became effective July 1, 2018, includes specific language representative of court decisions related to Board authority to reasonably enforce the governing documents:


RCW 64.90.405(7)(8)(9) - Powers and Duties


(7) The board may determine whether to take enforcement action by exercising the association's power to impose sanctions or commencing an action for a violation of the governing documents, including whether to compromise any claim for unpaid assessments or other claim made by or against it.

(8) The board does not have a duty to take enforcement action if it determines that, under the facts and circumstances presented:

(a) The association's legal position does not justify taking any or further enforcement action;

(b) The covenant, restriction, or rule being enforced is, or is likely to be construed as, inconsistent with law;

(c) Although a violation may exist or may have occurred, it is not so material as to be objectionable to a reasonable person or to justify expending the association's resources; or

(d) It is not in the association's best interests to pursue an enforcement action.

(9) The board's decision under subsections (7) and (8) of this section to not pursue enforcement under one set of circumstances does not prevent the board from taking enforcement action under another set of circumstances, but the board may not be arbitrary or capricious in taking enforcement action.


While this statute specifically allows reasonable discretion to enforce the governing documents, it also expressly forbids arbitrary and capricious enforcement. A Board of Directors does not possess the authority to make decisions in direct conflict with statutes or an organization's own governing documents. Such decisions would be considered unreasonable. Reasonable decision-making is an essential part of the "business judgement rule" (see Duty of Care and Standards of Conduct). The other, perhaps less obvious point: discretion should be used sparingly. Frequent intervention and application of discretion creates additional opportunities for an arbitrary and capricious (illegal and/or unlawful) process.


Generally, enforcing a well-written set of governing documents should not require Board intervention unless:

  • a violation hearing is requested

  • the circumstances of the violation and the rule and/or restriction are ambiguous to the point where the enforcing party (usually a management company or community manager) requires direction


Does your CIC permit circumstances that are not in compliance with your governing documents?

Selective enforcement is generally considered arbitrary and capricious and therefore illegal. Notably, selective enforcement and reasonable accommodations required by federal statutes like the Fair Housing Act are mutually exclusive and should not be confused.

  • If you 'bend' a rule or have not enforced a rule previously, can you start enforcing that rule selectively?

    • Small differences in facts can change the outcome, but if the Board agrees to permit something for Owner X, it can be viewed as creating a standard that should apply to all owners. A Board must be able to articulate how different facts justify different enforcement.

    • There are very few instances where you can limit enforcement to select owners without potentially being discriminatory.

    • Establishing a reasonable basis for a variance, e.g. waiving enforcement of a fine for a violation, is different than selectively enforcing rules related to which owners can keep pets, the size of those pets, etc.

      • Don't be fooled! Unless acting based on specific authority granted by your declaration / CC&Rs or by the Fair Housing Act, your Board likely has no authority to grant a "proactive variance" to a written restriction in your governing documents.

        • TAKE ACTION! If your governing documents are arbitrary, discriminatory, unreasonable, simply don't make sense or constantly lead to homeowner discontent and enforcement appeals, it's probably time for a change. There should be no need to "work around" well-written governance or to intervene on a regular basis. CIC Rules: 8 Commandments for Development and Enforcement


Enforcement ... is never going to be 100% equal, 100% of the time because it's done by human beings who are fallible, and have limitations. - Barbara (CAM)


It is fairly common for governing documents to provide individual members (owners) the ability to enforce compliance themselves without the Board's approval. In Wimberley v. Caravello, the Washington Court of Appeals ruled that the Board's decision-making was irrelevant given the nature of an owner-enforced dispute. Volunteer leaders need to understand when their association Board should get involved and when to leave "disputes between members." In 'The Option of Doing Nothing and Reasonable Inquiry' (see video), Ken Harer discusses how Board members can meet their duty of care by ensuring that they are not dismissive of potential enforcement actions.


Non-judicial dispute resolution such as alternative dispute resolution (ADR) (internal dispute resolution (IDR) required for California CICs) is a fantastic method to identify solutions at a relatively low cost in terms of time, money and other resources.

CULTURE OF COMPLIANCE


"Common interest communities ... present themselves as models of cleanliness, orderliness, and predictability. Implicit, if not explicit, in their very marketing is the message: "Come, comply with us."" - Paula A. Franzese's Privatization and Its Discontents: Common Interest Communities and the Rise of Government for "the Nice."

Repeat after me: the singular goal of enforcement is compliance, not punishment.


In OH, BEHAVE! Post-Pandemic Solutions: How to Build a Stronger Rules-Enforcement Culture, Andrew Penny elaborates on the myriad challenges that can result from a seemingly small, innocuous violation. He also contemplates how to develop a culture where voluntary reporting is appreciated. Unlike 'Cynthia' in GEICO's infamous HOA commercial, many communities rely on passive systems of 'aggrieved' reporting by residents even related to violations in common areas.


Taking a "see no evil, hear no evil" approach to enforcement is fraught with challenges. Violations, even if they are not always apparent, can become expensive and/or pervasive problems. Consider a multi-family housing property where clearance needs to be maintained for sprinkler heads. Meeting fire code could be the difference between fire suppression and significant damage and/or loss of life.


Actively engaging in frequent, invasive surveillance is quite different than routine review of areas within a community that are subject to the governing documents. Writing down policies and procedures about how your community goes about routine review is an excellent way to ensure uniform application and enforcement. Consider revising rules to add specificity if you discover violations that are typically imperceptible and/or that cause no actual harm to the common interests and purpose of your community. Court cases have proven that attempting to enforce unreasonable rules results in negative outcomes. Even the enforcement of reasonable rules in unreasonable circumstances is an equation for discontent.


Proactive management related to your governing documents should include communication, monitoring and enforcement rooted in an objective and unbiased, yet empathetic approach. Emphasize consistency, empathy, honesty, integrity, reason and transparency in your enforcement. Read Always Ask "WHY?": Are Empathy and Reason YOUR Stars and Stripes?


The unwritten rule for everything is that if nobody notices or knows you broke the rule, there will probably be no consequences. - Barbara (CAM)

DUE PROCESS


Due process is the formal expression of the more colloquial "opportunity to be heard" which is, in many cases, a statutory requirement. Beyond statutes, multiple courts have recognized the importance of providing a fair and reasonable process that involves an impartial hearing. Your governing documents should provide for a written hearing procedure. View hearing procedures in Declaration Language to Live By and example rules.


Impartial hearing processes provide a safe space to present evidence and avoid conflicts of interest. All parties should understand the process and be prepared to set aside emotions and personalities to understand the heart of the matter. Take a formulaic approach!

Anonymous complaints are inconsistent with due process if they cannot be substantiated by a reasonable person using reasonable effort. An anonymous person cannot appear at a hearing to present evidence. RCW 64.90.495(1)(k) requires associations to retain materials relied upon by the board or any committee concerning a decision to enforce the governing documents for a period of seven years after the decision is made. Note that there is no right to anonymity and that complaints, if relied upon, become records of the association. Most CIC records are subject to disclosure.


RCW 64.90.405(2)(l) - Powers and Duties


(2)(l) Enforce the governing documents and, after notice and opportunity to be heard, impose and collect reasonable fines for violations of the governing documents in accordance with a previously established schedule of fines adopted by the board of directors and furnished to the owners;

(5) If a tenant of a unit owner violates the governing documents, in addition to exercising any of its powers against the unit owner, the association may:

(a) Exercise directly against the tenant the powers described in subsection (2)(l) of this section;

(b) After giving notice to the tenant and the unit owner and an opportunity to be heard, levy reasonable fines against the tenant and unit owner for the violation; and


RCW 64.90.480(6)(7) - Assessments & Capital Contributions


(6) To the extent that any expense of the association is caused by willful misconduct or gross negligence of any unit owner or that unit owner's tenant, guest, invitee, or occupant, the association may assess that expense against the unit owner's unit after notice and an opportunity to be heard, even if the association maintains insurance with respect to that damage or common expense.

(7) If the declaration so provides, to the extent that any expense of the association is caused by the negligence of any unit owner or that unit owner's tenant, guest, invitee, or occupant, the association may assess that expense against the unit owner's unit after notice and an opportunity to be heard, to the extent of the association's deductible and any expenses not covered under an insurance policy issued to the association.

LEGAL PRECEDENT

CIC homeowners and representatives should understand several legal caveats, concepts, and precedents related to enforcement. Multiple affirmative defenses are available when legal cases arise:

  • Improper Administration and Procedural Flaws - These two concepts are somewhat intertwined. Improper administration generally relates to the way an organization executes its authority (e.g. following due process, etc.) while procedural flaws are more technical in nature (failing to fully review documents that have been submitted, failing to recognize missing information, etc.).

  • Laches - Failure to enforce a restriction in a reasonable amount of time (generally to be determined by a court)

  • Lack of Authority - Every organization has limits on its authority. Common interest communities are granted authority by state statutes and their declaration.

  • Selective Enforcement - See DISCRETION above

  • Statute of Limitations - Certain states have a statute of limitations for violations of restrictions of real property

STRICT PERFORMANCE, WAIVER AND ABANDONMENT


Regardless of enforcement practices, CICs can likely not abandon the requirements of recorded declaration / CC&Rs. Even so, the aforementioned "No Waiver" clause does not bullet-proof your association from lackluster decision-making or an adverse court decision. Note the excerpt below from Riss V. Angel where covenants were found to be binding, but the process used to reach an outcome failed to meet standards of reasonable judgement.

Riss v. Angel - 1997 Supreme Court of Washington


The court ruled the covenants are binding, but it found the association acted unreasonably in rejecting Plaintiffs' plans. The court concluded that the covenants as written are reasonable, but do not permit the homeowners to impose restrictions more burdensome than those expressed in the covenants. Specifically, the court said that the homeowners could not restrict size, height, and proximity to neighbors beyond the minimum square footage and the maximum height restrictions, and the setback requirements set out in the covenants. The court concluded that paragraph six's discretionary authority to reject proposals on the basis of design cannot be read as including authority to limit "bulk," i.e., size or scale. CP at 1633. The court concluded the association does have wide discretion to control design aesthetics, which the court reasoned included authority to reject, for example, a geodome, A-frame, or Tudor castle. The court also rejected the homeowners' concerns that lot six is special, saying that if special restrictions on a specific lot were desired, the covenants must clearly say so.


The court also concluded that the association acted unreasonably because it rejected Plaintiffs' plans without comparing the width and depth of other homes in the neighborhood to Plaintiffs' proposed residence, failed to thoroughly investigate, and relied upon inaccurate information.


In a somewhat converse scenario to Riss, a 2021 Indiana Court of Appeals of Indiana ruling decided that an owner lost the right to argue against restrictive covenants due to abiding those covenants for an extended period of time.


In Park Sutton Condominium vs. Barkan Management, a waiver of liability was found to provide an incomplete shield against all claims.


Both Nahrstedt v. Lakeside Village Condominium Assn and Hidden Harbour Estates, Inc v. Norman establish standards of reasonableness. Recorded restrictions such as those in a declaration / CC&Rs are covenants running with the land which confer a strong presumption of validity that is likely only overcome by when those restrictions are found to be: 1) arbitrary, 2) in violation of public policy (including discriminatory covenants), or 3) in violation of an individual's constitutional rights.


Example Declaration / CC&R Language


Strict Compliance - Each Owner, each Occupant, the Board and the Association shall comply strictly with this Declaration, the Bylaws, and the Rules and Regulations adopted pursuant thereto, as they may be lawfully amended from time to time, and the decisions of the Board.


Failure of Board to Insist on Strict Performance No Waiver - The failure of the Board in any instance to insist upon the strict compliance with this Declaration or the Bylaws or Rules and Regulations of the Association, or to exercise any right contained in such documents, or to serve any Notice or to institute any action, shall not be construed as a waiver or a relinquishment for the future of any term, covenant, condition, or restriction. The receipt by the Board of payment of an Assessment from an Owner, with knowledge of a breach by the Owner, shall not be a waiver of the breach. No waiver by the Board of any requirement shall be effective unless expressed in writing signed on behalf of the Board.

Interpretation

Pritchett v. Picnic Point Homeowners Association is an interesting case where the WA Court of Appeals, Division 1 reversed an earlier trial court decision. The case centers on restrictive covenants related to obstructing views. Here are some key excerpts:


¶ 17 The interpretation of a restrictive covenant is a question of law that we review de novo. Wimberly v. Caravello, 136 Wn. App. 327, 336, 149 P.3d 402 (2006). Restrictive covenants are interpreted to give effect to the intention of the parties to the agreement incorporating the covenants and to carry out the purpose for which the covenants were created. Riss v. Angel, 131 Wn.2d 612, 621, 934 P.2d 669 (1997). “The purpose of those establishing the covenants is the relevant intent. Subdivision covenants tend to enhance the efficient use of land and its value. The value of maintaining the character of the neighborhood in which the burdened land is located is a value shared by the owners of the other properties burdened by the same covenants.” Green v. Normandy Park Riviera Section Cmty. Club, Inc., 137 Wn. App. 665, 683, 151 P.3d 1038 (2007) (citing Riss, 131 Wn.2d at 621–24). Accordingly, we must place “special emphasis on arriving at an interpretation that protects the homeowners' collective interests.” The Lakes at Mercer Island Homeowners Ass'n v. Witrak, 61 Wn. App. 177, 181, 810 P.2d 27 (1991). “[I]f more than one reasonable interpretation of the covenants is possible regarding an issue, we must favor that interpretation which avoids frustrating the reasonable expectations of those affected by the covenants' provisions.” Green, 137 Wn. App. at 683.


¶ 18 In determining the intent of the parties to the agreement incorporating the covenants, we give “covenant language ‘its ordinary and common use’ and will not construe a term in such a way ‘so as to defeat its plain and obvious meaning.’ ” Wilkinson v. Chiwawa Cmtys. Ass'n, 180 Wn.2d 241, 250, 327 P.3d 614 (2014) (quoting Mains Farm Homeowners Ass'n v. Worthington, 121 Wn.2d 810, 816, 854 P.2d 1072 (1993); Riss, 131 Wn.2d at 623). We examine the instrument in its entirety and use extrinsic evidence to “ ‘illuminate what was written, not what was intended to be written.’ ” Wilkinson, 180 Wn.2d at 250–51 (quoting Hollis v. Garwall, Inc., 137 Wn.2d 683, 697, 974 P.2d 836 (1999) ).


¶ 29 The trial court's analysis was flawed and its ruling erroneous. First, the trial court improperly imputed a de minimis standard into the phrase “obstruct the Puget Sound or Park view of any other parcel.” Contrary to the trial court's analysis, there already exists an objective standard against which the prohibition, as written, can be measured. A homeowner's existing view is either obstructed or it is not obstructed. Silence as to the extent of an obstruction does not create an ambiguity“ ‘[i]t is the duty of the court to declare the meaning of what is written, and not what was intended to be written.’ ” Wilkinson, 180 Wn.2d at 252 (internal quotation marks omitted) (quoting Berg v. Hudesman, 115 Wn.2d 657, 669, 801 P.2d 222 (1990) ). By assuming that a minimal view obstruction could not possibly violate the covenant, the trial court introduced subjectivity to a standard that was otherwise facially objective. Moreover, the trial court's analysis ignored the Statement of Purpose—an integral part of the CC&Rs that is helpful for illuminating the purpose of the covenants contained therein. See Nelson v. Duvall, 197 Wn. App. 441, 453, 387 P.3d 1158 (2017) (“[I]n determining legislative intent, the ‘preamble or statement of intent can be crucial to interpretation of a statute.’ ” (quoting Towle v. Dep't of Fish & Wildlife, 94 Wn. App 196, 207, 971 P.2d 591 (1999) ) ).


¶ 30 Second, the trial court's analysis eschewed relevant extrinsic evidence and considered only statements made by select former Board members four years after the view protection clauses were adopted.3 But the intent of the homeowners who voted to adopt the covenants cannot be discerned through the post-hoc statements of individual Board members. See W. Telepage, Inc. v. City of Tacoma Dep't of Fin., 140 Wn.2d 599, 611, 998 P.2d 884 (2000) (“A noncontemporaneous understanding of legislative intent is not reflective of the Legislature's rationale for enacting a 1981 statute.”); see also In re F.D. Processing, Inc., 119 Wn.2d 452, 461, 832 P.2d 1303 (1992) ( “[T]he comments of a single legislator are generally considered inadequate to establish legislative intent.”); State v. Leek, 26 Wn. App. 651, 657–58, 614 P.2d 209 (1980) (statements made by individual legislators five years after bill's enactment were not competent to prove legislative intent). Neither can the court consider evidence that varies, contradicts, or modifies the written word. Bloome v. Haverly, 154 Wn. App. 129, 138, 225 P.3d 330 (2010). Rather, the appropriate epoch for consideration was the period of time leading up to the adoption of the view protection clauses. It was during this time that the covenants were drafted, the drafters explained the proposal to the homeowners, and the homeowners who voted “yes” formed their reasons for so doing.


¶ 32 Finally, the trial court's conclusion that the CC&Rs could not be reasonably interpreted to prohibit Pritchett's proposal is belied by its order directing the Association to amend the CC&Rs and add language to conform to the court's interpretation. Rather than interpreting the writing to declare what was written, the trial court declared that which it believed the drafters intended to write and then required the Association to amend the CC&Rs to conform to the court's vision. “A court may not create a contract for the parties which they did not make themselves. It may neither impose obligations which never before existed, nor expunge lawful provisions agreed to and negotiated by the parties.” Agnew v. Lacey Co-Ply, 33 Wn. App. 283, 288, 654 P.2d 712 (1982).


¶ 33 The plain language of Section 7.4 prohibits homeowners from constructing or modifying structures if doing so would “obstruct the Puget Sound or Park view of any other parcel,” regardless of the severity of the obstruction. This plain language understanding is supported by the statement of purpose and the extrinsic evidence surrounding the adoption of the covenants. By ruling otherwise, the trial court erred.