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?

A bewildered homeowner posted HOA hit us with an absurdly large fine. I don't know what to do to the r/HOA subreddit a few days ago.  The monetary penalty?  $6,000 for garbage cans that weren’t hidden well enough.

• • This HOA is located in North Carolina.  § 47F-3-107.1 requires:

    1. Due process (including notice and an opportunity to be heard)

    2. If it is decided that a fine should be imposed, a fine not to exceed one hundred dollars ($100.00) may be imposed for the violation and without further hearing, for each day more than five days after the decision that the violation occurs.

Colorado regulates CIC monetary penalties via § 38-33.3-209.5:

• • Learn about HB22-1137 (effective August 9, 2022)

  • (1.7) (III) (A) If an association reasonably determines that a unit owner committed a violation of the declaration, bylaws, covenants, or other governing documents of the association, other than a violation that threatens the public safety or health, the association shall, through certified mail, return receipt requested, provide the unit owner written notice, in English and in any language that the unit owner has indicated a preference for correspondence and notices pursuant to subsection (1.7)(a)(I) of this section, of the violation informing the unit owner that the unit owner has thirty days to cure the violation or the association, after conducting an inspection and determining that the unit owner has not cured the violation, may fine the unit owner; however, the total amount of fines imposed for the violation may not exceed $500.

Florida regulates CIC monetary penalties via 718.303(3) and 720.305(2):

• • The association may levy reasonable fines for the failure of the owner of the unit or its occupant, licensee, or invitee to comply with any provision of the declaration, the association bylaws, or reasonable rules of the association. 

  • A fine may not become a lien against a unit. 

  • A fine may be levied by the board on the basis of each day of a continuing violation, with a single notice and opportunity for hearing before a committee as provided in paragraph (b). However, the fine may not exceed $100 per violation, or $1,000 in the aggregate.

Beware of monetary penalties that run afoul of your state statutes and SCOTUS.

A Florida woman was fined $100,000 for a dirty pool and overgrown grass. When do fines become excessive?

Excessive fines? Florida city hits homeowners with massive penalties

— Kristine Phillips | USA TODAY| 07/19/19

"The protection against excessive fines guards against abuses of government’s punitive or criminal law-enforcement authority… For good reason, the protection against excessive fines has been a constant shield throughout Anglo-American history... Exorbitant tolls undermine other constitutional liberties. Excessive fines can be used, for example, to retaliate against or chill the speech of political enemies." 

— Ruth Bader Ginsburg, SCOTUS Majority Opinion in Timbs v. Indiana (February 20, 2019) 

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.

• No Approval?  No problem! … Almost

  • In Warriner Investments, LLC v. Dynasty Homeowners Association, the Indiana Court of Appeals found no fault with a trial court’s discretion to allow a pole barn  that was knowingly constructed without approval to remain in place because it wasn’t possible to see the structure from the street or any other lot and was therefore determined to have no material impact on the association.

• 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.

• Tear it Down!

  1. In Wimberly v. Caravello, a homeowner obtained permission from his association to build a three-story garage.  That homeowner was subsequently warned, and later sued by a neighbor.  The Washington Court of Appeals, Division 3, granted attorney's fees and injunctive relief to the plaintiff: the defendant was ordered to downsize the garage.  Expensive!  Also see Foster v. Nehls.

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

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 waiving enforcement of a fine for a violation is different than selectively enforcing rules.

    • 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.

      • Traditional governance models do not allow for "proactive variances" to written governance. 

      • Proactively waving written restrictions IS NOT THE SAME as considering how to enforce a restriction that's been violated.

      • Owners who violate restrictions have the right to due process before penalties are imposed.  You Board should take reasonable steps based on the specific facts and circumstances presented by homeowner appeals.

    • 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.  READ: 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 Wimberly 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' (video embedded below), 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.

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)

• The Meyers could get a permit to keep their library for $1,402, but ultimately decided instead to work to change the system. As a result, city officials are considering cheaper permits — around $5, according to the Journal — for similar free libraries, and benches.

  • the original hotline complaint may have been a catalyst for the city to rethink its regulations.  "Maybe we should thank that person.”

San Francisco is forcing couple to remove sidewalk 'obstruction' — or pay $1,400.  It's a little free library.  Aidan Pollard | Business Insider | 03/26/23

• Abandonment and Waiver - Often resulting from lacking communication, monitoring and enforcement, or because a number of exceptions (waivers) have been made over a sufficient period of time such as to invalidate the intent of a covenant or restriction.

  • • Swenson v. Erickson (2000 - Supreme Court of Utah)

    • Have your Deed Restrictions been Waived?

• Estoppel - Estoppel takes various forms, but centers around saying one thing and doing another or promising one thing and then taking contrary action.  View this short summary of estoppel.

  • • Alfaro v. Community Housing Improvement System & Planning Ass'n (2009 - California 6th District Court of Appeals)

    • The doctrine of equitable estoppel rests on the principle that a person “shall not be permitted to deny what he has once solemnly acknowledged.”  Arnold v. Melani, 75 Wn.2d 143, 147, 437 P.2d 908, 449 P.2d 800 (1968) | Nickell v. Southview Homeowners Ass'n

• 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

  • • CA Civil Code has a 5 year statute of limitations

    • Maryland has a 3 year statute of limitations for civil actions (unless an exception applies)

    • Washington State has a six year statute of limitations for action to enforce a homeowners association's lien for unpaid assessments

      • View additional limitations for WA State civil actions

• Summary Judgment - In a summary judgment motion, the burden is on the moving party to demonstrate that summary judgment is proper. 

  • Atherton Condo. Apartment-Owners Ass’n Bd. of Dirs. v. Blume Dev. Co., 115 Wn.2d 506, 516, 799 P.2d 250 (1990)

  • Perez v. Steever (2023)

In a summary judgment motion, the burden is on the moving party to demonstrate that there is no genuine issue as to a material fact and that, as a matter of law, summary judgment is proper. See Hartley v. State, 103 Wn.2d 768, 774, 698 P.2d 77 (1985). The moving party is held to a strict standard. Any doubts as to the existence of a genuine issue of material fact is resolved against the moving party. In addition, we consider all the facts submitted and the reasonable inferences therefrom in the light most favorable to the nonmoving party.

• We review orders on summary judgment de novo. Kim v. Lakeside Adult Fam. Home, 185 Wn.2d 532, 547, 374 P.3d 121 (2016). 

• A court properly grants summary judgment when the evidence shows there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998) (citing CR 56(c)). 

• The moving party bears the burden of proving there are no issues of material fact. Kim, 185 Wn.2d at 547. 

• If the moving party meets its burden, the nonmoving party must then make a showing sufficient to establish the existence of each element essential to their case. Atherton Condo. Apt.-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co., 115 Wn.2d 506, 516, 799 P.2d 250 (1990). 

• We consider all evidence and reasonable inferences in the light most favorable to the nonmoving party. Kim, 185 Wn.2d at 547. 

• "A genuine issue of material fact exists where reasonable minds could differ on the facts controlling the outcome of the litigation." Ranger Ins. Co. v. Pierce County, 164 Wn.2d 545, 552, 192 P.3d 886 (2008). 

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.

ADDITIONAL Enforcement References

• CIC Rules: 8 Commandments for Development and Enforcement

• Rules Enforcement Search

• Unwritten Rules - HOA Talk

• Simply Unenforceable: HOA Covenants And How They Can Go Too Far - HOPB

• Failure to Enforce - FindHOALaw

• Loss of Right to Enforce - Davis-Sterling.com

• Avoiding Common Covenant Enforcement Defenses - Altitude Community Law

• When Covenants Aren't Enforced - CAI DC

• Homeowner Associations and Restrictive Covenants - e-LawLines

• What to do when an HOA Doesn't Enforce Its Rules

• View Restrictions - Part II: HOA Covenants - Homeowner Law

• Resetting Enforcement & Volunteer Injuries - Common Ground March '21

• "Peace of the Puzzle" - Common Ground May/June '21

• Rule Enforcement Reset - WSCAI Journal July/August '22