Mountain Law: Enforcing community standards, Six things to know

This article is reproduced from the Summit Daily News, July 29, 2009, by permission of author Noak Klug

Condominiums and single-family homes are often subject to protective covenants, as well as rules and regulations adopted by their homeowner associations. Even though the association may be primarily responsible for enforcing these provisions, they can usually be enforced by individual owners. Here are six things to know about enforcing community standards:

1. Options for enforcing community standards.

Community standards are best enforced informally. Where informal efforts fail, associations have the power to impose fines for violations (see #4 below) and to enforce a lien (#5 below). Standards may be enforced through legal action. If the cost to remove the violation is less than $7,500, a covenant can often be enforced quickly and inexpensively in small claims court.

2. One-year limit on enforcing some community standards.

If an owner builds something on his property that violates the covenants, such as building a fence when the community prohibits fences, the association and neighbors have only one year to file a lawsuit. A prudent association will confront the situation soon after discovering the violation so that meaningful discussions can take place with the owner long before the expiration of this short statute of limitations. There is no statute of limitations for building or zoning violations; if a covenant violation is also a building or zoning violation (such as building a home that is too tall), the association may have a remedy through government authorities.

3. Attorney fees. In most disputes between an association and a homeowner, the court has the power to award reasonable attorney fees and costs to the prevailing party. If an association sues an owner for a perceived violation and the owner prevails, the association cannot assess the owner for any portion of the association's litigation expenses.

4. Enforcement by imposition of fines. Associations may enforce standards by imposing fines; however, fines are not valid unless the association has a written policy providing the fine schedule. The policy must include a fair and impartial fact-finding process to determine whether an owner should be held responsible. The process must, at a minimum, provide the owner with notice of an alleged violation and the opportunity for a hearing before impartial decision makers who do not have a financial interest in the outcome or personal interests in the outcome greater than general membership of the association.

5. Enforcement by association lien. Homeowner associations may enforce a lien under Colorado law against the property of an owner who does not pay required fines or assessments. The lien exists by operation of the statute and need not be recorded in the public records to be valid (although many associations record a notice of lien anyway). The amount of the lien includes fees, charges, attorney fees, fines, accelerated payments, and interest. Associations may enforce their liens by foreclosing on the property with a sheriff's sale. A portion of the lien has special priority under Colorado law, which makes it a powerful collection tool. (For a general discussion of lien priority, see my April 29, 2009, article titled “Lien Priority Fundamentals”).

6. Dispute resolution policy. Colorado law requires that homeowner association boards adopt written policies concerning how disputes will be handled between the association and owners. These policies often require that disputes be submitted to mediation with a neutral third party before either side can file a lawsuit.

Owners and associations should consider carefully the options available, the risks, and the correct procedures for enforcing community standards. This is one topic I will address at a free class I am teaching on homeowner association law Thursday (July 30). For more information, contact Brooke Roberts, Land Title Guarantee Company, (970) 453-2255.

Noah Klug is an attorney with the Breckenridge law firm of Bauer & Burns, P.C. He may be reached at 970-453-2734 or Noah@BreckenridgeLawyer.com. This article is intended as a general overview; consult an attorney for advice on your particular situation.