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The Rules Are Enforceable

The Rules Are Enforceable

A couple of our communities have just come out of litigation with homeowners who made improvements on their lots without architectural approval.  In both cases, the cost of the improvements was probably about $3,000 to $5,000.  In one case, the homeowner was asked to stop the work until he got approval and he refused.  In both situations, the homeowners got some really bad legal advice and basically took a position that they don’t have to abide by the association’s “rules”.  One of the homeowners even took a position that he didn’t have to listen to the judge!

For both associations and both homeowners, the improvements have now been removed, costing probably another $3,000 to $5,000 for each homeowner.  The homeowners reported that the legal fees paid to their attorneys were about $25,000 for one and about $35,000 for the other.  In addition, each homeowner ended up paying the association’s legal fees, which were about $30,000 in the first case and about $60,000 in the second case.  In short, the improvements to the property done without approval cost these homeowners between $60,000 and $95,000 – and of course all the work has been removed.

Part of the reason that these cases ended up costing so much in legal fees appears to be that the attorneys that advised them to fight it simply were unable or unwilling to read and understand three important California appellate court decisions.[1]  (This opinion is just from my personal observations and discussions with the homeowners - it is always possible they simply did not believe their attorney and felt that they would win.)  Simply put, these three cases confirm that the association’s rules (whether in the CC&R’s, amendments to the CC&R’s, or rules adopted by the Board of Directors), if reasonable, are enforceable – and the burden of proof to show they are not reasonable is placed on the homeowner.

The underlying principle here is that when you bought your home you became bound by the covenants – in simple but not technically correct terms, you entered into a contract with your association that binds you and your association.  You have essentially agreed to abide by the governing documents and reasonable rules adopted under those documents by the Board of Directors you elected.  The association is bound to the fact that it must enforce the rules, and if it adopts new rules they must be reasonable.

Most friction between associations and their membership comes from the fact that homeowners have not read the documents, or simply feel "It is just the HOA Board – it is not like a law or something”.  The problem is, it is like a law or something.  The duty to comply by the homeowner and the power to enforce by the board are the basic premises behind governance in homeowners associations.  While many feel that it should not be that way, many others buy into homeowners associations for exactly the opposite reason.  They want the assurance that the documents will be enforced.

Simply put, before you begin construction on an improvement on your home or lot, read the governing documents and the association’s rules.  Submit the required application and get approval.  We all feel bad about the high costs that the homeowners referenced above had to shell out – it is not worth it.  In both cases, by the way, the improvements were clearly objectionable for a variety of reasons, but that is not the issue.  The issue is that the rules are enforceable, and Boards have fiduciary duty to seek reimbursement (from the violating owner) of all costs and fees of enforcement.

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