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BrianB
(California)

Posts:1748

10/01/2008 6:35 AM
Just an example of why boards should do their duties, and why enforcing the rules fairly is perhaps a smart idea, as well as a duty of the board. It will be interesting to see what a judge rules, but the plaintiffs have a point: if an HOA is sold/marketed as something to maintain property values, and there is a promise to enforce the covenants, it is breach of that promise to willfully ignore the enforcement. http://www.dailycamera.com/news/2008/sep/30/hoa-decried-too-lax/ for those who don't like jumping pages: LONGMONT — A Longmont couple has turned the legal tables on their homeowners’ association — suing it not for being too overbearing with rules enforcement but for being too lax. Brian and Sheri Bernal, who have lived in upscale Starwood at Fox Meadow in east Longmont for four years, complain in their suit that houses around them feature architectural inconsistencies, lawns are choked with weeds and construction projects are allowed to go on longer than the association covenants allow. The upshot, they say, is that home values in the neighborhood are eroding. “As a result of the failure of the association to enforce the declarations and the guidelines and discharge its duties, as a result of the association’s failure to act and as a result of the association’s defective and negligent performance, the Starwood at Fox Meadow community has been degraded ...” the suit reads. The lawsuit, which was filed in Boulder County District Court last month, bucks the recent trend of people taking on their HOAs for being too harsh or nitpicky about the bylaws — color schemes, architectural directives, rules on vehicles in the driveway — that come with moving into a covenant-controlled neighborhood. Several legal challenges have gone all the way to the state legislature, as homeowners push for the right to dry laundry on a clothesline to save energy or xeriscape their lawn to save on water use. The Bernals claim their home has declined in value by $200,000 due to the lack of enforcement by the HOA. And they want restitution. “You’ve led someone to believe they’ll have these protections, and they don’t have these protections,” said Brian Bernal, whose house on Stardance Way is on the market. He said he has unsuccessfully tried to achieve resolution for years with the homeowners’ association, which he said is operated by Greenwood Village-based Hammersmith Management Inc. An executive at Hammersmith didn’t return a call requesting comment Tuesday. “You can’t look at a snapshot of what is out there today — this is a cumulative issue that has been going on since 2004,” Bernal said. What is out there today is a neighborhood with million-dollar homes boasting meticulous landscaping and green grass at its west end and a stretch of homes near where Bernal lives on the east side with weed-pocked, dirt-scarred lawns. Bernal said until recently, some of the weeds had grown to several feet in height. He also pointed to a house across the way that has multi-hued pipes and exhaust vents jutting up from the roof, a violation of the uniform color scheme required under the covenants. Sandra Barnes, who lives amidst several homes on Sundance Circle with less-than-stellar-looking landscaping, said the forlorn-looking lawns are not due simply to neglect on the part of the homeowners. She said the house across the street is in foreclosure, and one next door has new occupants, who just started making improvements to the grass and shrubs over the last few weekends. Barnes said her impression is that Hammersmith has been more on the overbearing — or, as she puts it, “over the top” — than the neglectful side in looking out for covenant violations. She received a warning notice about dandelions on her lawn this past spring and a threat of a $50 fine if she didn’t eradicate them, she said. Barnes surmises that things may have improved since she moved into the neighborhood a year ago and that she and the Bernals are “probably looking at different time frames” in terms of when supposed violations occurred. Overall, Barnes isn’t a big fan of HOA rules and regulations and said homeowners should just be able to maintain their properties with a reasonable sense of concern for their neighbors. “To me, it’s nice to have some difference in the neighborhood because we don’t want it to be cookie-cutter,” she said.

KirkW1
(Texas)

Posts:1190

10/01/2008 7:34 AM
I don't think they will see any of their $200,000. The thing is that they themselves could have enforced the covenants as well. Now what would be interesting is if they has sued for breach of contract and to free themselves of the annual assessments. They might even list as damages the amount they have paid in assessments. While I am not a lawyer, this would seem a much more reasonable suit. HOAs have been sued for not taking action before and because the covenants state the may enforce the covenants they have an out. But if there is a significant portion of the budget going to what could be considered covenant enforcement they would seem to have breached their contract.

RogerB
(Colorado)

Posts:3725

10/01/2008 8:39 AM
Brian, this case illustrates the need for the HOA and PM to enforce restrictions. I think the suit was initiated as a wakeup call to the HOA and Hammersmith (the PM). Doubt that it will go to trial because the HOA would lose and would be stuck with pay both parties legal fees; plus some damages awarded (which would probably be less the the legal fees).

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

MaryA1
(Arizona)

Posts:2489

10/01/2008 10:54 AM
This reminds me of a very well known case here in AZ - Gfeller v. The Scottsdale Vista North Townhouses Assn. I know I posted this info not too long ago, but will again. In the case the Gfellers brought suit against the assn for failure to enforce the declaration. The assn claimed they had a right to enforce the declaration but NOT the duty to do so. However, upon examination of the CCRs, the court found the assn did indeed have the DUTY to enforce as specifically stated in the CCRs. The declaration stated: "the board shall have the right and duty to enforce the declaration against violating owners." So, it really all depends upon the wording in the CCRs. If "duty to enforce" is in there, then the assn should be very careful or they could end up in court. Bottom line: If the assn does not want to enforce a particular provision they should take steps to amend or repeal that provision.

JeffT
(Maryland)

Posts:33

10/01/2008 11:01 AM
MaryA1 What did they win? Can you post a link or the article? Our assn. has enforced so many things and it shows. I would like to make them aware. I recently joined the board because of this.

MaryA1
(Arizona)

Posts:2489

10/01/2008 11:22 AM
Posted By JeffT on 10/01/2008 11:01 AM MaryA1 What did they win? Can you post a link or the article? Our assn. has enforced so many things and it shows. I would like to make them aware. I recently joined the board because of this. Sorry, Jeff. The only info I have is that the case went to the AZ Court of Appeals and the court held that ". . .the assn has an affirmative duty to enforce the assn's gov. docs." This took place a number of years ago but was the first such case in AZ.

GeorgerwilliamsW
(Indiana)

Posts:767

10/03/2008 8:24 AM
Jeff here is a reference to the case. Patricia Gfeller and Richaed Gfeller v. The Scottsdale Vista North Townhomes Association, 1 CA-CV 98-0010, Court of Appeals State of Arizona, Division One "We reverse the trial court's declaratory judgment in favor of the Association. We find that the CC&Rs impose an affirmative duty upon the Association to enforce the drainage requirements of the CC&Rs, which duty is not negated by provisions that permit the Association to select among alternative methods of enforcement." And the complete text: caselaw.findlaw.com/data2/arizonastatecases/app1/cv980010.txt

MaryA1
(Arizona)

Posts:2489

10/03/2008 8:31 AM
Thx George! It appears that the Gfellers were awarded their attorney fees and no other monetary judgement. Is that how you read it?

GeorgerwilliamsW
(Indiana)

Posts:767

10/03/2008 8:45 AM
The issue in the case was what appeared to be conflicting language in the covenants. The court rightly held that the covenants created a duty (obligation) for the association, not simply a right. The court did not create a duty out of thin air. The declaration did, indeed, use the word "duty." However, with that said, and with that as settled case law, a number of declaration I have reviewed in Hoosierland and throughout the Midwest (I need to start counting), clearly only specify a right, not a duty. Your analysis is correct, I believe. Attorneys fees in this case were awarded, but the ruling did not preclude further action to recover. I don't know the ultimate outcome of the case. My guess it was settled out of court. However, I do see another appeals case that was filed in 2008 against the same homeowners association on an entirely different matter.

MaryA1
(Arizona)

Posts:2489

10/03/2008 8:52 AM
Posted By GeorgerwilliamsW on 10/03/2008 8:45 AM The issue in the case was what appeared to be conflicting language in the covenants. The court rightly held that the covenants created a duty (obligation) for the association, not simply a right. The court did not create a duty out of thin air. The declaration did, indeed, use the word "duty." However, with that said, and with that as settled case law, a number of declaration I have reviewed in Hoosierland and throughout the Midwest (I need to start counting), clearly only specify a right, not a duty. Your analysis is correct, I believe. Attorneys fees in this case were awarded, but the ruling did not preclude further action to recover. I don't know the ultimate outcome of the case. My guess it was settled out of court. However, I do see another appeals case that was filed in 2008 against the same homeowners association on an entirely different matter. The info I have on the case is in the form of a written review from an HOA attorney in AZ. In this doc. the attorney states: "Many declarations do not contain "duty" language, but rather provide the assn with the right to enforce the gov. docs. Whether a court would impose a duty to enforce the Declaration upon assn's whose docs do not contain "duty" language is currently unknown. Furthermore, some assn docs allow variances. The lesson taught is that assn's should review their docs. If the assn does not want to enforce a particular provision, it should amend or repeal that provision. Otherwise, an owner may have the right to sue the assn for failing to enforce the docs."

GeorgerwilliamsW
(Indiana)

Posts:767

10/03/2008 9:05 AM
Posted By MaryA1 on 10/03/2008 8:52 AM The info I have on the case is in the form of a written review from an HOA attorney in AZ. In this doc. the attorney states: "Many declarations do not contain "duty" language, but rather provide the assn with the right to enforce the gov. docs. Whether a court would impose a duty to enforce the Declaration upon assn's whose docs do not contain "duty" language is currently unknown. Furthermore, some assn docs allow variances. The lesson taught is that assn's should review their docs. If the assn does not want to enforce a particular provision, it should amend or repeal that provision. Otherwise, an owner may have the right to sue the assn for failing to enforce the docs." This is why it is wise to shop around for an attorney who will tell you what you want to hear. If attorneys did not have differences of opinion there would be fewer lawsuits. Were I in practice, I would not proffer such advice to a client. It is fundamental tenet of adjudication (particularly in civil cases) that a court is loathe to impose a duty where non exists. In the Gfeller case, a duty expressly exists, but was potentially contradicted. All the court did is resolve the apparent contradiction. It did not create a duty where one did not exist.

KirkW1
(Texas)

Posts:1190

10/05/2008 6:35 AM
As I read back through this thing something did come to me. In my association the documents clearly say the HOA has a right and not a duty to enforce. It also grants the power to grant variances to the association (which I would assume preclude private enforcement). But can one assume implied duties? For instance, historically a third of our annual dues has been spent on management. And one of the arguments of having management is covenant enforcement. It gets worse as since one third of the dues were not spent, a full half of the money spent was presumably for collection of dues and enforcement of covenants. If the association is collecting money for enforcement, does that imply a duty to follow through on said enforcement? I still don't see how the couple could actually show that the HOA is responsible for the decline in value. Certainly they would have to show that the lack of enforcement is the only factor, or at least face only collecting the amount attributable to said lack of enforcement. Still, I could see a ruling stating that the dues collection amounted to theft by deception, or a non-performance breach of contract. At some point if they can show that their dues were supposed to pay for enforcement and said enforcement failed to happen, then they have paid in error. And even this is a bit scary to me in light of recent actions by members of my association's Board.

GeorgerwilliamsW
(Indiana)

Posts:767

10/05/2008 7:26 AM
Indeed Kirk, a duty can be implied. And if one stated reason for professional management is enforcement, then it is reasonable to conclude that the association may have an implicit duty to enforce covenants even if only a right to do so was explicit. But I think that would be a stretch. Nevertheless, I am sure a judge somewhere would find such an implied duty. I wouldn't. But that gets back to the powers of the board to make reasoned decisions to enforce or not to enforce. A good reason would likely trump a duty in any court. Courts don't like to second guess business decisions. And I doubt a theft by deception theory would have much currency in any court. Interesting to speculate, however. I agree with your observation about prevailing on a suit regarding decrease in property values. It will be difficult to prove that the association was directly responsible. It will be a battle between expert witnesses on both sides.

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