For those of you who have served, or currently serve on a board of directors or an architectural review committee, have you ever felt like the evil parent telling your child “no”? No matter how you put it, the child continues to argue that he/she should be able to carry out the “forbidden” activity, until everything comes to a head and the child is sent off to his/her room.
Unfortunately, when it comes to the architectural review process for associations, resolution of a dispute is not as easy as putting your foot down and sending an owner to his/her room. To the contrary, the architectural process is closely scrutinized by courts and owners in the communities. Therefore, before denying (or approving) a request, it is imperative that the architectural review committee dot its i’s and cross its t’s.
Below, you will find examples of common pitfalls our office has seen that impaired rights of associations to enforce their architectural restrictions.
Failure to be consistent
When it comes to enforcement of restrictions and approval of proposed exterior modifications, consistency is key. In fact, it has been our experience that more and more judges are demanding consistent enforcement of covenants and rules before allowing associations to enforce such covenants and rules through the court process.
Consistent enforcement means an association is treating all owners the same and requiring all owners to comply with the same standards. Consistency does not mean an association can never grant variances, but if an association does grant a variance, it must be able to demonstrate why the particular property needed the variance and distinguish it from the other properties that did not receive variances. If an association cannot do this, a court will treat the variance as unequal treatment of owners and a failure to be consistent.
How can an association ensure it is consistent? By creating written criteria (i.e. a checklist) that will be used to evaluate each proposed modification and using only those criteria with respect to every proposed modification. For example, when it comes to installation of gazebos, the association could create a checklist that sets forth appropriate locations, maximum dimensions, appropriate materials, acceptable colors, acceptable architectural types, etc. As the ARC reviews each proposed gazebo request, it can check off each criterion to mark compliance. At the end of the evaluation, if all criteria were met, the gazebo is approved. If one or more of the criteria is not met, the structure is denied.
Failure to follow process
Oftentimes, a specific process is set forth in the governing documents or architectural guidelines which governs ARC submissions and reviews. The process may involve requirements for owners to complete specific forms and provide copies of certain materials to the ARC. The ARC, on the other hand, may be required to send a notice of receipt of an ARC submission and perhaps some other acknowledgment or documentation.
If the process is not followed by the owner, the ARC will likely have a basis on which to deny the request. If the ARC fails to follow the process and denies the proposed improvement, the owner may have a legal argument that the denial was unlawful. Even if the ARC approves the proposed improvement, but fails to follow its process, an angry neighbor who dislikes the improvement may have an argument that the ARC breached its duty by allowing this improvement and failing to follow its own process for doing so.
Based on the above, it is imperative that architectural review committees (and board) be aware of and follow their processes closely.
Failure to timely respond to ARC request
Some declarations (especially older ones), contain provisions requiring ARC’s to respond to exterior modification requests within a certain amount of time, or the request is deemed approved. For example, it is not unusual to see a provision indicating that failure of the committee to respond to a request for modification within 30 days of receipt is deemed an approval of the request.
If your governing documents contain such a provision, it is imperative for the association to have some sort of process in place that ensures all ARC requests are reviewed and responded to within the 30 day time frame.
Failure by an association to comply with such requirement may lead to installation of a modification that is prohibited by the governing documents. In turn, such installation could expose the association to liability based on breach of duty (i.e. failure to timely respond).
Failure to enforce restrictions as written
A board of directors has a duty to act in the best interests of the community, which includes the duty to enforce all restrictions and covenants as they are written. However, as communities age, some of the covenants that may have originally made sense, may no longer benefit a community.
For example, 30 years ago the requirement that all homes paint their picket fences white may have been consistent with the overall aesthetics of the association. However, in 2013 white picket fences are no longer viewed as positive attributes. In this scenario, a board may decide to simply stop enforcing the white picket fence requirement and allow owners to paint their fences other colors.
Although this may seem harmless at first, what happens when Bob Smith (a lover of white picket fences) moves into the neighborhood and starts complaining to the board that his neighbors’ fences are painted brown? Legally, Bob Smith is entitled to rely on the covenants as they are written and is entitled to insist on enforcement of those covenants. If the board refused to enforce the restrictions as they are written, the association faces liability exposure.
So, what’s a board to do in this type of situation? There are two options: 1) enforce the covenants as they are written, or 2) present a declaration amendment to the community to approve removal of the outdated requirement. Making a decision not to enforce a covenant is never a good idea unless the covenant violates a State or Federal law.
Failure to timely file legal action
The Colorado Common Interest Ownership Act (“CCIOA”) prohibits associations from commencing legal actions against owners to enforce violations of building restrictions, unless such actions are brought within one year of when the Association knew or should have known of the violation (a/k/a statute of limitations).
A common mistake made by boards (and ARC’s) is to send demand letters to, and impose fines against, the violating owners and believe that such letters stop the one year clock. The only action stopping the statute of limitations is filing a complaint in court.
Another nuance of the one year statute of limitations is figuring out when the association should have known of the violation. Generally speaking, if a violation is clearly visible from the street, the statute of limitations beginS when the modification is completed. On the other hand, if the violation is not visible from the street (i.e. it’s in the backyard where only neighbors can see); the one year statute of limitations may be extended until such time as the association received a complaint about the violation. However, the specific circumstances of each violation are different and legal counsel will need to perform a case-by-case analysis of each violation.
For more information on the architectural review process, click here.