Enforcement of Governing Documents – What are the Association’s Options?

March 3rd, 2017

Posted in Business & Corporate Law,Real Estate Law

One of the most common topics we are asked by association clients is how to enforce the covenants and restrictions set forth in the association’s governing documents (declaration, articles of incorporation, bylaws, and rules and regulations).  Below is a brief review of an association’s options in regards to enforcement.

When dealing with a violation issue, the Association should consider first sending violation notice(s) (either through management or legal counsel) requiring compliance.  A violation notice should state, among other things, the nature of the violation, the specific provision being violated, and a specific date to comply.  If violation letters do not result in compliance, an association may impose fines and/or suspend an owner’s rights to use common elements and facilities.  However, it is important to note that the association must provide the owner at least fourteen (14) days’ notice and an opportunity for a hearing prior to imposing a fine or suspending use rights.  Further, for homeowner’s associations, the hearing must be held before a committee of at least three (3) other owners who are not officers, directors, or employees of the association, or the spouse, parent, child, brother, or sister of an officer, director, or employee. For condominium associations, the committee must consist of of other unit owners who are neither board members nor persons residing in a board member’s household.   As a practical matter, some associations find it difficult to assemble the “fining committee” described above.  However, if an association can overcome this practical obstacle, imposing fines could be a useful tool to enforce compliance of the governing documents.

If fining or suspending use rights does not result in compliance, or as an alternative to those processes, an association may utilize the institution of legal proceedings through counsel by first proceeding with mandatory, nonbinding alternative dispute resolution.  For homeowner’s associations, the association must first participate in pre-suit mediation.  For condominium associations, the association must first participate in nonbinding arbitration.  It should be noted that certain “disputes” are not subject to mandatory, nonbinding alternative dispute resolution.  For example, removal of a tenant is not considered a “dispute,’ and, thus, an association may seek direct relief from the court.

If the parties come to an impasse during mediation (HOA) or if arbitration does not produce a favorable result (condominium), then the association may file a lawsuit in a traditional court.  The primary form of relief would be injunctive relief specifically asking for an order from the court prohibiting the activity in violation of the governing documents.  Moreover, the prevailing party should be awarded reasonable attorney’s fees and costs association with bringing the action.

The foregoing was intended to provide an overview of the potential enforcement remedies that are available to an association.  Accordingly, an association’s board of directors are encouraged to seek advice from a qualified attorney to provide a fully comprehensive explanation of its enforcement options and the proper procedures.

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