In any conflict between an owner and a Homeowners’ Association (HOA), the underlying question to be answered by both parties, and ultimately by the court is: ‘Can the HOA do that?’ In order to proceed in their own best interests both the owner and the HOA need to understand the documents that establish and control the administration of their HOA. That understanding is the foundation of each defense to the enforcement of those documents. HOA’s often are faced with owner arguments relating to compliance with the association’s governing documents (Declaration of Condominium, Bylaws, Rules, etc.) because they are unable to enforce rules and charges which arguably have not been adopted or carried out properly. This article describes 8 defenses, or arguments, that might be raised by homeowners who are defending actions being taken by their HOA to enforce the association’s rules.
1. Lack of Authority
If an association does not have specific authority to bring the action under the association’s governing HOA enforcing documents, it may not have the right to take the action that is being taken without having first satisfied the requirements for obtaining the authority.
2. Unreasonableness
If a court deems a restriction to be unreasonable or the association’s interpretation of the scope of the restriction to be unreasonable such actions by the HOA will be barred. Principles that are commonly applied to determine the reasonableness of a particular covenant include:
a. The covenant violates public policy.
b. The covenant bears no rational relationship to the protection, preservation, operation, or purpose of the land against which the declarations is recorded, or
c. The covenant imposes burdens on the affected land that are so disproportionate to the covenant’s beneficial effects that the restriction should not be enforced.
3. Unreasonable Restraint on Alienation
A ‘restraint on alienation’ is a condition on the right to convey or otherwise dispose of an interest in property that is imposed in connection with a transfer of that property. In general, the law prohibits “unreasonable” restraints on the alienation of a person’s property. Courts usually weigh the owner’s burden against the covenant in order to determine whether the HOA has placed an unreasonable ‘restraint on alienation’.
4. Selective Enforcement
Associations have a duty to interpret and enforce their governing documents in good faith and in a manner that is neither arbitrary nor based upon prejudice or emotion. Homeowners often defend an HOA’s action seeking to enforce a covenant against the owner in bad faith, i.e., in an unreasonable and/or manner different from the treatment of others. That argument is a defense of selective enforcement.
5. Lapse of Time
Homeowners can argue that too much time has passed. The most extreme version of this argument is that the Statute of Limitations has run out so that any action by the HOA is clearly barred. A more difficult argument is that the actions are barred by ‘Laches’, in otherwards, HOA action is barred because the actions were delayed beyond any reasonable time. in the filing of the action, and the association has either acquiesced in the homeowner’s conduct that is now being challenged or has prejudiced the homeowner by the delay in bringing the action. A homeowner arguing a laches defense must establish that: (i) the association had knowledge of the fact that the homeowner was violating the covenant in question; (ii) the length of the delay was unreasonable; and (iii) The owner then argues that the delay has prejudiced the owner in some way.
6. Estoppel
This is an argument by the owner that the association has misled a homeowner into believing that the association would not seek enforcement of a particular covenant, either verbally or through action or inaction. If the court agrees, the association may be equitably barred from enforcing its rule because the homeowner has relied on the association’s conduct to his or her detriment. To invoke the defense of equitable estoppel, a homeowner should be able to prove:
a. The association had knowledge of the facts.
b. The association intended that it conduct would be acted on, or the association acted in such a manner, that the homeowner was entitled to believe that the association’s conduct was intended to be acted upon.
c. The homeowner was ignorant of the true facts; and
d. The homeowner relied on the association’s conduct to his or her detriment or injury
7. Waiver
In defense to an association’s HOA enforcing documents action, a homeowner may contend that the association’s board of directors is seeking to enforce a covenant or rule for which it has not taken action against similar violations. Thus, the homeowner may argue that the association has waived the right to pursue the violation against the homeowner because the association has tolerated other similar violations by others. The ‘waiver’ defense is a contention that by failing to seek enforcement against similar violations by other parties, the association has induced the homeowner into believing that the particular covenant is no longer subject to enforcement.
8. Changed Circumstances
The enforcement actions of an association will not be enforced when changes in circumstances have eliminated the original purpose of the covenant and it would be unreasonable for the court to allow it to continue to be enforced. It is a question for the court to decide if that has occurred. A homeowner must convince the court of the following to prevail with this argument.
a. There has been a change in surrounding circumstances that substantially frustrates the purpose of the requirement.
b. The change was not caused by the homeowner.
c. It would therefore be inequitable to enforce the requirement
CONCLUSION
In dealing with any legal conflict, one must do their best to determine what a court might do with the issues in question and guide one’s actions based upon your best guess in that regard. The early help of a lawyer is highly recommended. The lawyer may not be able to make absolutely correct predictions, but the input will be of value. Consideration of Alternative Dispute mechanisms is also highly recommended. Litigation in this day and age always takes more time than the parties want, the outcome can be unpredictable and attorney fees are always more than the parties want to pay. Mediation and Arbitration are alternatives to the traditional lawsuit and can be a more cost-effective and efficient way to proceed.