Real Estate & Property Law

The Importance of Covenant Enforcement

By Lawrence B. Leff, Mark K. Payne, Suzanne M. Leff, Stan V. Jezierski

In today's tough economic times, many associations are struggling to pay their expenses due to several delinquent homeowner accounts and, oftentimes, overlook the importance of enforcing their covenants.

The board of directors for an association has a fiduciary obligation to ensure that homeowners are complying with the covenants contained in the governing documents. Covenant enforcement does not always require an association to take legal action against its homeowners and there are several cost effective ways of ensuring compliance.

Oftentimes, a simple and courteous letter to the homeowner may suffice. If the letter is ignored, the association's covenants may permit it to assess fines against homeowners for non-compliance. Before assessing a fine, the association must provide adequate notice to the homeowner and further provide to them an opportunity for a hearing before the board or fining committee to permit the offending homeowner to dispute the violation. If the board or committee is convinced that the violation exists, a fine may then be assessed. If a fine is assessed, it is typically beneficial for an association to continue to work with the homeowner to obtain compliance. It is recommended that the assessment of fines be used as a leveraging tool and not as a means of punishing the homeowners.

Occasionally, a fine and warning letters may not compel a homeowner to comply with the covenants. In this case, it is recommended that the association's attorney send a demand letter to the homeowner. If the attorney demand letter does not result in the violation being cured a lawsuit, if authorized by the covenants, should be filed against the homeowner requiring them to remedy the violation. The association's covenants may also permit it to enter a homeowner's property, cure or remove the violation and assess the expenses incurred to the homeowner. As a part of this lawsuit, the association should request a judgment against the homeowner for all or part of the fines assessed and reasonable attorney fees and costs incurred.

One often overlooked method of enforcing the association's covenants, particularly if the homeowner is a nuisance, is to institute a judicial foreclosure to remove the homeowner from the community. Of course, this option is only available if the homeowner has unpaid fines and assessment fees.

No matter which manner the association proceeds to enforce its covenants, it is recommended that they pursue so diligently and in a uniform manner to ensure that it is not precluded from enforcing its covenants in the future.

Full post as published by Colorado Homeowners Association Law Blog on May 11, 2010 (boomark / email).