The Self-Managed Association A Commonsense Approach to Governing Document Enforcement

Homeowner associations, by their very nature, create an environment ripe for adversity and conflict. Membership is not voluntary. The obligation of the homeowner to pay assessments and conform to the provisions of the governing documents is not based on agreement with the board’s decisions, use of amenities, or satisfaction with how assessments are budgeted and spent. For homeowner rights advocates, this is a nightmare scenario.

Homeowner association boards of directors have a duty to enforce the association’s governing documents. Furthermore, the enforcement of the governing documents must be “in good faith, not arbitrary or capricious, and by procedures which are fair and uniformly applied” (Liebler v. Point Loma Tennis Club, 1995). Boards of directors can minimize the conflict and anxiety of enforcement by using a commonsense approach that includes the following.

REVIEW KEY SECTIONS OF THE COVENANTS, CONDITIONS AND

RESTRICTIONS, OR CC&RS. For the most part, enforcement activity is focused on the following articles or sections of the association’s CC&Rs: (1) Use restrictions, (2) maintenance and repair obligations, (3) architectural review, and (4) rental restrictions. A review of these provisions will quickly inform the board of potential enforcement situations for which they need to plan or adopt clarifying rules. If the

A Commonsense Approach to Governing Document Enforcement

association’s CC&Rs are more than 15 years old, an attorney should review these sections to determine if the restrictions are still applicable and legal.

REVIEW PREVIOUSLY ADOPTED

RULES AND REGULATIONS. A review of current enforceable policies, rules, and regulations should be done annually. Doing this effectively may require the assistance of the HOA’s attorney. Boards are responsible to ensure that association rules are relevant, current, and consistent with federal, state, and local laws. Consider scheduling this review on the board’s governance calendar. Boards often adopt rules to address pressing concerns that are not clarified in the CC&Rs. They should review these rules periodically to make sure they are clear and make sense for the community.

REVIEW AND ADOPT A SCHEDULE OF FINES AND A PENALTY ASSESSMENT POLICY.

California Civil Code §5310(a) (8) requires boards to adopt and distribute to members annually a policy statement describing the association’s discipline policy and the schedule of fines that can be imposed for violations of the governing documents. This is not an option. This policy needs to be reviewed annually and revised as necessary. The policy may include information about how members can file complaints of violations, how the board will investigate the alleged violations, and what steps the board will take to notify members of infractions, provide remedy periods, and begin and escalate enforcement action. To be effective, the schedule of fines needs to be meaningful and reflect both the nature and potential consequences of the infraction.

USE DISCRETION WISELY AND COMMUNICATE IT CLEARLY TO

MEMBERS. Most association CC&Rs grant discretion to boards of directors in the enforcement of the governing documents. The duty of enforcement is a board responsibility, not simply an obligation. The board’s decision to enforce provisions of the governing documents must be “in good faith.” It is not unusual for older CC&Rs to include use restrictions that are inconsistent with federal, state, and local laws or that are simply out of date or not applicable any longer. Enforcement policies should identify these problematic provisions and inform community members about how the board will respond to member complaints of infractions of these restrictions.

BE WARY OF NEIGHBOR VS. NEIGHBOR COMPLAINTS OF

INFRACTIONS. This is especially true of nuisance complaints brought by one neighbor against another. California Civil Code §5975(a) and (b) establish that not only are an association’s governing documents enforceable by the board of directors, but homeowners have enforcement rights as well. Board members often fall prey to being sucked into neighbor-against-neighbor disputes that have little if anything to do with the best interests of the community and its members. Boards need to set clear limits on their involvement in these issues and establish written policies clarifying enforcement of nuisance allegations and the handling of neighbor-to-neighbor disputes. If these disputes become harassment, boards may have no choice but to seek legal counsel to protect themselves and association resources.

INVESTIGATE REPORTED INFRACTIONS PROMPTLY

AND CLOSE THE LOOP. The enforcement policy should include how the board will investigate reported infractions and when members can expect a response. Investigating alleged infractions lets members know that the board takes enforcement seriously and intends to handle complaints fairly and promptly. Details of the board’s investigation and determination need to be communicated to both the member who reported the infraction and the member in violation. Use newsletters and email bulletins to inform members about the types of recurring infractions, trends, and remedies. Consider adding a frequently asked questions (FAQ) section to the community website or portal.

USE FINES AND PENALTY ASSESSMENTS AS A LAST RESORT.

If an infraction is reoccurring or continuous and a member is non-responsive to the board’s enforcement policies, the board may have no alternative but to conduct a hearing, levy a fine, or seek injunctive relief or a court order. California Civil Code §5855 establishes the procedures for hearings, levying of penalty assessments, and notices of a board’s decision. Before the board can assess a fine, it must consider the disciplinary action in a hearing. Unless the member requests that the hearing be in executive session, it will be conducted in the open meeting of the board [California Civil Code §5855(b)]. If the board is compelled by the evidence to levy a fine, it should be large enough to encourage compliance and discourage non-compliance. Fines are notoriously hard to collect and often lead to small-claimscourt actions or informal dispute resolutions. Board members must be committed to the time, expense, and legal implications that the fines and penalty assessment process may entail.

Taking a commonsense approach to governing document enforcement allows boards of directors to be proactive instead of reactive. There is no doubt that enforcement is part of delivering good governance to homeowner associations. Clear governing document enforcement policies and procedures are meant to encourage and compel property homeowner compliance with standards and restrictions that are consistent with community values, quality of life, and property value enhancement.

John Cligny, AMS, PCAM, CCAMHR, is a veteran portfolio manager and community association management executive. As co-founder of Association Consulting Group, John is a trusted advisor primarily focused on educating and advising community association board members on effective governance to promote a positive public opinion of homeowner associations and community management. John is a frequent speaker and panelist on a wide range of community association topics and issues.