A common issue within homeowners associations pertains to the action, or inaction, of a homeowners associations board of directors when it becomes aware of violations of its governing documents. Association directors are frequently confronted with situations where a party has complained about someone violating various provisions of the association’s governing documents and the association is asked to take action concerning the alleged violations by enforcing governing documents. The association, acting through its board of directors, is then expected to become involved in the matter by taking some form of action relative to the alleged violations, but for various reasons the association ignores the complaints or fails to take any action, leaving a resolution of the matter to others. The complaining party, who is generally a member of the association, is then left to seek enforcement of the association’s governing documents on his or her own. Being dissatisfied with the association’s decision to not take enforcement action, the complaining party will frequently commence some form of action against the association seeking to compel it to enforce its governing documents.
Case decisions have held that the directors of a homeowners association have a duty enforcing governing documents and that the enforcement action that is taken must be taken in “good faith” and not be “arbitrary or capricious.” Additionally, the enforcement process must employ procedures that are fair and uniformly applied. Case decisions have also held that recorded covenants and restrictions must be enforced unless they are “wholly arbitrary, violate a fundamental public policy, or impose a burden on the use of affected land that far outweighs any benefit.”
Notwithstanding their general duty to enforce their association’s governing documents, a homeowners association’s directors have discretion to decide whether, and in what manner, to enforce the governing documents, but their discretion must be exercised in a manner that is consistent with the directors’ fiduciary duties and the plain language contained in the provision(s) of the governing documents that are in question. The typical methods of enforcement that are available to the association are: the imposition of monetary penalties; the suspension of privileges; and the commencement of a legal action seeking injunctive relief. When it comes to making a decision to file litigation that is necessary enforcing governing documents, an association’s board of directors has discretion to either commence enforcement litigation or to not. In exercising this discretion, the directors should weigh the anticipated cost of the contemplated litigation against the gravity of the violation, and the likely outcome of the litigation being considered, and then make a good faith determination as to whether to get involved in litigation over the alleged violation or not to litigate. If the directors elect not to commence litigation over an alleged violation of the association’s governing documents, all of the other association members are also empowered to commence the enforcement litigation under state statutes and/or their association’s governing documents.
Because associations, acting through their board of directors, have a duty to enforce their governing documents, it follows that the directors have a duty to investigate complaints that are made by parties of alleged violations of those governing documents. This duty is imposed as part of a directors fiduciary duties which mandate that the directors use due diligence in investigating matters such as violations of governing documents, maintenance issues, and issues concerning association finances. The directors, having knowledge of a matter that requires an inquiry, cannot simply close their eyes to what is going on in connection with the associations business.
Where association directors have in good faith conducted a reasonable investigation into an alleged violation, and have made a decision based on their good faith determination that taking a particular course of action is not in the best interests of the association, the courts will typically defer to the boards authority and presumed expertise in connection with the issue, and defer the imposition of directives on the association under the business judgment rule. State statutes and other provisions contained in an associations governing documents may also protect the decision making of directors relative to action, or inaction, on alleged violations of the associations governing documents by enabling directors to rely on the advice of persons, such as lawyers and property managers, who they believe to have more expertise on the matter in question.