Homeowners associations regularly deal with issues about compliance with their governing documents such as the conditions, covenants and restrictions (commonly referred to as the “CC&Rs” ), and their operating rules. For various reasons, many homeowners associations fail to take any action relative to the enforcement of their CC&Rs after their board of directors has been made aware of facts which indicate that there may have been one or more violations of the CC&Rs. Such inaction subjects the association to potential legal actions that may be brought by members of the association in an effort to recover damages allegedly caused by the association’s failure to take action on CC&Rs, and/or seeking an injunction to compel the association to take action to enforce the provision(s) in question. More often than not the outcome of such litigation instituted by another member of the association depends on how the association’s board of directors handled the violations of the governing documents.

When confronted with issues pertaining to violations of their governing documents for CC&Rs, the directors of the association must decide on an appropriate method to seek enforcement of the provisions in question. Typical enforcement options that may be considered include monetary penalties, suspension of privileges, or the filing of a lawsuit seeking injunctive relief. For further information regarding the remedy of injunctive relief see article posted February 9, 2015, entitled, “Enforcement of Association Governing Documents Through Injunctive Relief” . To enable the association to take enforcement action through the courts, state statutes contain specific provisions that grant homeowners associations standing to initiate legal actions on behalf of the membership in various HOA related matters including enforcement of the association’s governing documents.

Notwithstanding the fact that associations have the standing to institute a court proceeding against a member in order to compel compliance with the association’s governing documents, court decisions have held that the directors of a homeowners association have discretion relative to a decision to commence litigation against a member in order to enforce the governing documents. In exercising their discretion, the directors, acting as a body at a meeting where a quorum is present should consider the facts of the case, the nature and seriousness of the violation(s), the likely outcome and the anticipated cost of the litigation in order to make a good faith determination whether to litigate or not to litigate a particular violation in the CC&Rs.

Because associations have a duty to enforce the restrictions contained in their CC&Rs when alleged violations are brought to the attention of the managing personnel or the board of directors, the association, acting through its board of directors, has a duty to investigate the matter. This duty imposes a requirement of exercising due diligence in conducting an investigation into the facts pertaining to the alleged CC&Rs violation. Due diligence necessitates making a reasonable inquiry into the matter. The fulfill this responsibility, the various tasks involved in the investigation can be delegated to the managing agent or other parties, but the information they gather should then be presented to the association’s board of directors for review, discussion and a decision on how to proceed. The directors cannot disregard violations of the documents that they are obligated to enforce by doing nothing and then claim that they had discretion to take no action based on their business judgment. It is true that directors are granted deference under the business judgment rule, but that does not relieve the directors of their responsibility for conducting a good faith reasonable investigation of the matter and taking some form of good faith action that is in the best interests of the association in order to enforce compliance if there has been a violation. Any such action that is decided upon should be taken in accordance with the due process requirements that are imposed by applicable state statutes and/or other provisions in the association’s governing documents. The decisions of the board of directors should be properly documented in the form of a written resolution, samples of which may be viewed via the below links.

Aside from being subjected to an action by an association member to compel the association to take action, if a board fails or refuses to take appropriate action to enforce a restriction contained in the association’s governing documents, the association can lose the right to enforce the restriction in the future. This can result from a court making a determination that one of the following defenses raised by member in opposition to the association’s efforts to enforce a restriction is appropriate: (i) latches (where there has been an unreasonable delay in seeking enforcement and that delay operates to the prejudice of the defendant; (ii) waiver (where the association has made a knowing, intentional relinquishment or abandonment of rights; (iii) estoppel (where the association has by its conduct or false statements led the member to do that which he or she would not have otherwise done; and (iv) statute of limitations (statutorily imposed deadlines for filing certain types of actions).

In conclusion, association directors must understand that, while they have discretion in deciding how they wish to enforce their governing documents, when confronted with violations of their governing documents they must investigate the alleged violation(s) and, if they determine that there has been a violation, take some form of good faith action against the violator(s).

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