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Real Estate & Property Law: a View from the property line
General Guide to Restrictive Covenant Enforcement
By William G. Gammon
Generally, and in most cases, it is the Board of Director's (the "Board's") fiduciary duty to enforce the deed restrictions on behalf of the Association membership. The Board must select when and what to enforce based on its best business judgment, while also taking care not to enforce the restrictive covenants in a discriminatory, arbitrary or capricious manner - the triumvirate of behaviors that will get an Association in hot water quicker than you can say "homeowner files civil suit against her HOA." It is impractical to expect that a Board can maintain absolute vigilance over the community and catch each and every potential deed restriction violation as it occurs in a community at any given time. Instead, the Board must exercise its own business judgment when considering whether to pursue an alleged violation.
The first thing the Board should always do is consult the deed restrictions for the community. Oftentimes, the deed restrictions will set forth express powers and authority that the Association can wield in its enforcement arsenal, like imposing fines or bringing equity suits for injunctive relief against violating homeowners.
Here is a list of the typical remedies available to an Association that seeks to enforce its deed restrictions:
1. Impose a fine - this power is typically derived from the DCCRs, by-laws, or even Texas statute. A homeowner must be given notice of the violation with an opportunity to cure same before any fines can be assessed for first time violators. Note: for "repeat offenders", the opportunity to cure is usually waived and the fine can be levied upon notice of same. The only problem with fines is that this won't motivate some people to correct the violation(s).
2. Small Claims Court - the Association can always file a suit in small claims court (the Association usually represents itself in these courts); however, the Association will only be able to secure a money judgment (which doesn't correct the violation(s)) and these courts are "courts of no record." Meaning, that if the homeowner wants to appeal the judgment, then the case is removed to County Court for a brand new proceeding, complete with all of the document review, pre-trial discovery and any other litigation procedures accompanying such efforts. As a result, small claims court can become just as expensive as its District and County counterparts with no concrete result and no violation remedy, especially if the homeowner appeals the small claims judgment.
3. County Court or District Court - like small claims court, but the Association is almost always represented by counsel; these are courts "of record" meaning that evidentiary rules and civil procedure must be observed to create and preserve the trial record in case of appeals by either party. Litigation in the District or County Courts can be expensive, but the Association can seek injunctive relief and an order by the Judge to cease the violative conduct and/or correct the deed restriction violations. Further, if the homeowner chooses to ignore the injunctive order, then the Judge has the power to level contempt sanctions against the homeowner, which includes more severe fines and, ultimately, incarceration for continued misconduct until the violation(s) are corrected.
4. Filing a Lien - if provided for in the deed restrictions for the Association, a lien can be filed in the real property records for the county wherein the property is located. This lien puts any potential purchasers of that property on notice that this violation exists and is an encumbrance of sorts on the land until resolved. While inexpensive, this remedy typically only nets a result at the time of property sale or refinancing (since the mortgage financiers generally will not fund the transaction until any encumbrances on the property are removed first).
5. Self-Help - if provided for in the deed restrictions, an Association can initiate self-help and enter the homeowner's property to correct the violation. The costs of effecting any removal or cleanup or other correction of the violation(s) is then charged back to the homeowner's account. This remedy can be tricky though, since expenses might be difficult to collect from a homeowner that is already non-responsive about the violation(s) while the homeowner may be able to claim trespass, damage to property or even personal injury arising from the Association's corrective measures. When utilizing self-help, the Association needs to take great care and document everything it does, including photographing or videotaping the actions it took.
6. Suspension of Member Privileges - if provided for in the deed restrictions, an Association, after notice and a hearing, may suspend certain member privileges if a homeowner refuses to correct the violation. This remedy, however, might prove useless if the homeowner does not utilize the privilege (like suspension of pool access privileges if the homeowner does not use the pool).
7. Mediation/Arbitration - based on whether or not the Association's deed restrictions require this or not; can be formal like a lawsuit (binding arbitration) or informal (non-binding mediation). Depending on the mediator/arbitrator, can be very cost-effective and less confrontational than a traditional trial, unless there is no middle ground from which to negotiate (e.g. the hot pink painted house cannot remain hot pink in color).
8. Police and/or County/Municipal Intervention - Most counties, cities and local municipalities have ordinances for nuisance conduct, inoperable vehicles, disorderly conduct, disturbing the peace, etc. The Association should always consider contacting the local authorities when handling certain deed restriction violations as these agencies may be better equipped to deal with specific matters as the need arises. In the very least, the Association should maintain a good rapport with local law enforcement and government offices and cooperate with them when and if these entities are brought in to investigate the homeowner's misconduct as a violation of local civil and/or penal statute(s).
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