Enforcement of Covenants - Part 5

ENFORCEMENT OF COVENANTS

PART V

    This edition of the e-Lawyer is the fifth in a multi-part series which addresses the enforcement of the covenants that regulate deed restricted communities (e.g. HOAs and Condominiums). For purposes of these articles, the term 'covenants' will include the restrictions found in Declarations, Articles of Incorporations, By-Laws, Rules & Regulations and Architectural Guidelines. These e-Lawyer articles will not, however, address issues relating to the non-payment of assessments.
 
    In Part I (Volume V, Issue 4), we addressed the various options that may be available to community associations to enforce their covenants.
 
    In Part II (Volume V, Issue 5) , we addressed the mediation/litigation process that is now required for the enforcement of HOA covenants.
   
    In Part III (Volume V, Issue 6), we addressed the arbitration process that is required by Chapter 718, Florida Statutes, for the resolution of most condominium disputes.
 
    In Part IV (Volume V, Issue 7), we addressed prevailing party attorney fees.
 
    In this Part V, (Volume V, Issue 8) we will address the defenses most commonly raised by violators in response to the Association’s demand for compliance.
 
COMMON DEFENSES
IN COVENANT ENFORCEMENT ACTIONS
 
    In the vast majority of cases, there is simply no valid justification for the failure to comply with the covenants. However, because covenant enforcement actions are firmly based on equity concepts, this is not universally true. Therefore, from a practical standpoint, if a violator raises any of the available equitable defenses, the following three step process will be required:

    1. First, the Association must prove that a violation actually exists. This means, at a minimum, that the Association must prove that there is an identifiable restriction and that the owner is violating the terms of that restriction. (e.g. The owner is failing to mow the lawn)

    2. If the Association can prove that the owner is violating a restriction, the burden then shifts to the owner to show that it is unfair (i.e. inequitable) to enforce the restriction against them based on one of the available defenses. (e.g. other owners are also failing to mow their lawns)

    3. Finally, if the owner can supply proof that one of the below listed defenses might exist, the burden then shifts back to the Association to overcome the defense. (e.g. the association is aggressively enforcing the lawn mowing restriction throughout the community)
 
    Because steps 2 and 3 above are critical to many enforcement actions, the following is a summary of the most common defenses that are raised when such actions are filed. You must remember that the factual basis for many of these defenses are the same, thereby making it difficult sometimes to differentiate them in actual practice.
 
    We will use the following simple example case to present the various defenses.
 
    On January 1, 2000 the Declaration for Dreamacre was amended to prohibit 'large dogs'.
 
    On January 1, 2004, Mr. & Mrs. Brown fulfilled their lifelong dream and purchased their very own pitbull dog and immediately brought it to their home in Dreamacre.
 
SELECTIVE/UNEQUAL ENFORCEMENT:
 
    Probably the most widely used and most easily understood defense is the claim of 'Selective Enforcement'. As its name implies, this defense is based on the equitable principle that all persons must be treated equally.
 
    Using our example case, the Browns allege that many other 'large dogs' reside in the community and that the Association is only picking on them because of its misguided belief that pitbull dogs are dangerous.
 
    On the other hand, the Association claims that only dogs in residence when the Declaration was amended in 2000 are in the community, and that the Board has diligently enforced the restriction from and after the amendment was adopted.
 
    Based on the above, if the Browns can prove their position, they will prevail. If the Association can prove its position, it will prevail.
 
    The following are some other important notes about this defense that must be remembered:
a. The claim of selective enforcement only applies to the same or similar restrictions. For instance, the fact that the Association may not have enforced the commercial vehicle restriction should have no impact on the question of whether the dog may remain.
 
b. The fact that the developer permitted large dogs to reside in the community does not impact the case, so long as the non-developer controlled board immediately and consistently commences enforcing the restriction upon taking control of the community.
 
c. Even if the Browns are correct, the Association may 'reinvigorate' the large dog restriction for prospective enforcement if they properly notify the owners of their intent to enforce the restriction in the future.
2. UNCLEAN HANDS/EQUITABLE ESTOPPEL:
 
    A second defense often seen is the claim of 'unclean hands' or 'equitable estoppel'. In order for an owner to prevail on this claim, they must prove that:
a. Someone or some group made a representation to them on behalf of the Association;
 
b. They reasonably relied on that representation;
 
c. The Association later changed its position; and
 
d. They have already taken action based on the original representation and will suffer a loss if required to comply with the Association’s new position.
    Using our example case, the Browns allege that, before they purchased the $1000.00 purebred pitbull dog, they met with the President of the Association who assured them that it was fine to purchase such a dog.
 
    The President, who has a hearing deficiency, claims that the Browns asked him if it was ok to purchase a log.
 
    You make the call.
 
    The following are some other important notes about this defense that must be remembered:
a. The claim of 'unclean hands' or 'equitable estoppel' may only be raised if the owner reasonably believed that the person upon whom they relied had the power to make the decision and/or to bind the Association. For instance, in our case, it could reasonably be claimed that the Browns knew that the President had no authority to override a recorded restriction. On the other hand, when an architectural review committee makes a decision, the owner presumably should have the right to believe that the committee had the power to make that decision.
 
b. The owner must have taken action based on the original representation. For instance, if the Browns had not yet purchased the dog, their claim would fail.
3. WAIVER/ACQUIESCENCE BY ASSOCIATION:

    A third defense frequently raised is that the Association has 'waived' its power to enforce a specific restriction by its actions or inactions. In order for this defense to apply, the owner must prove that the Association consciously allowed the continuing, obvious and widespread violation of a particular restriction.

    Using our example case, the Browns allege that over one-half of the owners (including all of the board members) have had large dogs for many years.

    Of course, if that claim can be substantiated, it is likely that the Association has waived the dog restriction and the Browns will prevail.

    The following are some other important notes about this defense that must be remembered:

a. The waiver of one restriction (e.g. dogs) cannot be expanded to include a waiver of other restrictions (e.g. commercial vehicles).

b. The Association may be able to 'reinvigorate' the waived restriction for prospective enforcement if they properly notify the owners of their intent to enforce the restriction in the future. However, if a violation is too widespread, this reinvigoration process may fail (e.g. 3/4 of the homes have basketball goals).

4. LACHES/STATUTE OF LIMITATIONS:

    Owners also sometimes raise the defense that the Association simply took too long to file its action, thereby losing its right to do so. This defense can, in fact, be raised in the following ways:

    A. STATUTORY STATUTES OF LIMITATION:

    In Chapter 95, Florida Statutes, the Florida Legislature has established time periods during which the various types of lawsuits must be filed. These time periods are referred to as Statutes of Limitation.

    Because Declarations are contracts, Associations must file lawsuits against violators within five (5) years from the date that they knew, or should have known of the violation – otherwise, the claim is lost.

    B. CONTRACTUAL STATUTES OF LIMITATION:

    In addition to the five (5) year limitation period imposed by Chapter 95, various Declarations contain contractual limitation periods. For instance, a Declaration might provide that suit must be filed within one (1) year from the date of the violation or be forever lost.

    While Section 95.03 provides that no contract may shorten the periods established in Chapter 95, some judges have enforced a shortened time period.

    C. LACHES:

    In addition to the Statutes of Limitations outlined above, there exists an additional equitable limitation concept called 'laches'. Simply put, this concept provides that an Association can be precluded from filing a lawsuit, even before the statutory or contractual time periods have expired, if a Judge believes that it is unfair to allow such suit to be filed. Because laches is an equity concept, it is impossible to establish a 'bright-line' test as to when it is too late to file a suit, however, the below 'Reconciliation' section will better explain the concept.

    D. RECONCILIATION OF STATUTES OF LIMITATION WITH LACHES:

    To reconcile Statutes of Limitation with the concept of Laches, we will use this expanded example case.

    The Browns purchased and brought their dog to Dreamacre in January, 2004.

    The Association became aware of the dog in February, 2004.

    In August, 2004 the Association sent a letter to the Browns demanding that the dog be removed and threatening to file suit if they failed to do so. Additional letters were sent and discussions were held until June of 2005.

    In July, 2005 new board members where elected and they immediately hired a new management company.

    The new board voted to sue the Browns and suit was filed in February, 2006.

    First, because the dog only appeared in 2004, the applicable five (5) year Statute of Limitation has not yet expired. Accordingly, and because in our case the Declaration does not contain any further contractual limits, the Association is still legally entitled to file an action for the removal of the dog and the Browns will be unable to raise any defense based on Chapter 95.

    However, because the Association became aware of the dog in February, 2004, the Browns have raised the defense of laches, claiming that it is inequitable and unfair to permit this suit to be filed two (2) years after the Association became aware of the dog.

    Whether the court will agree with the Browns will depend on whether they can prove ALL of the following things:

1. They must prove that the dog was brought to Dreamacre in January, 2004;

2. They must prove that the Association had knowledge of the dog, but failed to file any lawsuit;

3. They must prove that they were unaware that the Association would ultimately file an action to enforce the restriction; and

4. They must prove that they will be injured if the relief requested by the Association is granted.

    The Browns can clearly prove #1 and #2 above and perhaps can prove #4. However, they will be unable to prove that they were unaware that the Association would ultimately file an action. Therefore, based on the above facts, the Court should not dismiss the suit based on laches.

    If, however, the Association had never contacted the Browns and then filed suit two (2) years after the dog appeared, the decision of the Court would likely be in favor of the Browns.

    Please remember that, no matter what decision is made as to the laches issue, no suit may be filed after the five (5) year Statute of Limitation period has expired.

5. COVENANT IS VAGUE/AMBIGUOUS/UNENFORCEABLE:

    Yet another defense to an enforcement action is the claim that the restriction is vague and ambiguous. As to this issue, the following statement is helpful:

Restrictions are clothed with a very strong presumption of validity because each property owner has adequate notice of the restrictions and purchases his property knowing of, accepting, and relying upon them. Accordingly, courts will not invalidate restrictions unless they are clearly ambiguous, wholly arbitrary, unreasonable in application, or violative of public policy or a fundamental constitutional right.

    To supplement the above statement, Florida law requires Courts to look to the normal everyday definitions of words when necessary to determine their meanings.

    Again, using our example case, we find that the restriction prohibits 'large dogs', a very vague term. Therefore, in this case the restriction would likely fail unless the Association could convince a Judge that there is a clearly understood definition of the term 'large dog' and that the Browns’ dog falls within that definition.

    While there are other defenses that can be raised, the these are the ones that most commonly arise in enforcement actions. It is important that all board members and managers understand the equity concepts behind these defenses so that they can better prepare themselves to enforce their covenants.

NEXT EDITION:

    In Part VI of this series we will discuss various self-help enforcement measures.

The firm of Taylor & Carls, P.A., with offices located in Maitland, Melbourne, Tampa and Palm Coast, Florida, was founded in 1981 and has practiced in the area of community association law since that date. This edition was prepared by Robert L. Taylor, Esq. of Taylor & Carls, P.A. The information contained in The Association e-Lawyer should not be acted upon without professional legal advice.

©2006 Taylor & Carls, P.A. All Rights Reserved.
The firm can be reached Toll Free at 1-800-395-6235 or locally at 407-660-1040.
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