June 2012 – An HOAleader.com reader writes, “A homeowner replaced his roof and chose a color that isn’t in compliance with our replacement standards. It’s not even close to the existing colors. The board stated at the community annual meeting that the owner didn’t follow the procedure of obtaining approval through our architectural request process. The board chose to ignore the homeowner’s negligence and opted to have each of the adjoining townhomes in his section match his noncompliant color when the time comes for them to replace their roofs. Their reasoning is that the homeowner can’t afford to replace the new roof, and they don’t believe it will affect the property value.
“The homeowners in the section weren’t notified of the decision. I suggested (and sent a supporting “how to” link) painting the shingles. I also suggested at the least sending a certified letter stating that the owner is out of compliance, and when the time comes for him to sell the property, the resale certificate won’t be issued until the roof is in compliance. That does give the owner time to accumulate the funds (or plan⁄price accordingly) and protects future board members to enforce roof replacement standards. Both suggestions were denied without supportive reasoning.
“My concern lies in a precedent of noncompliance being set on all replacement issues and property values being affected. I would assume that an appraiser hired by a lender would notice a roof not compliance. I would also assume that a lender would be wary of proceeding with a loan due to the fact that at any time a new board may enforce the standards and force a new buyer to comply. What course of action can homeowners take against an unconcerned, irresponsible board?”
Here our experts discuss whether boards can waive compliance with the HOA’s rules in this way, whether it’s a good idea, and the risks, if any, to which board members expose the HOA when they make such a waiver.
It’s Simple: Enforce Your Rules
Generally, our experts say that boards should enforce their HOA’s rules unless there’s a really, really, really good reason not to—and that’s hard to find.
“Most covenants say that boards can decide not to enforce all the provisions all the way, and there’s nothing owners can do about it,” explains Jeff Vinzani, an attorney in Charleston, S.C., who represents associations. “But in this case, people are violating the HOA’s covenants. In South Carolina, homeowners that the board tries to enforce rules against in the future could argue the board has no such authority because, in essence, it has unclean hands.”
Vinzani once lived in an HOA that had a similar problem. “I lived in a neighborhood with twin homes, like duplexes,” he recalls. “The board allowed one party to paint one side of a house and didn’t require the other owner to paint his side. The new paint wasn’t quite the same, and the other side’s paint was chipping off. One owner thinks his side looks good, and the other owner says, ‘I could have just touched up my paint, but now I can’t because my paint won’t match.’ Those owners were sort of at each other after that.”
“When you’ve got standards, they’ve got to be enforced,” agrees Jed L. Frankel, a partner at Eisinger, Brown, Lewis, Frankel & Chaiet PA in Hollywood, Fla., who advises community associations. “If you don’t enforce them as to one person, you can’t enforce them as to anybody. The reasoning behind not enforcing them doesn’t really matter. It’s very important when you have color and other architectural restrictions the association cares about and wants to enforce that these rules be applied across the board.”
That said, Frankel says you should be open to changes that fit the times. “There may be things that over time aren’t as important anymore,” he says. “For example, here in Florida, many HOAs had restrictions against parking pickup trucks in driveways. Now you have SUVs and modified pickups, some of which cost a lot more and look nicer than many cars. So a number of HOAs have said that rule isn’t enforceable anymore.”
There are Tough Cases
However, some issues aren’t so clear cut. “I deal with this issue quite a bit,” says Michael S. Hunter, an attorney and partner at Horack Talley in Charlotte, N.C. “A lot of times I’m dealing with people who’ve built fences without getting approval and the board has ignored it. Before you know it, you have 10 fences not in compliance. Then a new board comes in and says, ‘What do we have here? Should we go back and address these violations or grandfather them in?’
“That’s a slippery slope, and there’s no good answer,” says Hunter. “I advise the board of the risks and benefits of enforcement because it’s really a business decision, not a legal one. The risk is that by looking the other way or granting exemptions, you’re setting a precedent that people can violate the rules and get away with it. You’re also exposing the board to, however unlikely, a lawsuit for breach of fiduciary duty for not enforcing the HOA’s restrictive covenants.”
“You have to look at everything on a case–by–case basis,” agrees Duane McPherson, Carrollton, Texas–based division president at RealManage, an association management firm that oversees properties in Arizona, California, Colorado, Florida, Louisiana, Nevada, and Texas. “In this case, I’d need more information, like how many other buildings does this building clash with? Based on what we know, I wouldn’t have advised the board to waive that violation. I’d have attempted to get the roof to the appropriate color so it doesn’t change the community as a whole. I think changing the community’s aesthetics needs a lot more thought and community support.”
Hunter, on the other, hand, is OK with the board’s compromise. “I tell boards to pick their battles, and let the punishment fit the crime,” he explains. “If it’s an egregious violation, like a roof that clashes with the neighborhood, I don’t think that’s something you can overlook. But I think the board’s solution here was a good one. The action the board is taking isn’t an undue burden on the homeowner, who otherwise might end up losing his home if he’s forced to change the color immediately.”
On that point, Frankel’s not sympathetic, though he sees an opportunity for resolution. “My thought is that if you don’t have the money to fix this, it’s the same as if you can’t pay assessments,” he says. “You probably shouldn’t be living there. However, maybe the board can look at doing things creatively. I don’t know if I’d recommend this, but maybe the board could make a loan to do the work. That’s not ideal because we don’t want HOAs to be in the business of lending money. But there are other creative ideas the association can consider if money’s the issue.”
Gordon Goetz is also unmoved by a financial argument. “That the board didn’t feel the person could afford to fix the problem—it isn’t a reason,” says president and CEO of Goetz Manderley, a community association management company based in Santa Maria, Calif., that manages 210 associations totaling 17,000 homes in California’s San Louis Obispo, Santa Barbara, and Kern counties. “In California, as long as the board publishes its rules and policies, it should be able to hold any owner accountable for not submitting an application for work or not following the exact specs of the application.
“I think the board in this situation was taking the path of least resistance, and I disagree with the decision it made,” adds Goetz. “One person unilaterally changed the style of the roof, and now the board is expecting three other owners to be OK with not having had any say and replacing their roof at their cost with something they may not find attractive? That board is really setting itself up for future issues.”
Vinzani also wonders why the board is putting a burden on the compliant owners. “In my example of the twin homes, the board would have been better off enforcing rather than letting a violation like that go and putting the onus on the other owner to paint his side a different color,” he says. “You should put the onus on the person’s who’s violated the rules.”
Matt Humphrey is president of the Alameda, California-based HOAleader.com, from which this article was adapted.