Co-Author: Jonathan A. Goodman, Esq.
Obstacles in Amending and Enforcing Community Association Covenants: What your Association’s Documents Don’t Say May Hurt You.
The Colorado Court of Appeals recently held that an association’s original covenants allowing for changes or modifications could not be amended to add a covenant that required homeowners to start paying dues for the first time.
Developers, Community Association managers, and an Association’s Board of Directors may think they’ve properly amended an Association’s covenants. It used to be that you could ensure that an amendment to the community association’s documents was properly adopted and therefore enforceable by determining whether all of the procedures established in the association’s documents were followed. For example, you could check to see if each homeowner was properly notified of the amendment, if there was a quorum, if the requisite number of members approved the amendment, and if any proxies were properly executed. If all of the procedures were followed, the validity of the amendment sought to be enforced against a homeowner could not be attacked on procedural grounds.
However, the recent case out of Jefferson County District Court makes us look beyond these routine questions and at the original language of the covenants first recorded by the Association. If the original covenants stated that a certain procedure could “change,” “modify,” or even “amend” its contents without using the works “add” or “create,” you may be in trouble. If you are drafting covenants for a new association, you may want to watch your wording. It may seem like semantics, but the Court stated that an addition to the covenants was much more than a change, modification or even an amendment.
West v. Evergreen Highlands Association was decided by the Colorado Court of Appeals on November 23, 2001. The amended covenants required all lot owners in the subdivision to pay dues to the association and subjected the lots to liens for nonpayment of the dues. The original covenants for the association were recorded in 1972 and the pertinent provision stated:
These covenants shall run with the land and shall bind all parties and all persons claiming under them for a period of ten years from the date of filing…and shall automatically be continued thereafter for successive periods of ten years each; provided, however, that the owners of seventy-five percent of the lots which are subject to these covenants…may change or modify any one or more of said restrictions, by executing and acknowledging an appropriate agreement… (emphasis provided).
Nothing in the original covenants addressed the association’s right to collect dues. In 1995, the association recorded an amendment with the consent of seventy-five percent of the lot owners adding a new article to its covenants which required all lot owners to be members and pay dues and subjected them to liens for nonpayment of dues. The homeowner who eventually brought suit against the association did not sign the approval of the covenant, refused to pay dues and was threatened with a lien. The trial court found that the provision was valid and that the homeowner needed to pay the dues. On appeal, the homeowner argued that the trial court was wrong in interpreting the original language of the 1972 covenants to allow seventy-five percent of the lot owners to add or create new restrictive covenants, rather than merely modify or change the existing provisions. The appellate court agreed and found that the language only allowed changes to the existing covenants, not the addition of new covenants that had no relation to the existing ones. The Court stated that even if the language allowed for the right to “amend,” they would still conclude that only a “pre-existing covenant” could be amended, changed or modified by seventy-five percent of the owners and there could be no creation of new covenants unrelated to the original ones.