The Imperfect Art of Settling Association Disputes

It is human nature to want our way.  You don’t have to look further than a toddler throwing a tantrum in a grocery store to understand that we are hardwired to fight for what we want.  A large part of the journey into adulthood is learning to temper that desire to fit into that fundamental reality:  compromise is often the key to a successful personal and professional life.  This is rarely more true than in the community association context.  Boards must remember that, while they certainly have a duty to enforce the covenants, the subjects of those actions are most often their neighbors.  Aggressively pursuing enforcement with no pause for common sense or compromise can result in damaging the harmony of a community not to mention the very real possibility of losing in court.  In short:  if a bird in the hand is a negotiated compromise and two in the bush is winning everything you seek in a lawsuit, a good director should remember the point of the old adage and, where responsibility dictates, settle for the less than perfect outcome.

There are a few paths to successful compromise when enforcing a violation of the covenants.  The first and most obvious is whether a violation must be “undone” to resolve the issue.  This question often arises in the architectural control realm.  It is entirely possible for an Owner to install an improvement that was not approved – and is therefore a violation – but that would have been authorized had an application been submitted.  The Board cannot turn a blind eye to this type of violation, or it risks to avoid giving a future Owner a claim of “arbitrary and capricious enforcement.”  That said, it’s often sufficient to give the Owner a stern notice or a nominal fine and leave the issue at that.  While a Board could technically sue to have the improvement undone based on the language in most covenants, a judge will often punish an Association for taking the path of litigation for a modification that, at the end of the day, fits within the neighborhood aesthetic.  In cases like this, a promise from the Owner to abide by the rules in the future may be a good compromise even though the Association could do more.

Once you get past the threshold question above, the next step is to determine how far the violation should be escalated.  This can be an easy answer in some cases – if an Owner has an ongoing violation and simply refuses to stop or acknowledge repeated notices regarding the same a Board may have little choice but to escalate to a lawsuit.  On the other hand, one loud party from an otherwise rule-abiding occupant probably would not warrant a $1,000.00 fine and an injunctive relief suit for a court order.  While the Board must remember that every enforcement decision creates a precedent for future, similar violations, it can be reasonable to stop at a courtesy notice, a fine, or self help, and forgo a lawsuit – especially when an owner or occupant acknowledges or accepts the violation.

Some disputes will end in suit, however.  This can be inevitable when you find an owner or occupant who simply does not believe in the authority of the covenants to control their behavior.  Compromise can become significantly harder once a suit is filed for the simple reason that both sides have spent more time and money on the issue at that point.  Even then, however, a good board will remember that success in a covenant violation suit is not guaranteed, nor is an award of the costs and expense (attorneys’ fees) from this type of lawsuit.  They can certainly use those amounts as a bargaining chip and remain optimistic about their chances of collection, but at the end of the day a judge or jury has the discretion to determine what fees they believe to be “reasonable” in light of the facts and circumstances of the case.  Because of that, sometimes the best thing for the community is to agree to forgo some of the costs associated with the suit if the Owner agrees to stop the violation.  Again, this will set a precedent so it is important to think through the ramifications, but if stopping the violation is the end goal then sometimes chalking up the fees to the “cost of doing business” is better than risking a loss at trial.

Striking a balance in covenant enforcement will never be easy, but a board of directors that remembers to use common sense in dealing with violations can certainly find success.  Often, accepting the deal offered – if it is reasonable and made in good faith – is the best path forward even though it may result in the association “giving up” something it has the technical right to demand.