Behind the Scenes Preparation for a Covenant Violation Suit

The facts change from community to community, but the story is similar:  after years of “cooperative” neighbors a new Owner moved in and modified their property without approval.  Now the Board is dealing with complaints about the pink house, metal shed, 12-foot fountain, etc.  The Board approaches association counsel and points to the declaration, which clearly requires approval before any modification can take place.  At this point in the conversation things can get a little uncomfortable because the attorney will start asking questions about past enforcement, enforcement policies, and other issues not directly related to the matter at hand.  The purpose of this article is to explain why covenant violation suits are often not as simple as they seem and the behind-the-scenes actions that can make the difference between getting the violation cured or having a costly loss in court.

The Path to Enforcement

One of the most important things for directors to remember when faced with an unapproved modification is that, at the end of the day, they are going to have to ask a judge or jury to force an owner who paid money for an improvement to spend more money to remove that improvement.  If you think about this from the perspective of a person who doesn’t live in the community, you can see why it can be a lot to ask.  That is why a board should always attempt to get initial construction stopped through emergency injunctive relief if it can – that way the judge is only asked to stop construction and not to “undo” what has already been completed.  An order can be obtained by getting the association’s attorney to file an emergency motion and complaint with the court immediately upon noticing the preparation or initiation of an unapproved modification.  This will result in some up-front attorneys’ fees but is far more likely to succeed in stopping the modification than a suit brought after it is complete.

Sometimes it is not possible to stop construction before it begins – whether because it was “hidden” from view or because it only took a day to complete.  When faced with a completed, unapproved modification, the first thing a board should consider is whether the violation is something that absolutely must be removed or whether it can be accepted as is or with slight modifications.  If it can be accepted as is or with slight modifications, the board should try to pursue settling the matter without a lawsuit.  Sometimes a simple phone or sidewalk chat explaining why it is important to follow the requirements is enough to avoid a lot of time and money.  

The Dreaded “Arbitrary and Capricious Enforcement”

While some owners will negotiate, others will not budge.  One of the only effective legal defenses that an owner can raise when they’ve clearly violated a restrictive covenant is to claim “arbitrary and capricious enforcement.”  This defense argues that the owner is being treated differently from other owners with similar violations.  The crux of this defense is whether the owner can show other, similar violations that the association has not pursued or, if looked at from a different perspective, whether the association can show reasonable enforcement of the restriction in similar circumstances. 

Sometimes this is as easy as showing that a similar violation has never occurred.  In most communities, however, it is not so simple.  The owner or their attorney will likely demand records from the association showing enforcement of the declaration in other circumstance and may even request records about specific addresses in the hopes of finding evidence of a failure to enforce.  This defense is highly fact-specific, and it can be hard to determine, at the outset of the case, whether it will have any merit.  Because of this, one of the things the association’s attorney will likely discuss at length is past enforcement action:  how it was done, what steps were taken and what the outcome was.  Ensuring that the Board and association have policies in place to make enforcement actions reasonably uniform and keeping good records of violations and outcomes can go a long way in avoiding a successful defense to the violation.

But is it Reasonable?

Georgia judges and juries, for better or worse, are given wide discretion when issuing orders in covenant violation cases.  For instance, they have the authority to award all fines, some fines or no fines levied for a covenant violation.  Similarly, they can allow an association to recoup all of its attorneys’ fees and costs enforcing a violation or none at all.  Finally, a judge or jury could agree that an owner is in violation but still not require them to fix the violation.  The question of fines, fees and resolution are all reviewed by the judge or jury on a “reasonableness” standard, meaning they ask themselves the question “is this reasonable” when deciding what to award in an order.

What, exactly, is “reasonable” is very difficult to answer in most circumstances.  Take fines, for example.  Georgia has a few recorded cases where “reasonable” fines have been awarded, but not much guidance is given on what made them “reasonable.”  Because of this, the Board and association attorney will likely need to have a series of conversations as the lawsuit progresses to develop a strategy for ensuring, to the extent possible, that the ultimate “ask” of the association for fees, fines and resolution is something that most people will find “reasonable.”  This could be as simple as cutting off fines at a certain amount.  It could also be as complicated as asking for a series of smaller changes to an unapproved modification instead of asking for its complete removal.  The board will be a key player in this process because, when it comes to reasonableness, everyone has a valid opinion.

At the end of the day, a covenant violation suit is almost never as simple as the language in the declaration makes it out to be.  It is nearly always better to avoid one – if possible – through responsible settlements.  If a suit cannot be avoided, a board should remember that the decision maker will not just be looking at the current violation but possibly at a series of past violations.  They will also be weighing the amount of fines and fees demanded in the lawsuit as well as the ultimate violation resolution sought by the association.  With all this in mind, it is important that each board work behind the scenes to set the association up for success when that suit finally comes.