Simply Unenforceable: HOA Covenants and How They Can Go Too Far
Even a validly enacted, substantively sound covenant can be nonetheless unenforceable if the HOA’s enforcement is procedurally improper, or is conducted inconsistently or for an inappropriate purpose.
Covenants and restrictions form the foundation of a homeowners’ association. By establishing standards for what homeowners must do, and must refrain from doing, they set the tone for the community. Well-planned covenants can protect property values, promote safety and aesthetic appeal, and generally improve a neighborhood’s quality of life. But if they’re ill-conceived, covenants and restrictions can become an annoyance to HOA members, lead to lower property values, and even infringe upon basic constitutional and common law rights of homeowners.
When purchasers take title to a property within an HOA, they implicitly accept and agree to abide by the community’s declaration. See, e.g., Castle Point Homeowners Assn. v. Simmons, 333 Ga. App. 501, 505-506, 773 S.E.2d 806 (2015). And, in exchange for undertaking those obligations, homeowners have a right to expect the association and their neighbors to equally perform as required. At its core, a declaration is like a contract between the HOA and all the individual members of the association. And, indeed, courts reviewing HOA covenants interpret them similarly to how they interpret other contracts. Midlake on Big Boulder Lake v. Cappuccio, 673 A.2d 340 (Pa. Superior Ct. 1996).
Like any other contract, an HOA covenant is presumed to be enforceable as written—absent some reason why it should not be enforced. N.C.G.S. §47F-1-104; Nahrstedt v. Lakeside Village Condo. Ass’n., 8 Cal. 4th 361, 386 (1994). The general standard is that a “reasonable” covenant that promotes a substantial interest of the community will probably be upheld. Saunders v. Thorn Woode Partnership, L.P. 265 Ga. 703, 462 S.E.2d 135 (1995). A validly enacted restriction is binding on homeowners “unless the restriction is arbitrary, imposes burdens on the use of lands it affects that substantially outweigh the restriction’s benefits to the development’s residents, or violates a fundamental public policy.” Nahrstedt v. Lakeside Village Condo. Ass’n., 8 Cal. 4th 361, 386 (1994).
Notwithstanding the presumption of enforceability, there are plenty of reasons why an individual covenant or restriction might be unenforceable. The reasons most commonly cited by courts are:
Procedurally flawed enactment;
Substantive invalidity;
Violation of rights of homeowners or prospective homeowners; or,
Inconsistent, arbitrary, or capricious enforcement.
Any one of these flaws can render a covenant effectively void. One flawed covenant won’t necessarily invalidate the rest of a community’s declaration—and sometimes courts will interpret a questionable covenant in a manner that permits enforcement—but, for the most part, a covenant that fails any of these criteria will be unenforceable.
Procedurally Flawed Enactment.
The enactment of a covenant or restriction is procedurally flawed if it fails to abide by the rule-making process required by the community’s governing documents and state law. If a covenant is built into the declaration when initially recorded, that’s not usually a problem. But state HOA laws impose precise requirements for amending a community’s declaration, and, in many cases, the association’s declaration and/or bylaws include additional procedures. In Georgia, for instance, a declaration can be amended only through a member vote, with a super-majority generally required for approval. O.C.G.A. §44-3-226. Then, an amendment must be properly recorded with the local land records before it becomes unenforceable. O.C.G.A. §44-3-226(d). Most states have similar standards.
Likewise, many associations have a precise protocol for imposing new covenants or restrictions. Typically, an amendment must be proposed by a majority of the HOA’s board, or by a written petition signed by a sufficient percentage of homeowners. Once an amendment is proposed, homeowners typically have a right to receive advance written notice of the proposed amendment and the homeowner meeting at which it will be considered. This allows objecting homeowners the opportunity to organize votes in opposition. If an amendment does not receive the requisite votes in support, or if the amendment protocol is not followed, the covenant will be unenforceable if challenged.
In some situations, a newly enacted restriction—even though validly adopted—isn’t enforceable against existing, objecting homeowners under the concept of “grandfathering.” Grandfathering occurs when a homeowner is already engaged in conduct that becomes restricted by a subsequent amendment. Because the homeowner acquired the property at a time when the use in question was permitted, he or she has a vested right to continue that particular use.
California’s legislature codified “grandfathering” in relation to both pet and rental restrictions at Cal. Civ. Code §4715(c) and §4740(a), (b), respectively. The former statute disallows enforcement of a newly-enacted pet restriction against an owner whose pet was previously compliant. And, under the latter, a property-owner is completely exempt from a rental restriction if he or she owned the property prior to enactment of the restriction and does not consent to it. Similarly, in Florida, a rental restriction is only effective against an owner if the restriction was in place at the time of purchase or the owner voted for the amendment imposing the restriction. Fla. Stat. §718.110(13).
Courts differ from state to state as to how they view grandfathering. Thus, the defense is not available in every scenario in which an HOA attempts to enforce a restriction adopted after a homeowner accepted title to his or her home.
Substantive Invalidity.
A covenant is substantively invalid if it is inconsistent with the HOA’s powers as expressed in the community’s governing documents or with state statutes regulating homeowners’ associations. If a covenant purports to regulate homeowner conduct in an area in which the association does not have the power to act, the covenant is likely unenforceable.
Although state HOA statutes generally grant associations broad power, a covenant or restriction must serve some legitimate purpose of the community, and it must be a reasonable means of accomplishing the intended goal. See, e.g., Four Brothers Homes at Heartland Condominium II, et. al., v. Gerbino, 691 N.Y.S.2d 114 (1999). Restrictions are generally “reasonable” if they are rationally related to the protection of property and promote the purposes for which the association was created. Laguna Royale Owners Assn. v. Darger, 119 Cal.App.3d 670(1981). On the other hand, a restriction that is arbitrary or places burdens on homeowners that are significantly greater than the potential benefits stands a strong risk of being found substantively invalid.
Covenants or restrictions can be held substantively invalid if they conflict with public policy, which is usually found in the laws enacted by the state legislature. In Arizona, for example, state law expressly protects homeowners’ right to rent or lease their properties unless a rental restriction is specifically built into a community’s declaration. A.R.S. §33-1260.01A. Thus, an HOA would not be able to prevent homeowners from renting their properties based a board-enacted regulation or more generally worded covenant.
Other examples of legislative statements of public policy include protections of religious displays (see, e.g., Tex. Prop. Code § 202.018(b); (765 ILCS 605/18.4) and California’s statutory guaranty that homeowners can keep at least one pet. Cal. Civ. Code §4715. A restriction that conflicts with these types of state laws is substantively invalid and therefore unenforceable.
State and federal legislatures have also made clear statements of public policy in enacting anti-discrimination statutes. The federal Fair Housing Act (FHA), for instance, forbids discrimination in housing based upon race, color, religion, sex, familial status, national origin, or disability. 42 U.S.C. §3604(a). A covenant is unenforceable if it effectively discriminates against a homeowner on one of these bases “in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection with such dwelling.” 42 U.S.C. §3604(f).
Courts interpreting the FHA have held that nearly any age-based discrimination, including discrimination against children or families with children, violates the FHA’s prohibition on familial status discrimination. See, Iniestra v. Cliff Warren Investments, Inc., 886 F. Supp. 2d 1161, 1164 (C.D. Cal. 2012). Thus, if a restriction effectively discriminates against community residents or potential residents based on age, it is likely to be held unenforceable. Discrimination against pregnant women, foster families, and families adopting children can also be familial status discrimination. Gorski v. Troy, 929 F.2d 1183 (7th Cir. 1991).
Even if a covenant or restriction is not actually intended to discriminate based upon a prohibited factor, it can still be found to violate the FHA, and therefore be unenforceable, if it results in a “disparate impact” on any protected class. Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S.Ct. 2507 (2015). A covenant or restriction has a disparate impact when it results in an adverse effect on a protected group that is so disproportionate as to essentially amount to discrimination. Id. For example, a covenant that results in religious segregation within a community, or substantially restricts housing options for members of a specific religious group, is likely unenforceable. See, e.g., Hallmark Developers, Inc. v. Fulton Co., Ga, 466 F.3d 1276, 1286 (11th Cir. 2006).
In some cases, an HOA may need to make a “reasonable accommodation” if a covenant or restriction effectively limits housing options of persons with mental or physical disabilities. A reasonable accommodation can include a “change, exception, or adjustment to a rule, policy, practice, or service…” See, Joint Statement of HUD and Dept. of Justice, Reasonable Accommodations under the Fair Housing Act (2004). For instance, an association might have to refrain from enforcing an otherwise acceptable pet restriction against a disabled homeowner who keeps an assistance animal, including an emotional support animal. Bhogaita v. Altamonte Heights Condominium Assn., 765 F.3d 1277 (11th Cir., 2014).
Violation of Homeowner Rights.
The U.S. and state constitutions guaranty that certain rights, such as the freedoms of speech and religion, will not be infringed by the government. However, agreements and transactions between private parties are usually not subject to constitutional protections because only “state actors” are limited by constitutional rights. Southcenter Joint Venture v. National Democratic Policy Com. 113 Wash.2d 413, 780 P.2d 1282, 1292 (1989). As a result, homeowners’ associations, because they are not “state actors,” are generally able to impose limitations on constitutional rights that government agencies would never get away with. Golden Gateway Center v. Golden Gateway Tenants Assoc., 111 Cal.Rptr.2d 336 (Cal. 2001).
A very few states (most notably, New Jersey and Massachusetts) take the position that HOAs are “quasi-governmental” entities. Under this view, courts in those states take constitutional protections into account when analyzing HOA covenants, though HOAs are still not nearly as limited as the government itself. See, e.g., Board of Managers of Old Colony Village Condominium v. Preu, 80 Mass.App.Ct. 728, 956 N.E.2d 258 (2011); Mazdabrook Commons Homeowners Association, Inc. v. Khan, 210 NJ 482, 46 A3d 507 (2012).
A similar minority view holds that—while the Constitution does not prevent associations from adopting and privately enforcing restrictions on constitutional rights—enforcement of those covenants through the court system potentially does violate the Constitution (because the court itself is a “state actor”). See, Fox v. Hamptons at Metro-West Condo. Ass’n, Inc., No. 6:18-cv-1457-Orl-40GJK (M.D. Fla. Sep. 25, 2018); Board of Managers of Old Colony Village Condominium v. Preu, 80 Mass.App.Ct. 728, 956 N.E.2d 258 (2011).
The position in the vast majority of states, though, is that the U.S. Constitution and the constitutions of the individual states do not limit HOA powers. Notwithstanding that general principal, state legislatures have enacted numerous statutes which effectively extend the reach of constitutionally protected rights to homeowners’ association. Thus, HOAs are sometimes prohibited from infringing on constitutional rights of homeowners, even though the protection does not flow directly from the state or federal constitution.
Freedom of Speech.
With regard to the First Amendment right to freedom of speech, multiple state statutes restrict the authority of homeowners’ associations to impede particular forms of expression—most commonly, political speech and patriotic displays. Political speech, which federal courts afford the highest level of protection against government overreach, is defined as expression for or against government policies, political candidates, or office-holders, or which relates to “politics, nationalism, religion, or other matters of opinion.” West Virginia Bd. of Ed. v. Barnette, 319 U.S. 624, 642 (1943).
HOA restrictions on signage are common and usually fully enforceable against homeowners. See, e.g., Midlake on Big Boulder Lake v. Cappuccio, 673 A.2d 340 (Pa. Superior Ct.1996). However, laws in many states limit the power of HOAs to restrict signs if they are political in nature. Maryland, for instance, disallows enforcement of restrictions that would prevent a homeowner from displaying a political sign on the homeowner’s own lot near election time. MD Code, Real Property, § 11B-111.2. In North Carolina, an HOA can only restrict political signs if its declaration unmistakably states that political signs are restricted—a general restriction on signage cannot be extended to limit political signs. N.C.G.S. §47F-3-121.
The most common approach is to guaranty the right to display political signs during the period before and immediately after an election and only allow HOAs to limit the number, location, and/or size of political signs displayed. See, e.g., A.R.S. §33-1808C; Texas Election Code §259.002. A restriction that goes further than that is unenforceable.
Another form of expression known as “political activity” is also protected from HOA infringement under the HOA laws of many states. Political activities are generally defined as actions “directed toward the success or failure of a political party, candidate for a partisan political office or a partisan political group.” Political Activity and the Federal Employee, U.S. Office of Special Counsel (2005).
Arizona’s HOA law, for example, explicitly forbids HOAs from enforcing covenants that encroach upon “door to door political activity,” including “circulation of petitions.” A.R.S. §33-1808(G). Along with protecting the right to circulate political literature and petitions, California prohibits enforcement of covenants in a manner restricting members’ right to peaceably assemble to discuss political or election issues—or to invite candidates or office-holders to speak on political issues within the community. Cal. Civ. Code §4515(b).
Patriotic displays (which generally means display of the U.S. and state flags) may be the form of expression most commonly protected against HOA encroachment. In this case, even the federal government gets involved, with the Freedom to Display the American Flag Act of 2005 (Pub.L. 109–243, 120 Stat. 572, enacted July 24, 2006) guarantying homeowners the right to respectfully display the Stars and Stripes. Many states have their own versions, typically protecting the American and state flags, and often the flags of the different branches of the U.S. military. See, e.g., Fla. Stat. §720.304; A.R.S. §33-1808A; N.C.G.S. §47F-3-121; Tex. Prop. Code §202.012. In most cases, an HOA can limit flag size and issue reasonable guidelines for display of flags, but cannot prohibit them.
Religious Freedom.
As with freedom of speech, the guaranteed right to religious liberty, as set forth in the U.S. Constitution, does not apply directly to HOAs. However, state laws protecting religious expression—and the FHA’s prohibition on religious discrimination—effectively prevent enforcement of certain covenants impeding homeowners’ freedom of religion.
An HOA covenant expressly intended to exclude members of specific religious groups from the community, or which is adopted for that purpose, is unenforceable as a blatant violation of the FHA. The covenant need not make specific reference to religion to be unenforceable, if its intent is clear from the circumstances. See, LeBlanc-Sternberg v. Fletcher, 67 F.3d 412, 424 (2d Cir.1995). On the other hand, a “facially neutral” covenant (that is, a covenant that doesn’t have anything to do with religion on its face and is not intended to result in religious discrimination) can be enforceable even if it has the unintended consequence of interfering with a homeowner’s religious observation. Boodram v Maryland Farms Condo, 16 F3d 408 (CA 4 1994).
For a covenant that inadvertently impedes religious practice to be enforceable, it must be reasonable, facially neutral, and applied equally to any other non-religious activity. Tien Tao Ass’n, Inc v Kingsbridge Park Cmty Ass’n, Inc, 953 SW2d 525, 532 (Tex App, 1997). HOAs have more flexibility if the restriction in question limits religious activities in commons areas, as long as it is implemented uniformly, serves a legitimate purpose, and doesn’t single out any one religion or religious belief. Savanna Club Worship Serv, Inc v Savanna Club Homeowners’ Ass’n, Inc., 456 F Supp 2d 1223, 1232 (SD Fla, 2005).
Right to Bear Arms.
Less legal authority exists regarding whether homeowners’ associations can limit the Second Amendment right to bear arms, as compared to cases involving freedom of speech or religion. The general rule appears to be that, while HOAs have authority to enforce validly enacted restrictions on firearms or other weapons in open areas, courts will not enforce blanket restrictions that completely prohibit gun ownership by residents. See, e.g., District of Columbia v. Heller, 554 U.S. 570 (2008).
Whereas the First Amendment expressly limits actions by Congress, the Second Amendment is written in the passive voice (“Congress shall pass no law…” versus “…the right of the people to keep and bear Arms, shall not be infringed."). Thus, the amendment can be viewed as stating a strong public policy preference in favor of protecting citizens’ right to own firearms, regardless of who may wish to infringe upon that right.
Inconsistent, Arbitrary, or Capricious Enforcement.
Even a validly enacted, substantively sound covenant can be nonetheless unenforceable if the HOA’s enforcement is procedurally improper, or is conducted inconsistently or for an inappropriate purpose. In general, a board’s exercise of its enforcement powers must be “procedurally fair and reasonable,” and its decisions must be made in “good faith … reasonable and not arbitrary and capricious.” Saunders v. Thorn Woode Partnership, L.P. 265 Ga. 703, 462 S.E.2d 135 (Ga., 1995). Moreover, board members and officers have a statutory duty to act in good faith.
Both state law and the governing documents of HOAs often include procedural prerequisites that must be met before an enforcement mechanism can be carried out. For example, in North Carolina, an association must provide a homeowner with notice and the opportunity for a hearing before the board can impose a fine, suspend membership rights, or impose assessments for damage to common elements. N.C.G.S. §§47F-3-107(d), 47F-3-102(12). Likewise, Texas associations must provide written notice, the opportunity for a hearing, and a safe-harbor period to cure a violation (if it is curable) before the association can impose a fine against a homeowner. Tex. Prop. Code §§ 209.006, 209.007.
Many jurisdictions mandate written notice to a homeowner before an HOA records a lien against the homeowner’s property. See, e.g., Fla. Stat. §720.3085; Cal. Civ. Code §5675. And, the requirement of advance notice before an HOA forecloses on a lien is nearly universal. See, e.g., Uniform Common Interest Ownership Act §3-116; Fla. Stat. §720.3085(5); Cal. Civ. Code §5710(b); N.C.G.S. §47F-3-116(f). Some states also have a minimum delinquency amount before an association can pursue foreclosure. See, e.g., O.C.G.A. §44-3-232(c) (judicial foreclosure suit only permitted if delinquent amount is at least $2,000).
A few states require or strongly encourage HOAs to give homeowners a chance to attend mediation before filing a suit to enforce covenants, though mediation is usually inapplicable in simple collection suits for unpaid assessments. Fla. Stat. §720.311, N.C.G.S. §7A-38.3F(b), Tex. Prop. Code § 209.007(d).
An HOA’s declaration or other governing documents may include similar conditions precedent which must be met before taking action to enforce a covenant. Failure to observe all necessary protocol can prevent enforcement, invalidate a lien, or force the association to restart the process from the beginning. See, e.g., Diamond v. Superior Court, 217 Cal. App. 4th 1172 (2013).
Arbitrary or capricious enforcement can similarly preclude an HOA’s attempt to enforce a covenant or restriction. If an HOA seeks to enforce a covenant it has not consistently enforced in the past or restrict conduct that has been ongoing for an extended period, the association may discover that it has inadvertently abandoned or waived its legal right to enforce the covenant or restriction. Liebler v. Point Loma Tennis Club, 40 Cal. App. 4th 1600, 1610-11 (4th Dist. 1995); Prisco v. Forest Villas Condominium Apartments, Inc., 847 So 2d 1012 (Fla.App. Dist.4, 2003). Along the same lines, enforcement targeted at one or a small group of homeowners is subject to legal challenge by the affected homeowners. See, e.g., Bloch v. Frischholz, 533 F.3d 562 (7th Cir. 2008).
A homeowner faced with an enforcement action can assert the HOA’s inconsistent or arbitrary enforcement as a defense. White Egret Condo., Inc. v. Franklin, 379 So.2d 346 (Fla. 1979). If the court finds that the association’s enforcement efforts have in fact been arbitrary or inconsistent, the covenant or restriction will be unenforceable.
Homeowner Recourse.
The options available to a homeowner facing HOA enforcement of an improper covenant—or a homeowner singled out for inconsistent enforcement—vary between states and based upon the nature of the covenant in question. In appropriate cases, it may be worth speaking with the board about the issues before taking any formal legal action. A well-written letter from a homeowner (or homeowner’s attorney) expressing valid concerns about the validity of a restriction or the board’s enforcement may be sufficient to change the board’s analysis.
If formal action is necessary, homeowners have standing to challenge HOA covenants in state court, typically in the county in which the community is located. If the improper covenant or enforcement thereof violates the FHA, the homeowner can file suit in federal district court or file an administrative housing complaint with the Department of Housing and Urban Development’s Office of Fair Housing and Equal Opportunity. In states that favor pre-suit mediation, an impartial opinion from an experienced mediator can sometimes convince an HOA board to reassess an untenable position and forego further enforcement.
If legal action proves necessary, or if the association has already instituted legal proceedings, it’s almost always a good idea to consult with an experienced attorney. An attorney familiar with the relevant state’s HOA laws will be able to evaluate the merits of the association’s position and the homeowner’s available defenses. Counsel can also provide valuable advice on important issues like statutes of limitations, potential alternate claims and defenses, and the merits of seeking a negotiated compromise versus pursuing litigation.
It’s worth noting that state HOA statutes and community declarations often include “fee-shifting” provisions requiring a losing party to reimburse the prevailing party’s legal fees in suits involving enforcement of covenants. In Ritter & Ritter v. Churchill Condominium Assn., 166 Cal.App.4th 103, a case from 2008 involving secondhand smoke, a court in California ordered an association to pay over $500,000 of a member’s attorney’s fees. Litigation is notoriously expensive, but fee-shifting provisions can defray some or all of the cost of defending against an HOA’s attempt to enforce an unenforceable covenant.
