In West v. Evergreen Highlands Association, decided in November, 2001, the Colorado Court of Appeals limited the ability of the association to add a new covenant requiring mandatory membership and assessments based upon the specific amendment language in the original covenants.
 
The Facts
In 1972, protective covenants were recorded against property located in Evergreen Highlands Subdivision. An amendment to the protective covenants was recorded in 1982. Although neither the 1972 protective covenants nor the 1982 amendment required membership in an association or payment of assessments, an association had existed from the inception of the community.  The 1972 protective covenants provide for change or modification as follows:
 
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 ...
 
Mr. West, the plaintiff, purchased his home in Evergreen Highlands in 1986, subject to both the 1972 protective covenants and the 1982 amendment. In 1995, the Association recorded an amendment to the protective covenants which had been approved and signed by 75% of the owners within the Evergreen Highlands subdivision. The amendment added covenants which required mandatory membership and payment of assessments and subjected the lots to liens for nonpayment of assessments. The plaintiff failed to pay assessments following this amendment and the association advised him that it intended to file a lien.  The plaintiff then filed suit against the association to have the 1995 amendment declared invalid.
 
Trial Court Ruling
The trial court relied on a 1999 case from Montana which held that language providing that covenants could be “waived, abandoned, terminated, modified, altered or changed” was broad enough to allow the addition of new restrictions and a 1998 case from Texas which found a modification creating a mandatory association valid to find that the 1995 amendment was valid. The trial court also relied on a 1986 California case which held that the language “change or modify” included any alteration.
 
Court of Appeals Reversal
The Colorado Court of Appeals determined that the cases relied upon by the trial court did not apply to the facts of this case. Rather, the Court of Appeals followed another line of cases from other jurisdictions, primarily an Illinois case that dealt with “narrowly drafted covenants,” similar to the covenants in Evergreen Highlands. The Court held that the language “change or modify” was plain and clear and that, therefore, only a pre-existing covenant, related in subject matter, could be altered by 75% of the owners. Since the 1972 covenants did not contain a restriction regarding mandatory membership, assessments, or lien authority, a vote by 75% of the owners could not subsequently add such a provision.
 
The association has petitioned the Court of Appeals for rehearing on the grounds that the Court misapplied the Illinois case. The Petition for Rehearing states that the Court failed to take into account the considerable differences in the notice of the regulatory schemes involved in the Illinois case and the case at bar. The association points out that the developer formed the association at the inception of the community and that the corporate documents creating the association do grant the association the right to assess fees against members to fulfill its maintenance duties and other purposes. The Petition further cites the Third Restatement of Property (Servitudes), regarding the association’s implied authority to raise funds necessary to fulfill its functions. Based upon the other documents that provide notice, the association argues that the 1995 amendment has not added any new provisions. The Court has not yet ruled on the Petition for Rehearing. In the event the Court of Appeals does not reverse the case on rehearing, further appeal to the Colorado Supreme Court is expected. 
 
Practice Pointer
So what does this mean for associations and Board members? Almost every declaration of covenants contains a provision regarding how to amend or change the declaration. Although the basic language of these provisions is fairly similar, there are many variations. Some provisions, like the one in this case, only refer to changing or modifying. Others may refer to changing, modifying, altering or amending. Still others may refer to changes or additions to the covenants. The amendments that are possible will depend on the language contained in your declaration. If your association is considering amending the declaration, either to revise existing provisions or to add provisions where the declaration is currently silent, the Board should talk to the association’s attorney to determine the parameters of the amendment and any potential risks.