Covenant enforcement … explaining to a homeowner that the expensive new fence he built all by himself, but without permission from the architectural committee, must go … breaking the news to the elderly woman who holds her new puppy in her arms that the association’s rules prohibits animals … telling the belligerent couple on the corner that although purple is a great color for grapes, it’s not approved as an allowable color for their siding.  As a board member, your duty to enforce your association’s covenants might well be one of your least favorite responsibilities.  However, as unpleasant as taking action may be, it is imperative not to put it off until another day.  Remember, because of the application of certain defenses, time and careful planning is indispensable when it comes to successful covenant enforcement.

The first defense, the statute of limitations, arose because of the judicial desire for parties to resolve their differences in a timely matter.  As such, courts have provided a legal deadline by which a claim must be filed with the court.  To meet the statute of limitations deadline, an association must file a lawsuit with the court within the applicable timeframe.  This filing requirement means that actions like sending a letter regarding the violation, having verbal communications with the violator, or producing minutes showing that the alleged violator had been notified of the violation will not qualify as actions that will toll the statute of limitations.  Often, boards will not realize that while they are attempting to solve problems informally, the statute of limitations clock continues to tick and the time to file the claim steadily decreases.

Different claims have different statutes of limitations, but one of the most common legal actions that associations fail to file timely are those for construction violations (i.e., architectural violations, violations regarding the installation of structures and other improvements, etc.).  Section 38-33.123 of the Colorado Common Interest Ownership Act ("CCIOA") requires an association to commence an action regarding a violation of any building restriction within one year from the date from which the association knew, or in the exercise of reasonable diligence should have known, of the violation.  If an association fails to file within the statute of limitations, then the association has lost its ability to take action on the illegal construction.  In other words, due to the board’s failure to file within the statute of limitations, the association’s residents will have to resign themselves to looking at their neighbor’s huge, horrible shed painted in the colors of the neighbor’s alma mater located on the front yard in full view of potential buyers.  Not only are such structures eyesores, they can also markedly decrease association property values.    

In addition to failing to file within the applicable statue of limitations, an association can lose its rights to enforce its covenants through an "estoppel" defense or a "laches" defense.  An association will be “estopped” from enforcing its covenants when a homeowner shows that he or she acted in reliance on the association’s actions or representations in respect to the covenant in question.  For example, a homeowner may bring an estoppel defense if the association has observed the covenant violation, remained silent, leading the homeowner to believe that the association’s silence constitutes acceptance of the violation.  The “laches” defense attaches to a claim when an association sits on its rights for too long, which results in the loss of that right.  Laches might apply, for example, if an association delays enforcement long enough to cause a legal detriment to the homeowner.   

Fortunately, since the estoppel and laches defenses require a close examination of the legal and factual issues in each case, such defenses may be overcome.  The statute of limitations for a construction violation, on the other hand, does not provide an association with much of a defense. If the homeowner can show that the association failed to file a lawsuit within one year from the date the association knew or should have known of the violation, the association will lose the claim. 

Since these defenses can cause an association to lose its rights to enforce a covenant, if you don't know whether a particular violation triggers a statute of limitations or whether your actions are creating an environment for a successful estoppel or laches claim, by all means ASK.  Consult your attorney for information and advice on the options available.