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Recent Case: One Story, Two Story, A-Frame, B-Frame
Dr. Seuss once said, “I meant what I said and I said what I meant.” Jerry and Lou Ann Allen attempted this same argument in the recent Colorado Court of Appeals case, Allen v. Reed, and realized in the world of homeowner associations, it does not get you very far. The Allens were members of the Eleven Mile Recreation Association, a community located near the Eleven Mile Reservoir. The association’s covenants stated that no home could exceed one story measured from the finished grade. The covenants, however, did not specify the height of one story from finish grade or define finish grade. But, as far as the Allens were concerned, a one story home was a one story home.
THE FACTS
Glen and Mary Reed lived below the Allens in this mountain community. Initially, the Reed’s property consisted of a small, one-story log cabin. In 2002, the Reeds decided to turn the one-story cabin into a one-story A-frame, with an upper level loft, and a vaulted ceiling extending twenty-three feet from the floor of the original cabin to the top of the roof. The addition was patterned after other A-frames in the area and complied with the local building restrictions.
The Allens took exception to the addition because it blocked their view of the nearby lake. The Allens sued the Reeds seeking to prohibit them from constructing the addition, claiming that the A-frame addition with an upper level loft violated the association covenant limiting homes to one story.
The trial court denied the Allen’s motion for preliminary injunction to prevent the Reeds from building the planned home. Shortly thereafter, the Reeds built the addition. However, at trial, the court held for the Allens, finding that the addition exceeded one story and violated the covenants. The trial court ordered the Reeds to remove the structure.
The Reeds appealed the decision arguing that the term “one story” as used in the covenants was ambiguous and unenforceable. The appellate court agreed, reversed the trial court’s ruling, and allowed the Reeds’ addition to remain standing.
ANALYSIS
In Colorado, restrictive covenants must be clearly written to be enforced. When covenants are unclearly written and ambiguous, courts must resolve the restriction in favor of the free and unrestricted use of land, which is what happened here. The appellate court found that the term “one story” by itself was ambiguous and not sufficient to restrict the Reeds from building an A-frame home.
Some have viewed this decision as a way for homeowners to challenge their community’s building restrictions and win, ruining a community’s character with buildings that do not fit the community. Given the facts of this case, however, the holding should only be applied in limited circumstances as numerous reasons exist that make this a unique case. First, the covenants did not numerically identify the height of one story. Second, the covenants did not define finish grade. Third, the covenants did not reference any building codes to provide additional context for the restriction. Fourth, the covenants did not specifically reference a purpose to protect views or site lines within the community. Fifth, the association did not have an architectural review committee established to review plans. And sixth, several other homes of this style had been built in the community.
Given these six distinguishing characteristics, the case will be quite limited in its application. Courts will still analyze the decisions of an architectural review committee under the business judgment rule, which provides deference to an association’s reasonable and honest exercise of judgment. While objective standards are easier to defend, even subjective standards such as the protection of views and characteristics of the community are safe against challenge, provided they can be connected to something objective. For example, a subjective goal of a community to protect mountain views should be coupled with a concrete, objective way to achieve this goal such as specific height restrictions for homes or a minimum setback.
In sum, this unique case with its unique set of facts will not dynamically change the way Colorado’s courts analyze architectural review committee decisions. However, if your association’s covenants do not contain any objective criteria for deciding these types of questions, this case may inspire the adoption of some!
[PRINTER FRIENDLY VERSION]
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