Enforcement Actions

by: Jeffrey A. Goldberg

A covenant enforcement case is an action to obtain a court order for the purpose of obtaining a court determination that a unit owner has violated the covenants of the Declaration, and a court order to require the unit owner to stop the violation and to remedy the violation.

During some point in the process, it is hoped that the unit owner will voluntarily comply and settle with the Association. However, enforcement cases can be very difficult and are not easily solved unless the Board is able to get the cooperation of the unit owner. There are no easy solutions.

The following is a brief summary of the procedure generally followed in covenant enforcement cases. The purpose of this article is to give the board a realistic assessment of what to expect from this type of litigation.

Declaration Remedies

These cases must follow the enforcement mechanism of the Declaration. Most every Declaration has some provision for enforcement or remedies for the violation of its provisions. The remedies provisions can vary widely although many Declarations contain some version or variation of the same notice procedure.

Typically, these provisions provide for sending a special 30-day notice of violation followed by another 10-day notice of termination. If the unit owner does not comply during the respective 30-day and 10-day grace periods, then a lawsuit is filed to request a court order to require compliance. Some Declarations also provide for a court order for the forced judicial sale of the Unit-to literally require the unit owner to sell and transfer his or her Unit. However, the court is generally reluctant to carry out such a harsh remedy absent special circumstances.

Even if an Association's Declaration does not require it, it is a good idea to send out the notices and try to obtain the unit owner's voluntary cooperation.

Avoid Litigation

Litigation should be considered as the last resort. Litigation is often time-consuming, expensive and disruptive, and it is difficult to obtain quick relief. It tends to create disharmony and anger within the community. The end result of litigation is often an order of court which neither party considers acceptable. The prevailing party, if there is one, often receives a pyrrhic victory, sustaining far more losses than what was won. Although the Declaration often provides for the recovery of attorneys' fees, it is rare for a victorious association to receive an award of all of the attorneys' fees and costs incurred. An award of attorneys' fees and costs is always uncertain and should never be relied upon.

It is far preferable to settle with the unit owner and have a quick, effective and inexpensive resolution, if possible.

The decision of how to proceed should be rational and objective. Anger, or the desire for punishment or revenge, should not motivate the Board. >From my experience, when Boards involve themselves in litigation out of anger or resentment, the Association incurs great expense and disruption with no good result.

Failure to Enforce Can Be a Waiver

Sometimes, there is no choice other than to file a lawsuit. The Board has a duty not to simply permit a flagrant violation of the Declaration. Instead, the Board must take care that its enforcement policies are uniformly and systematically applied. The failure to uniformly enforce the Declaration can result in a waiver-which means the Association will be prevented from enforcement of that provision in the future- against the violating unit owner and perhaps against future violators. In addition, the failure to enforce the covenants could result in claims against the board by the other unit owners.

Settlement of a case is far preferable to litigation, but the settlement must adequately resolve and cure the violation. Every case which is started must be brought to a final conclusion, and a record of each violation and how it was resolved should be kept (in order to prove the Board's uniform enforcement policies and practices). In practice, the Board and its attorneys must be flexible and creative to try to fashion a solution that is acceptable to the Board and to the unit owner.

When a unit owner simply refuses to cooperate, the Board must be prepared to follow through with legal action. In fact, an active settlement posture and aggressive action often go hand in hand. It is often aggressive court action which brings a recalcitrant unit owner to the negotiating table.

Stay in Control of Attorneys' Fees and Costs

This kind of litigation is complex and can be very expensive. It is necessary to have a legal budget for the case and to evaluate it on a periodic basis so that the Board can remain in control of its legal services and legal fees.

A precise estimate is difficult because it is impossible to predict what will happen. The complexity and difficulty of the case depends in large part on whether the unit owner will vigorously defend the case.

Procedure When Legal Action is Necessary

The following is the procedure for pursuing this type of case.

	1. Initial Letter. It is sometimes a good idea to write a simple letter to the unit owner asking him or her to contact the Association's attorney to arrange for an informal resolution of the problem. This would be an attempt to try to resolve the case quickly and inexpensively for both sides. If the Association's governing documents require it, the board may need to hold a hearing before proceeding further.
	2. 30-day Notice Letter. If the first letter did not work, the next step is a very formal 30-day notice letter. This letter would conform to technical legal requirements in preparation for filing a formal case and must be sent by the Association's attorney. This letter gives the unit owner 30 days to conform his or her behavior to acceptable standards.
	3. 10-day Notice Letter. This letter would follow the 30-day letter unless the home owner settles the matter with the Association. This would be the third attempt to resolve the case out-of-court and would be a last attempt to try to obtain the home owner's cooperation. This letter also would be formal, written by an attorney, and would conform to the legal prerequisites for filing a lawsuit. This letter gives the unit owner a final 10-day deadline for compliance.
	4. Settlement Negotiations and Agreement. If the homeowner responds positively to any one or more of the above letters, the next step would be to seek to negotiate a settlement agreement. I would try to get the homeowner agree to comply to the satisfaction of the Association, although some compromise on both sides is usually necessary. This stage can be difficult and painstaking to get the parties to find a creative solution acceptable to both sides.
	5. Litigation. If it becomes necessary to file a lawsuit, it would be prudent to adopt a flexible budget (and revise it often based on what the other side might do). The great expense of litigation dictates that, at every point in litigation, the goal should be to continue to try to settle the case. Aggressive litigation will often facilitate settlement.

The first stage involves fact and witness investigation, drafting and filing the complaint, serving the papers on the unit owner, recording a notice against the unit, and gathering evidence and documents.

If the defendant fights the case, the next step would be pre-trial motions and discovery, involving development of witness testimony and evidence. Finally the case would go to trial for a court determination and order.

It is rare for a case to go that far, however, because both sides are usually motivated to settle in order to minimize the expense. The Association usually has a superior bargaining position in this regard because it usually is in a better financial position to fund litigation than the individual unit owner. However, this advantage should not be taken for granted because it does not always prove true. Therefore it is better to be reasonable and conciliatory instead of taking an overly-aggressive and abusive bargaining position. In addition, if it should ever come to the point that the Association is seeking an award of attorneys' fees from the court, the amount of the award will depend upon how ready the Association was to accommodate the legitimate needs of the unit owner. If the Association takes a hostile and abusive negotiating posture, the court may refuse to award fees and costs.

In an emergency situation involving irreparable danger to property or person, or to the rights of the parties, it is possible to obtain an emergency court order (depending upon the circumstances). In situations where it is necessary to act swiftly to avoid harm or injury, the Association must not hesitate but rather must aggressively pursue its rights in court.

When proceeding with legal action to enforce the Association's governing documents, it is prudent to hire attorneys who are experienced and knowledgeable in this area of the law who have done this type of work before and who are willing to aggressively pursue the Association's remedies when necessary but also be willing to use common sense in avoiding unnecessary cost and disruption.

Summary

	1. The Association can enforce the Declaration by asking the court to order the unit owners to comply.
	2. The Association has a duty to enforce the Declaration.
	3. The goal is to obtain voluntary compliance-aggressive litigation often motivates the unit owner to settle with the Association and to comply.

Enforcement Actions: Litigation to enforce declaration is difficult but sometimes absolutely necessary

by: Jeffrey A. Goldberg