Month: December 2019

Where is Virginia on Selective Enforcement of HOA Covenants?

In Greek mythology, Procrustes was a robber who deceived his victims into entering his house by offering a free bed for the night. Once inside, if the visitor was too short, he violently stretched them to the full length of the bed. If the visitor was too tall, he would chop off their legs to fit them. Either way, Procrustes ended up with their valuables. Procrustes met his end when the hero, Theseus “fitted” Procrustes to the length of the bed in his own guest room. In the law, judges, lawyers and professors sometimes deride arbitrary or unwise legal standards as “Procrustean.”  

Subdivision deed restrictions often seem “Procrustean.” But at least Procrustes held all visitors to the same “standard.” When a HOA or condominium seeks to enforce a restrictive covenant against a particular owner, often there are other properties for which the board has failed to enforce that covenant against for a number of years. The owner, reading her notice of violation, may wonder if the HOA had effectively abandoned enforcement of the restriction or if the notice is an unfair “selective enforcement” against some lots but not others. The Supreme Court of Virginia considered this question in the 1992 decision, Raintree of Albemarle Homeowners Association v. Charles & Glenda Jones. Raintree brought suit against the Jones family, seeking an order prohibiting them from keeping a “wrecker” tow truck on their residential property. The HOA’s enforcement was a sore subject. Two other owners, Gordon Nicely and Dennis Powell parked pickup trucks owned by a utility company at their homes without HOA objection. The disputed covenant prohibited lot owners from parking trucks “of any nature” overnight on property in the subdivision, except in an enclosed garage. The section also prohibited, “school buses, commercial vehicles or habitable motor vehicles” outside of an enclosed garage. The Supreme Court disagreed with the HOA’s view that the utility company pickup trucks were not commercial trucks or “trucks of any nature” prohibited by the covenant. The HOA also argued that its failure to enforce the covenant against Messrs. Nicely or Powell, did not constitute a waiver of the enforceability of that covenant in the Jones case. The Supreme Court of Virginia’s longstanding rule says that the right to enforce a restrictive covenant may be lost by “waiver, abandonment or acquiescence” by the association to violations thereof. But the party relying on such waiver must show that the previous conduct or violations had affected, “the architectural scheme and general landscaping of the area so as to render the enforcement of the restriction of no substantial value to the property owners.” The Supreme Court found that the HOA’s failure to enforce the covenant against Nicely and Powell did not substantially devalue of the covenant in the context of the overall architectural scheme of the development.

The Supreme Court found that the Circuit Court properly denied the HOA’s request for an order prohibiting the Joneses from parking their wrecker truck on Old Brook Road. The Supreme Court observed that Old Brook Road is State Route 652, not a private right of way. The HOA had no authority to regulate parking on Old Brook Road because it had been incorporated into the state system of highway maintenance. If VDOT didn’t have a problem with the truck, then there wasn’t anything that could be done against it. This is one reason why many HOAs like to own their own roads.

Many HOA declarations prohibit the keeping of commercial vehicles or motor homes in the subdivision. These rules can be onerous to small business owners who need a commercial vehicle to earn a living. Usually, owners are permitted to use their home as an office for professional work that does not impact the curbside views of the lot. Commercial vehicle or home business restrictions can hit working class people harder than professionals. Enforcement of such rules often “drives” small business owners further away from their service areas, require them to pass on “overhead” garage costs to their customers in higher prices, or force them out of business. This can discourage useful economic growth between services and consumers of ordinary means.

“Selective Enforcement” is a difficult defense to prove when relying upon the rule in Raintree. Motor vehicles are transitory by nature. If this was a case where a majority of the lot owners violated a covenant prohibiting sheds in the front yards for many years, then it would be much more likely to be found to render the prohibition useless. Or if the original declaration called for the association or developer to establish bridle paths across the front of each lot for equestrian activity, and instead of doing so, many lot owners built fences and other structures in the areas originally contemplated for horse trails.

There are other rules which lot owners may be able to use to assert a “selective enforcement” defense other than the “defeat of common scheme” rule discussed in Raintree. For example, federal or state fair housing laws may prohibit certain enforcement actions related to race, religion or other criteria.

Supreme Court of Virginia seem receptive to “textualist” challenges to HOA enforcement actions. Under this approach, set out in Tvardek and Sainani, interpreting the specific language in covenants or statute narrowly to limit enforcement, is more likely to result in a successful challenge. For example, in this case, if the Jones used unmarked mini or compact vans for a house cleaning business that they parked overnight at their property, then such a practice might not violate the covenants, because the minivans look no different than those used by large families.

The covenant at issue in the Raintree strikes me as unreasonable, in its prohibition against “trucks of any nature” being “parked overnight.” Pickup trucks are commonly used by passenger vehicles, and many automobiles used by families are classified as a kind of truck. It doesn’t make sense to put a covenant in a declaration that treats ordinary pickup trucks, SUV’s, vans, etc. like commercial service vehicles. Also, the “overnight” temporal limitation seems unreasonable. By this rule, a commercial vehicle could sit in an open driveway all day and go elsewhere at night. This doesn’t protect onlookers from the “eyesore” of the commercial vehicle. A literalistic enforcement of this covenant would require lot owners to ask their friends, who come to visit using compact pickups, to leave as soon as the sun sets.

Many people want HOA disputes to be resolved based on what others in the subdivision are doing or on “common sense” arguments. However, the courts in Virginia have explained that what the declaration and the statutes actually say is often more important than what some people may be doing. Different lawyers and judges often disagree as to what particular HOA covenants actually mean. At least with Procrustes, people trapped inside his house knew how tall they needed to be to get out unscathed. There were no arguments as to how long the bed was. When the legal standard is unclear as to what compliance would actually look like, then there is a greater problem. This is why the recent trend in Virginia whereby courts refuse to enforce overly general or ambiguous covenants makes sense.  

Selected Legal Authority:

Raintree of Albemarle Homeowners Ass’n, Inc. v. Jones, 243 Va. 155 (1992)

Tvardek v. Powhatan Vill. Homeowners Ass’n, 291 Va. 269 (2016)

Sainani v. Belmont Glen Homeowners Ass’n, 831 S.E.2d 662 (2019)

photo credit: akahawkeyefan RADIATOR SPRINGS? via photopin (license)

This photo does not depict anything discussed in the blog post.

Judicial Limitations on HOA Fining Authority

It’s December. Santa is coming. But for many, Santa isn’t the only person leaving things at homes. Many households using outdoor decorations to share holiday cheer will receive, in addition to gifts from their friends and family, HOA violation notices. Fortunately, Christmas came early in 2019, bringing Virginia landowners new, owner-friendly legal precedent.

Years ago, state legislatures made it easier for HOAs to use handbooks of architectural standards to enforce private land use restrictions.  Upon proper observation of certain formalities, HOAs can make up rules adding to those in the declaration and  impose fines and liens for violation of those rules.

Why is this controversial? It allows boards to bypass the normal, difficult process of obtaining votes of 1/2 to 2/3 of the owners to amend the restrictive covenants in the declaration. The power to adopt and enforce such rules (or the discretion not to do so) can make owners feel like someone is controlling their life or the value of their investment. When such power falls in the hands of an association board, owners are one election away from (1) a civic-minded group doing their best to help the community, (2) a controlling group of bullies acting out of self-interest, or (3) a board that is unengaged or incompetent.

Many people have a mistaken belief that the law empowers these organizations, the language of the documents doesn’t matter, and there is no real way to protect oneself. This is false. In August of 2019, the Supreme Court of Virginia explained in Sainani v. Belmont Glen Homeowners Association, Inc. that the law strictly construes HOA statutes, declarations and rules when Boards try to enforce such rules, and in favor of free use of property. This blog post explains what happened in the Sainani case, and how the legal method outlined in that case can be used to resist other efforts by HOAs to fine owners for violating rules and regulations.

SanJay and Sona Sainani owned a home in Belmont Glen HOA in Loudoun County, Virginia. For several years, the HOA sent them violation letters for the stringed holiday lights that adorned their front door and deck most days of the year. For the months of September through April, the Sainanis would leave up lights for several Hindu, Sindhi, and Sikh religious holidays. The HOA’s notices referred to its Handbook of Architectural Design Guidelines.  That document limited display of holiday lights to certain days around Halloween, Thanksgiving, Winter Holidays, and the Fourth of July. Beyond that, the Handbook required owners to obtain written approval from the HOA’s Architectural Review Board. At a hearing that the Sainanis did not attend, the HOA imposed a fine of $10.00 per each day that the violations continued. The ARB suspended the Sainanis voting privileges and their use of common facilities. The HOA filed suit in the General District Court and obtained a default judgment. The Sainanis retained counsel, appealed the GDC order, and filed counterclaims against the HOA on appeal in the Circuit Court of Loudoun County.

The Sainanis took the position that the seasonal display guidelines in the Handbook were unenforceable because their adoption was not authorized by the subdivision’s amended declaration of covenants. The Circuit Court decided that the holiday light rules were enforceable, and entered judgment against the Sainanis for $884.17 in unpaid fines and almost $40,000.00 in attorney fees and court costs. The Supreme Court of Virginia granted the Sainanis an appeal.

Justice D. Arthur Kelsey wrote the opinion of the Supreme Court. The “strict construction” analysis of HOA covenants follows the approach taken in Tvardek v. Powhatan Village HOA which I have written about previously. The general rule of strict construction is that restrictive covenants, “are not favored, and the burden is on [the party] who would enforce such covenants to established that the activity objected to is within their terms.” Covenants, “are to be construed most strictly against the grantor and persons seeking to enforce them, and substantial doubt or ambiguity is to be resolved in favor or the free use of property and against restrictions.” A  longstanding principle of the English common law is protection of the free use, enjoyment and disposal of property without restriction except by the laws of the land.

Most HOA covenants include lists of prohibited activities that range from the specific to the general, using terms that may or may not be clearly defined.  Under the rule of “ejusdem generis,” when a particular class of things is enumerated, and general words follow, the general words are construed in a sense similar to the more specific language. The corollary to this is the rule, “noscitur a sociis”, states that when general and specific words are grouped, the general words will be construed to embrace only objects similar in nature to the specific things mentioned.

Because the language of restrictive covenants is construed in favor of free use, covenants are only enforced where the intention of the covenant is clear and the restrictions are reasonable. Virginia courts are required to determine the meaning of covenants by considering the instrument taken as a whole. Parties are not permitted to cherry-pick bits and pieces of language that, if taken out of context, support their arguments.

The HOA pointed to several sections of the Declaration which they contended allowed for enforcement of anti-holiday light rules against the Sainani family:

1. The Declaration prohibited nuisances. A section provided: “No exterior lighting on a Lot shall be directed outside the boundaries of the Lot. Exterior lighting which results in an adverse visual impact to adjacent Lots, whether by location, wattage or other features, is prohibited.”  Because this covenant concerned the “adverse visual impact” of lighting on one lot to an adjoining lot, the Handbook rules about which days and times one could display decorative holiday lights, the activity objected to fell outside the scope of the light nuisances restrictions. The Court was not persuaded that the general prohibition against nuisances could apply to lighting features that were not proscribed by the “lights” subsection or any other subparts.
2. The Declaration required lot owners to obtain approval of the HOA’s ARB before any “modification or “alteration” of any lot or structure shall be made, installed, constructed, erected, placed, altered and/or externally improved. The Supreme Court used “strict construction” principles to limit the scope of this section to permanent changes to a lot, and not seasonal displays. The Court approved a section of the Restatement (Third) of Property: Servitudes § 6.7 which provides that design-control powers do not include an implied power to impose controls for purely aesthetic purposes, absent express authorization by statute or the declaration. Restatements are treatises where academic experts attempt to summarize and clarify common law doctrines.
3. The Declaration gave the ARB the authority to regulate the external design and appearances of the property so as to enhance property values and to maintain harmonious relationships. The Supreme Court found this grant of authority in the declaration to be overly general and found that it failed to specifically enumerate rulemaking powers beyond the “light nuisance” section previously considered.

The Sainani opinion does not mean that owners can just throw HOA violation notices into the trash. Fines are not now abolished. Owners ought to consult with qualified legal counsel whenever served with a notice to appear in a hearing at the HOA or courthouse. Sainani will prompt lawyers who draft HOA covenants to be more specific in describing prohibited conduct and grants of power to HOA boards and committees. This may avoid having the “void for generality” Sainani principle prevent covenant enforcement.

The court quotes a section of the HOA Handbook which states that the purpose of the holiday guidelines was, in addition to other purposes, “to avoid religious issues in the community.” This opinion doesn’t mention whether or not the Sainanis presented any arguments that any orders of the GDC or Circuit Court’s orders functioned as a restraint on free speech or exercise of religion. The Sainani opinion shows that it is not necessary to frame an issue in terms of first amendment rights for an owner to prevail.

What does the Supreme Court’s approach in the Sainani case mean for lot owners who are concerned about how the board is enforcing rules in the community? Since the Boards are the usual enforcing authority of HOA governing documents, the new opinion is a blow to many board or committee adopted systems of notices of violations, hearings and liens that rely heavily upon thick handbooks only loosely supported by the recorded covenants. The principles of strict construction shine light through loopholes in the HOA fine systems that may be offensive. The Court is 100% correct that interpretation of HOA statutes and covenants ought to look through a lens focused on the free use of property by landowners. The practical value of land comes from its free, un-interfered with use.

What the Sainani case (like the Tvardek case and others before it) introduce into the community associations system is substantial uncertainty about whether sections of governing documents are enforceable, and if so, how. The Supreme Court is not saying that the declaration or the exterior lighting provisions are invalid or that the Board may simply be ignored. The opinion says that the HOA cannot enforce particular sections of a Handbook adopted by the board by imposing fines through a statutory process. This enforcement uncertainty is of great interest to lawyers looking to enable or resist an Association’s rulemaking and enforcement practices. There are active owners in every community who will continue to strive to make other owners lots look a certain way, even if the judiciary raises the banner of private property rights higher. Lobbyists, specialist lawyers and professional managers who represent HOAs will go back and draft new legislation, covenants, rules, and procedures, trying to strengthen the authority of HOA boards and committees The uncertainty imposed by “strict construction” strengthens the rights of owners in the face of Boards and legislators who would like to limit those rights. However, this may be unhelpful to an owner who wants to be able to make plans and decisions now without months or years of litigation.  That’s why I would like to see the 2020 Virginia General Assembly take action to reform HOA fines.  

Selected Legal Authority:

Sainani v. Belmont Glen Homeowners Ass’n, 831 S.E. 2d 662 (Va. Aug. 26, 2019)

Va. Code § 55.1-1819, formerly, Va. Code § 55-513 (Adoption & enforcement of rules)

Photo Credit:

NathalieSt Christmas Flowers via photopin (license)(for decorative purposes only, does not depict anything featured in text of blog post)