Rights in real property - Property owners’ associations and common interest ownership communities

Learning Outcomes

After reading this article, you will be able to identify the legal structure and powers of property owners’ associations and common interest ownership communities. You will understand the nature and enforceability of covenants, association rules, and the remedies available for violations. You will be able to apply these principles to MBE-style questions and distinguish between valid and invalid restrictions or actions by associations.

MBE Syllabus

For the MBE, you are required to understand the legal framework governing property owners’ associations and common interest ownership communities. This includes the creation, powers, and limitations of associations, the nature of covenants and restrictions, and the rights and obligations of members. You should be prepared to:

  • Recognize how property owners’ associations are formed and the scope of their authority.
  • Analyze the enforceability of covenants, conditions, and restrictions (CC&Rs) imposed by associations.
  • Distinguish between valid and invalid association rules or restrictions.
  • Evaluate remedies for breach of association covenants or rules.
  • Understand the rights of association members and the limits on association powers.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. Which of the following is most likely to be enforceable by a property owners’ association?
    1. A rule prohibiting all political signs, regardless of size or content.
    2. A covenant requiring all homes to have a specific style of mailbox.
    3. A restriction banning all non-residents from entering the community.
    4. A rule requiring all residents to vote in local elections.
  2. If a homeowner violates a valid association covenant, the association may generally:
    1. Impose criminal penalties.
    2. Seek an injunction or damages.
    3. Terminate the homeowner’s property rights.
    4. Enforce the covenant only if all owners agree.
  3. Which of the following is NOT a typical power of a property owners’ association?
    1. Levying assessments for common expenses.
    2. Amending covenants by majority vote, if allowed by the declaration.
    3. Enacting rules that conflict with state law.
    4. Maintaining and repairing common areas.

Introduction

Property owners’ associations and common interest ownership communities are common in modern real estate developments. These entities manage shared property and enforce rules that affect all owners within the community. Understanding their legal authority, the enforceability of covenants, and the remedies for violations is essential for the MBE.

Types of Common Interest Communities

Common interest ownership communities include homeowners’ associations (HOAs), condominiums, and cooperatives. Each owner typically holds a separate interest in their unit or lot and a shared interest in common areas. The association governs the community and enforces covenants, conditions, and restrictions (CC&Rs).

Key Term: Property Owners’ Association
An entity formed by owners in a development to manage common property, enforce rules, and collect assessments for shared expenses.

Key Term: Common Interest Ownership Community
A real estate development where owners share rights and obligations in common areas, subject to association governance and recorded covenants.

Creation and Authority of Associations

Associations are usually created by a recorded declaration or primary deed. This document sets out the rights and obligations of owners and the association. The association’s authority is typically limited to powers granted by the declaration and relevant statutes.

Key Term: Declaration (or Primary Deed)
The recorded instrument that establishes the association, defines common areas, and sets out covenants and rules binding all owners.

Key Term: Restriction
A limitation on property use imposed by covenant, association rule, or declaration, enforceable if reasonable and not contrary to law or public policy.

Covenants, Conditions, and Restrictions (CC&Rs)

CC&Rs are binding promises that run with the land and are enforceable by the association or other owners. They may regulate property use, appearance, and conduct within the community.

Key Term: Covenant Running with the Land
A promise in a recorded instrument that binds successors in title, enforceable by or against future owners.

Key Term: Restriction
A limitation on property use imposed by covenant, association rule, or declaration, enforceable if reasonable and not contrary to law or public policy.

Association Rules and Enforcement

Associations may adopt rules to supplement CC&Rs, provided the rules are reasonable, consistent with the declaration, and do not violate law or public policy. Enforcement typically includes:

  • Assessments for common expenses.
  • Fines for rule violations (if authorized).
  • Injunctions or damages for breach of covenants.
  • Suspension of privileges (e.g., use of common facilities).

Key Term: Assessment
A charge levied by the association on owners to fund common expenses, enforceable as a lien if unpaid.

Limits on Association Powers

Association actions must comply with the declaration, governing statutes, and general principles of law. Restrictions or rules that are arbitrary, discriminatory, or violate fundamental rights may be unenforceable.

Rights and Remedies of Owners

Owners have the right to use common areas, participate in association governance, and challenge unreasonable or unlawful association actions. Remedies for breach of covenants or rules include injunctions, damages, and, in some cases, removal of offending improvements.

Worked Example 1.1

A homeowners’ association’s declaration requires all homes to have a white exterior. An owner paints her house blue. The association sues to enforce the covenant.

Answer: The association is likely to succeed. The covenant is a recorded restriction that runs with the land, is not arbitrary, and is enforceable by the association.

Worked Example 1.2

An association adopts a rule banning all yard signs, including political signs. A homeowner displays a small sign supporting a candidate. The association fines the owner.

Answer: The rule may be unenforceable if it violates state law protecting political speech or is found to be an unreasonable restriction on expression.

Exam Warning

Association rules and restrictions must be reasonable and consistent with the declaration. Rules that conflict with state or federal law, or that are arbitrary or discriminatory, are likely to be unenforceable.

Revision Tip

Always check whether a restriction is in the recorded declaration (more likely enforceable) or is merely a rule adopted by the board (must be reasonable and authorized).

Key Point Checklist

This article has covered the following key knowledge points:

  • Property owners’ associations are created by recorded declarations and manage common areas.
  • CC&Rs are binding covenants that run with the land and are enforceable by the association.
  • Associations can levy assessments, adopt reasonable rules, and enforce covenants by injunction or damages.
  • Association powers are limited by the declaration, statutes, and public policy.
  • Owners can challenge unreasonable or unlawful association actions.

Key Terms and Concepts

  • Property Owners’ Association
  • Common Interest Ownership Community
  • Declaration (or Primary Deed)
  • Covenant Running with the Land
  • Restriction
  • Assessment
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