reasonable enforcement of deed restrictions - dallas … · · 2017-07-146 one purpose of deed...

Marc D. MarkelMarc D. Markel Roberts Markel P.C.Roberts Markel P.C. Attorneys and Counselors at LawAttorneys and Counselors at Law

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Dallas Bar AssociationDallas Bar Association Real Estate SectionReal Estate Section

Reasonable Enforcement of Deed Reasonable Enforcement of Deed RestrictionsRestrictionsSeptember 13, 2010September 13, 2010

Copyright © 2010 by Roberts Markel P.C., all rights reserved

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Presentation GoalsPresentation Goals

What does it mean to be reasonable?

Understanding the authority of the association

Knowing when an association should take action

Knowing when an association should not take action

What is permissible action


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Prevalence of Community Associations

– One out of eight new communities across the country

– Estimates are that there are over 300,000 mandatory community associations in existence

– It is estimated that 25-30,000 of them are in Texas

Community AssociationsCommunity Associations


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A man’s house is his castle

Creating & Enforcing Governing DocumentsCreating & Enforcing Governing Documents


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Regulation of land use

– No one should tell a person what they can do on their own property

– But to preserve their property values they should be able to regulate what their neighbors are permitted and prohibited to do

– Thus the inherent conflict– And the birth of restrictive covenants and

the community association to administer the plan



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One purpose of deed restrictions is to protect property values. Violations of deed restrictions most directly affect the value of adjoining lots. Cox v. Melson-Fulsom, 956 S.W. 2nd 791, (Tex App. Austin 1997, no writ).



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An Owner burdens his own land with restrictions because of the fact that a like burden will be imposed on his neighbor’s lot and this will be beneficial to both lots. Curlee v. Walker, 244 S.W. 2 497, (Tex 1922).



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Sets Standards for the Community

Critical in importance without zoning

Necessary to maintain/improve property values in addition to zoning

Maintains Curb Appeal

Enhances and Maintains Property Values

Sets Guidelines for Communal Living

Why Have Deed Restrictions?Why Have Deed Restrictions?


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Texas Uniform Condominium Act

Sec. 82.055. Contents of Declaration for all condominiums. The declaration for a condominium must contain:………

(9) any restrictions on use, occupancy, or alienation of the units

Origin of Deed Restrictions Origin of Deed Restrictions --

Condominiums Condominiums


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Presentation Notes

The Texas Uniform Condominium Act provides that these sections are applicable to all condominiums, even those created before the Act. Declaration Articles of Incorporation By-Laws

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Sec. 202.001. Definitions. In this chapter:(4) “Restrictive Covenants”

– Covenant, Condition or Restriction contained within a Dedicatory Instrument

(1) “Dedicatory Instrument”– Governing Documents covering the Establishment,

Maintenance and Operation of an Association– Includes:

• Restrictive Covenants• Bylaws• Rules and Regulations• All lawful Amendments

Origin of Deed Restrictions Origin of Deed Restrictions


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Enforcement– By Owners

– By Community Associations

– By Community Managers

– Municipal Utility District

– By a City

– By a County

Enforcing Governing DocumentsEnforcing Governing Documents


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Enforcement by Owners– Owners usually have the right to enforce all use

restrictions on the property– May be equal right to all others– May be inferior right to association

Does the violation affect the Community?– Community nuisance– Private nuisance

Enforcement Enforcement --

OwnersOwners


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Enforcement by Community Association– As permitted by the Texas Property Code

• Due process per Chapter 209

– As permitted by the Restrictions• May be superior right to owners and others• May be equal right to owners• May be permissive• May be mandatory

Enforcement Enforcement ––



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Prerequisite Procedure: Condominiums§82.102 Texas Uniform Condominium Act

Before assessing property damage or fines the Association must provide notice:

– Of the violation or property damage– The amount of fine or damage charge– Opportunity for hearing if timely requested– Opportunity to cure by a specified date – unless

a similar notice was provided within the last 12 months

– Notice of the levy of a fine sent to owner within 30 days of the fine




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Source of Authority to Enforce Deed Restrictions(Planned Unit Development “PUD”)

§204.010 Texas Property Code*Unless otherwise provided by the governing documents the association may:

(10) If notice and an opportunity to be heard are given, collect reimbursement of actual attorney’s fees and other costs incurred by the property owners’ association relating to violations of the subdivision’s restrictions or the property owners’ association’s bylaws and rules;

* §204 of the Texas Property Code only applies in limited areas




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Source of Authority to Enforce Deed Restrictions

§209.006 Texas Property Code

The Association or its agent must give proper notice to an owner:

–Before an association may suspend an owner's right to use a common area–File a suit against an owner

•other than a suit to collect an assessment or •foreclose under an association's lien

– Charge an owner for property damage– Levy a fine for a violation of the governing documents




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§209.006 Texas Property CodeThe notice must:– Describe the violation or property

damage that is the basis for the suspension action, charge, or fine

– State any amount due the association from the owner

– Inform the owner that the owner: • Is entitled to a reasonable period to cure the

violation and avoid the fine or suspension• Unless the owner was given notice and a

reasonable opportunity to cure a similar violation within the preceding six months; and

• may request a hearing under Section 209.007 on or before the 30th day after the date the owner receives the notice.




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Source of Authority to Enforce Deed Restrictions


Hearing before Board or Designated Committee

Upon timely written request

If the hearing is before a committee:–The notice must state right of appeal to the Board




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§209.007 Texas Property Code– Hearing not later than the 30th day after the date the

board receives the owner's request for a hearing– Notification required to owner as to hearing specifics at

least 10 days before the hearing date• Date – time – location –etc.

– One postponement each is permitted for a period of not more than 10 days.

– Additional postponements may be granted by agreement of the parties.

– The owner or the association may make an audio recording of the meeting.




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– Notice and hearing provisions are not applicable:– If a suit is filed seeking a temporary restraining order or

temporary injunctive relief– If a suit is filed that includes foreclosure as a cause of

action– Either party may file a motion to compel mediation– to a temporary suspension of a person's right to use

common areas– if the temporary suspension is the result of a violation that

occurred in a common area and involved a significant and immediate risk of harm to others in the subdivision.




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The Board

Ultimate responsibility for the enforcement of the Association’s deed restrictions lies with the Board of Directors

Failure to act can have legal consequences– Attractive Nuisance– Foreseeable Crime


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1. Directors may be liable for not acting - e.g. Attractive Nuisance, security measures relating to foreseeable crime. 2. Directors can contract for Manager to enforce rules, but cannot delegate responsibility. 3. Manager's responsibility to keep Board informed, and obtain Continuing Education. 4. MaxTrac, Unit Folders, Minutes of Meetings, Book of Resolutions.

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The Manager’s RoleManager is an agent – and its authority can not exceed that of its principalManager’s authority is found in the management agreement and Board directivesManager’s role is to guide and assist the Board with the enforcement of the dedicatory instruments

Manager should refuse to act if directed to act in illegal, immoral, or unethical manner, outside the scope of the deed restrictions or management agreement


The Community ManagerThe Community Manager


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Enforcement by Municipal Utility Districts

– Standing to enforce dependent upon value of the property being in issue

– If non-enforcement effects property values of lot with restriction or others in the area


Municipal Utility DistrictsMunicipal Utility Districts


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Enforcement by a City

– The Local Government Code permits but does not require a municipality to pursue deed restriction violations

– Some municipalities have determined that they will in proper circumstances enforce restriction violations with limitations

– Example: Enforcement limited to set back and residential use


The CityThe City


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Associations should consider before enforcing a restrictive covenant if there is municipal authority for enforcement via an ordinance.


The CityThe City


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Enforcement by a County

– Texas Property Code Section 203

• County Attorney may sue to enforce restrictive covenants

• Applies only to counties with a population in excess of 200,000


The CountyThe County


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Sec. 203.003 Texas Property CodeCounty attorney authorized to enforce restrictions.

– (a) The county attorney may sue in a court of competent jurisdiction to enjoin or abate violations of a restriction contained or incorporated by reference in a properly recorded plan, plat, replat, or other instrument affecting a real property subdivision located in the county, regardless of the date on which the instrument was recorded.


The CountyThe County


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Restrictions and Zoning– The inter-relationship

– Which is more restrictive

– Zoning may not relax requirements of restrictions

– Restrictions are enforceable if more restrictive than zoning ordinances


Restrictions & ZoningRestrictions & Zoning


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Recovery of attorney’s fees:

The person/entity that brings an action to enforce restrictive covenants and prevails in that action shall be entitled to reasonable attorney’s fees (5.006 Property Code)

With a condominium the person/entity that prevails shall be entitled to reasonable attorney’s fees (chapter 82 Property Code)

Authority to Enforce Deed RestrictionsAuthority to Enforce Deed Restrictions


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Authority to Enforce Deed Restrictions Authority to Enforce Deed Restrictions

(Planned Unit Development)§ 209.008. Attorney’s Fees

The association may collect attorney's fees and costs for enforcing the governing documents, if:

Written notice is provided if the violation continues

An owner is not liable for attorney's fees if the attorney's fees are incurred before the conclusion of the hearing under Section 209.007, or

The owner does not timely request a hearing The owner's presence is not required to hold a hearing

under Section 209.007.


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Authority to Enforce Deed RestrictionsAuthority to Enforce Deed Restrictions

(Planned Unit Development)§ 209.008. Attorney’s Fees

(c) All attorney's fees, costs, and other amounts collected from an owner shall be deposited into an account maintained at a financial institution in the name of the association or its managing agent. Only members of the association's board or its managing agent or employees of its managing agent may be signatories on the account.

(d) On written request from the owner, the association shall provide copies of invoices for attorney's fees and other costs relating only to the matter for which the association seeks reimbursement of fees and costs.


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The Lawsuit The Lawsuit --

The Temporary Restraining Order

Issued by Court without testimony

Not favored

Should not be requested without a proper reason

Must have something to show the court to establish necessity

If granted is for very limited duration

Show cause is issued setting a hearing promptly

Bond is required


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The Lawsuit The Lawsuit --

The Temporary Injunction

MINI TRIAL -Issued by Court with testimony and after:

Determination that money damages will not be sufficient

The applicant is determined to more than likely prevail at time of trial

Bond is set and postedCase is set for trial

Irreparable harm required?

Indian Beach v. Linden – required showing of irreparable injury

Most decisions state no burden of proving any actual harm

CPRCCopyright © 2010 by Roberts Markel P.C., all rights reserved

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The Lawsuit The Lawsuit ––

Permanent Injunction Permanent Injunction

Goal is an order that is enforceable by contempt

Must be clear and un-ambiguous

Specify what must be done

And when

Have a mechanism for verifying compliance


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Free use of land

Liberal Interpretation

Reasonableness

Interpretation of Restrictive CovenantsInterpretation of Restrictive Covenants


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Free use of land

– For many years the law as to enforcement of deed restrictions was (and still may be) to favor free use of the land and against those who seek to restrict the use of the property in cases of ambiguity.



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Liberal Interpretation

– A restrictive covenant shall be liberally construed to give effect to its purposes and intent.Texas Property Code Section 202.003(a)



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The Current Balance (in most courts):

Covenants should be liberally construed to determine the framer’s intent, and if there is any ambiguity as to that intent, the covenant should then be strictly construed in favor of the free and unrestricted use of the premises.



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Presumption of Reasonableness:An Exercise of discretionary authority

by a

property owners’ association or other representative designated by an owner of real property concerning a restrictive covenant is presumed reasonable

unless the court

determines by a preponderance of the evidence that the exercise of discretionary authority was arbitrary, capricious, or discriminatory.

Texas Property Code 202.0034(a)



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Arbitrary– Failure to exercise honest judgment

Capricious– Freakish, whimsical, fickle, changeable,

unsteady, and arbitrary

Discriminatory– Failure to treat all persons equally



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Statute of Limitations – 4 years– But beware of the discovery rule

Latches - equitable

Waiver

Abandonment



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Waiver– Acquiesced to such substantial violations

within the restricted area as to amount to an abandonment of the covenant

– Change in conditions in the restricted area or surrounding area --- no longer possible to secure any substantial degree of benefits to be realized through the covenants.



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Waiver

A finding of waiver requires that a POA voluntarily and intentionally relinquished its right to enforce the restrictive covenants.



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Waiver– Of a provision or provisions– Of the entire set of restrictions– Would a reasonable person conclude that the

restrictions had been abandoned based upon the number, nature and severity of other existing violations.



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Waiver

– Equity test

– The fairness to a lot owner must be weighed against the fairness to their lot owners who have acquired their property on the strength of the restrictions.



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Variance

Authority

– Governing Documents• Architectural Guidelines• Restrictive Covenants

– Thin Air

Utilization of Variances– Reasonable– Arbitrary – Discriminatory– Ethical Issues


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Variance

Determination of authority

Presumption of authority

Reasons why variance is given:– Topography– Natural obstruction– Aesthetic considerations– Hardship considerations– Environmental considerations– Other


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Variance

Variance

– The ARC may grant a variance to as to any provision in these restrictions as a result of hardship, natural obstruction, topography, environmental considerations or aesthetics


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Variance

Sample Provision– “The ARC may grant a variance if in its sole and

absolute discretion the granting of the same will not change the overall appearance of the subdivision.”

– Yard Art • “Each Owner may, subject to approval of the architectural

committee, have one or more items in their front yard of an artistic nature”

– Driveways • “All driveways must be constructed of concrete and may be

sealed but not stained”


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Yard Art


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Yard Art


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Variance


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Driveways


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Adopted by U.S. Congress in 1988

Amendment to the Civil Rights Act of 1968

Adoption of Act by Texas in 1993 as Chapter 301 Texas Property Code

Fair Housing ActFair Housing Act


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The FHA prohibits discrimination on the basis of race, color, religion, sex, national origin, familial status and disability.



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Handicap:

“A physical or mental impairment which substantially limits one or more of such person’s major life activities, a record of having such an impairment, or being regarded as having such an impairment”



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Gittleman v. Woodhaven Condominium Ass’n, Inc., and Maintenance Management, Inc., 972 F. Supp 894 (U.S. Dist. Ct. New Jersey, 1997).As condominium associations assume more powers traditionally associated with the state, it is only fair that they assume more of the obligations for ensuring that the rights of the unit owners they represent are protected.

Fair Housing Act Fair Housing Act ––

Reasonable AccommodationReasonable Accommodation


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The Telecommunications Act of 1996The Telecommunications Act of 1996


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Restrictions which prohibit the following are void:

– Satellite dishes of 1 meter or less in size

– Broadcast antennas

– Multipoint multi-channel distribution service



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No rule or regulation may unreasonably delay or add unreasonable costs to an individuals right to receive signals.

May not require a written request for approval that is not instantly reviewed

May not require any review fee

The location of the antenna is very site specific



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1. Peer pressure

2. Revocation of vote or use privileges

3. Fines

4. Assistance from public agencies

5. Self help

6. Limited variance

7. Legal action

Examples of Remedies for ViolationsExamples of Remedies for Violations


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QuestionsQuestions


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