Restrictive Covenants

Definition.  Restrictive covenants are deed restrictions typically found in a Declaration of Covenants, Conditions and Restrictions or a Declaration of Condominium for a community.  Declarations including restrictive covenants are normally drafted and put in place by the original developer.  Restrictions may vary in type and scope from community to community. 

When restrictive covenants are recorded in a declaration, they bind all property owners.  Even though a purchaser may not read the declaration, the purchaser is bound by the covenants because they are in his “chain of title” and attach to the property.  As a result, each owner has constructive knowledge of the restrictive covenants and actual knowledge becomes irrelevant. 

Purpose of Restrictive Covenants.  The stated intention of many restrictive covenants is to “preserve, protect, and enhance property values.”  This goal may be achieved as follows:

  • Architectural and maintenance restrictions give a development a more standard appearance because they control some of the activities that take place within its boundaries.
  • Use restrictions limit use of property for defined purposes and in accordance with defined standards.  Use restrictions are generally intended to enhance the peaceful enjoyment of residents’ use of their properties.


Types of Restrictive Covenants.  Although restrictive covenants include affirmative covenants such as an obligation to pay assessments, maintenance obligations, and insurance obligations, this article focuses on use restrictions. These types of restrictions fall within two general categories. 

Architectural and Building Restrictions.  For many types of changes to the exterior appearance of property, these restrictions require approval of the Board of  Directors of the Association or Architectural Review Committee.

Typical restrictions may include:

  • Size of dwelling
  • Set back requirements
  • Conditions on additions to dwellings (e.g., patios, enclosing porches, adding a second story, installing satellite dishes or solar panels)
  • Modifications to exterior appearance of dwellings (e.g., paint color, materials (such as siding, brick, or stone), windows and doors)
  • Interior modifications that may affect other owners (e.g., installing hard surface flooring in stacked units, connecting to common element utilities for items such as washing machines, structural changes)
  • Exterior appearance of lots (e.g., landscaping, yard art, flags) 

Use Restrictions.  Although this is not an exhaustive list, it highlights some of the most common use restrictions:

  • Residential use of dwelling units (scope of home occupations)
  • Occupancy (e.g., number of residents in a dwelling)
  • Leasing
  • Pets
  • Parking
  • Use of other limited common elements and garages (what can be placed on patio, garages used for other than parking vehicles)
  • Nuisance and noise
  • Signs
  • Trash
  • Satellite dishes
  • Age restrictions in communities qualifying under Housing for Older Persons Act

Common Violations

Architectural Violations.  The most common violation of architectural restrictions is failure to obtain approval for a change before the change is made.  The best approach to architectural violations is to take action as quickly as is reasonable under the circumstances.  Although the statute of limitations on a building restriction may allow the association to take legal action within one year, prompt action is prudent. 

The initial steps of notice to cease work or take other required action may allow the owner and the association to address the issue short of litigation.  For example, if the board becomes aware that an owner is pouring a foundation for an addition that has not been approved, the board should immediately contact the owner verbally (if possible) and in writing and request that the owner ceases work until plans are submitted and approved. 

If the owner continues work, a court is more likely to assume that the owner proceeded at his own risk and rule that the improvement has to be removed, even if the owner has expended substantial sums on the improvement.

Use Restrictions/Violations.

  • Pets.  There are a number of common pet restrictions.  Typical violations range from having a pet in a community that prohibits pets, having a dog that is too big in a community that restricts the size of dogs, allowing a dog to remain outside in an enclosed area barking for long periods of time, allowing pets to urinate on balconies with the waste dripping to balconies below, and failing to pick up pet feces from common areas.
  • Parking.  Many declarations include parking restrictions.  Even if not included in the declaration, they are typically found enforceable if enacted by rule as a reasonable means to regulate use of the common areas.  Common parking restrictions address prohibited vehicles such as RV’s and commercial vehicles, guest parking, disabled and abandoned vehicles.  Towing is commonly identified as a remedy to address parking violations.
  • Leasing.  Leasing restrictions are more often adopted by amendment than found in original developer documents.  Restrictions may include limitations on the right to lease or may simply include third party beneficiary provisions for the association (e.g., minimum lease terms, owner liable for tenant violations, authority to evict subject to defined standards).
  • Nuisance.  Frequently nuisance restrictions in governing documents are very subjective and, therefore, difficult to enforce.  More recent documents sometimes define behavior considered to be a nuisance (such as barking dogs, music that can be heard in another unit, construction activity during specified hours).  If the nuisance restriction is broad, the board should adopt rules defining what constitutes a nuisance for the community. 
  • Smoking.  This is a controversial issue, but at least one trial court in Colorado has held that if an association properly amends its declaration with the requisite owner vote, the association may restrict smoking within units. 

Obligation of Association to Enforce Covenants - The Business Judgment Rule 

Colorado Courts have addressed the issue of an association’s duty to its members to enforce covenants and the standard of care to which the association will be held in Colorado Homes, Ltd. v. Loerch-Wilson, 43 P.3d 718 (2001). 

In this case, a developer brought tort claims against purchasers of a new home in a subdivision and tort and contract claims against the homeowners association and its managing agent, relating to purchasers’ public protests (picketing and sign in their garage window) of the developer’s alleged failure to make warranty repairs.  

The developer alleged that the association breached its duty to the developers by failing to enforce in good faith the covenants against the Owners.  The association acknowledged that a contract between it and the lot owners existed that obligated the association to enforce the restrictive covenants, subject to certain defenses.

The Court acknowledged that the business judgment rule applied to the actions taken by the association, and that the Court was not going to substitute its business judgment for that of the association’s board of directors. 

Specifically, the Court noted:

"[u]nlike other types of contracts that require specific acts at specific times by contracting parties, covenant enforcement may require the exercise of discretion as to both the timing and manner of enforcement." 

The Court also found that the substance of the business judgment rule is whether an association’s decision to act or not act (e.g. whether or not to enforce a covenant against an owner as in this case) is based on whether the association’s decision was made in good faith and was not arbitrary.

In this case, the owners claimed to be exercising First Amendment rights in their picketing and signage activities and claimed to have obtained law enforcement approval for the activities.  Therefore, according to the Court, the association at least was required to make an appropriate investigation and evaluate the owners’ claims prior to initiating any enforcement proceedings before deciding whether or not to take any enforcement action against the Owners.  The Court noted that standard applied regardless of whether the developer was pursuing either a tort claim against the association or a claim based on the contract the parties agreed existed.

Enforcement Mechanisms

Internal Resources for Enforcing Covenants, Rules and Architectural Standards/Guidelines.  There are a number of internal resources the association and the community can use to encourage an owner or resident to conform to the association's covenants, rules and guidelines.  Before using any of the internal resources for enforcing rules, verify that the association has the legal authority to take such action either by express grant or absence of a restriction on any of the following:

  • Fines.  Fines are an internal resource intended to induce voluntary compliance.  The Colorado Common Interest Ownership Act (CCIOA) allows associations to impose and collect fines in the same manner as assessments, provided the violator is first given due process rights (notice of the alleged violation and the opportunity to have a hearing before “impartial decision makers” to determine whether the violation occurred).  The association must also publish a fine schedule.  The association can lien the violator's property and ultimately foreclose its lien if payment is not received.  Or, the association can file suit to obtain a money judgment for the amount owed.  In addition, the association can also seek and collect its reasonable attorney fees and costs associated with any of these actions.
  • Record a Notice of Covenant Violation.  The association may consider recording a notice of covenant violation, similar to a record notice of lien.  This gives third parties (potential buyers, re-financing lenders, etc.) notice of the claimed violation.  If these parties have notice, the violation is more likely to be cured.  Also, these parties will be aware of the claimed violation, if they close on a purchase of the property or on a refinance.  The association should, however, be cautious about timeframe and the statute of limitations (discussed below). The association should also ensure that this is an available remedy under the association’s governing documents.
  • Suspension of Owner's Voting Rights.  If permitted by the governing documents, this may be the mildest action possible.
  • Suspension of the Use of Recreational Facilities and Common Areas.  Many governing documents contain broad authority allowing for the suspension of an owner's right to use recreational facilities and common areas; however, typically the association should only suspend privileges related to the violation (e.g., suspend pool privileges - not parking privileges - for a pool violation).
  • Self-Help.  Self-help refers to those instances in which the association takes action to correct the violation itself without a court order.  Because of the potential for confrontation resulting in breach of the peace or damage to an owner's personal or real property, self-help is generally not recommended.  If an association decides to utilize self-help, the association should develop careful procedures before using self-help to correct a violation.  Self-help should only be used if it is expressly authorized in the declaration and only then after implementing and following its procedures.  Although the governing documents may specifically provide for self-help, the courts may see it as a breach of the peace or trespass and look unfavorably on the association for utilizing this mechanism rather than the court system.
  • Utility Shutoff.   Some governing documents allow utilities, particularly water service, to be shut off if an owner violates certain covenants. This resource, even if specifically provided for, should be used cautiously, if at all. Some municipalities and local governments prohibit this type of action because of health and safety concerns.
  • Towing.  The authority to tow a vehicle is typically found in either the covenants or rules.  It can be an effective means of resolving a vehicle violation, although the cautionary comments under “Self Help” are also applicable to towing.  Also, an association may not tow vehicles from public streets.  Reasonable notice prior to towing should be provided unless the violation constitutes an immediate threat to the safety of individuals or the community, such as a fire lane violation. 

External Resources for Enforcing Covenants, Rules and Architectural Standards/Guidelines.   The association can also draw on resources within the greater community to help enforce private covenants, rules and guidelines.  Cities, counties and municipalities typically do not enforce covenants, rules, regulations or architectural standards.  However, if the covenants, rules or guidelines are the same as or less restrictive than a county or city ordinance, the association may be able to get a county governmental agency or municipal department to enforce its ordinance instead of the association spending association time and resources on enforcement.  However, the association must ask for help from the applicable agency or department.  And, the association must take the time to build effective working relationships with governmental officials.

  • Local Health Department.   The county health department can be asked to enforce local health codes (e.g., number of occupants in a unit; internal use of a home; or storage in a dwelling or on a lot).
  • Local Building/Zoning Department.  This local agency (whether of a county, city or town) can assist with enforcement of its ordinances (e.g., fence or shed regulations; setback restrictions; restrictions on commercial use of dwellings; removal of vehicles, boats, and trailers from lots or common areas).
  • Local Building/Code Enforcement Department.  These agencies issue building permits.  In some areas, this office's responsibilities overlap with those of zoning and health.  In some areas, this office requires the approval of a community's board of directors before it will issue a permit.  That practice is preferred, but is not always the local practice.  This local government office may be able to help if a home is in violation of an existing building, plumbing, fire, or electrical code.
  • Local Law Enforcement.   In some jurisdictions, the police or sheriff's department will enforce traffic regulations or issue tickets and/ or tow violators of the community's parking rules.  Local law enforcement may also respond to noise violations.
  • Local Fire Department.   The local fire department may help with enforcement of fire lanes and the removal of hazardous materials.
  • Animal Control Department.   This agency may patrol the community for animals in violation of local ordinances and respond to “at large” pets or barking dogs.
  • Local Government Centers.  Several cities have established neighborhood resource departments to assist homeowners and homeowner associations with a variety of issues, including the resolution of neighbor to neighbor disputes.  These departments also have referral services available.

Alternative Dispute Resolution (ADR).  Some associations consider ADR as a means of encouraging residents and owners to comply with covenants, rules and standards/guidelines.  Although direct negotiation between the parties is a form of ADR, generally ADR involves submitting a dispute to a trained, uninvolved third party for resolution (e.g., mediation or arbitration).  The third party's decision may be non-binding or binding on all the parties.  This approach can be efficient and effective or can just add cost, expense and delay, depending on the situation.  The association might propose ADR when confronted with a difficult rule enforcement situation or the possibility of prolonged litigation or disputes that involve difficult personalities.  Under CCIOA, associations must have a policy on disputes between the association and owners that may include ADR options.  As a part of the dispute policy required by statute, the association should address how disputes of owners with the association are to be handled, including any required notices or ADR options.

Lawsuit to Obtain a Court Order.  The ultimate recourse of the association is a lawsuit against an owner in violation of a covenant, rule or guideline.  In a lawsuit, the association may seek a restraining order to stop the offending action and an injunction to prevent any further violation.  The association may also seek to have the court force the owner to restore the property to the condition that existed prior to the violation, and to reimburse the association for any costs incurred in enforcing the restriction, including attorney fees. 

  • Who may (or must) enforce documents?  The right of or obligation of enforcement typically lies with the parties for whom the benefit of the covenant, rule or guideline was created. The benefited parties may include members as well as the association and/or it's architectural or design review committee.
  • Which court can an enforcement action be filed in?  There are three primary courts in Colorado: Small Claims Court; County Court; and District Court.  Each of these courts can hear enforcement action cases involving residential restrictive covenants.  There are advantages and disadvantages to each court which should be considered in evaluating where to file a case, including costs, discovery rights, the judges, trial process and jurisdictional limits.  These factors should be discussed with the association’s attorney, given the specifics of an individual case.
  • Remedies in Court.  The remedy for breach of a restrictive covenant, rule or guideline lies within the equitable jurisdiction or authority of the courts.  The courts will not typically grant the prevailing plaintiff monetary relief, but instead require the defendant to strictly comply with the restrictive covenant or rule.  Courts have ordered the following remedies:
    • TRO – temporary restraining order
    • Preliminary injunctions (e.g., stop construction pending hearing on merits);
    • Permanent injunctions (e.g., prohibit construction, remove resident from community) and supplemental
      • court orders court orders directing the removal or modification of building and structures to conform with restrictions
      • monetary damages on the defendant owner if the violation had already caused actual damage to a common element or property owned by the association or if the owner failed to comply with the judgment requiring the owner to correct the violation and the association had to incur costs to correct the violation itself
      • attorney's fees and costs of the prevailing party
  • Recovery of Attorney Fees.  Colorado law (C.R.S. § 38-33.3-123) authorizes the recovery of attorney fees by the prevailing party in any action brought to enforce a covenant or rule.  Thus, as long as the association wins, it is entitled to recover from the losing party the attorney fees it spent.  Likewise though, if the owner wins, the association will be required to pay the owner's legal fees.  If an owner wins, the association may not impose that owner’s pro rata share of the association’s fees against that owner.

    Most declarations also have a provision that authorizes the association to recover from the owner any legal fees the association incurs in enforcing its covenants.

    Even though the association may be entitled to recover its attorney fees, a court must still determine if the amount of attorney fees incurred or sought are "reasonable."

  • Defenses to Enforcement of Covenants and Rules.  Defenses against restrictive covenants fall into three groups. 
    • The first group of defenses relate to the magnitude of prior violations:
      • Change in character of neighborhood
      • Abandonment
      • Acquiescence

        The defenses in this group are closely intertwined and, at times, practically indistinguishable.

      • Change in Character of Neighborhood.  Generally, under this defense, the owner will argue that the community has changed so drastically since it was originally developed and the Declaration was originally recorded that the covenant or rule no longer serves a meaningful purpose and its enforcement is no longer reasonable.
      • Abandonment.  Generally, under this defense, the owner will argue that neither the association nor any owners have enforced the relevant covenant or rule in such a long period, even though many violations of the covenant have occurred during that period, that the association and the owners have abandoned the covenant or rule and its enforcement.  This argument is somewhat similar to a waiver defense discussed in the next section, but typically would require a much greater period of non-enforcement before the covenant is deemed abandoned and wholly unenforceable. Typically, three or four prior violations that have gone without enforcement are probably insufficient to make any of the defenses valid.  Rather, the number of prior violations must be so great that a reasonable person would come to the conclusion that the particular covenant or rule has been abandoned, wholly waived or never existed.
      • Acquiescence.  Generally, under this defense, the owner will argue that the association allowed or otherwise expressed an intent to allow the owner to violate the covenant or rule.  Basically, the owner will try to show that the association failed to enforce the covenant or rule against the owner in the past, and that the owner was merely acting in a manner similar to how he acted in the past.

    • The second group of defenses deal directly with the association's (or plaintiff's) actions or inactions prior to or during the time of the alleged violation:
      • Estoppel.  This defense is predicated on the position that the association made a statement or took some action expressing a position that a covenant or rule would not be enforced, and is now precluded (or estopped) from seeking to enforce it against the owner.
      • Laches.  This defense is based on the length of time that has passed before the association (or plaintiff) sought to bring an enforcement lawsuit against the owner.  For example, if an owner had a dog that barked all the time (in violation of a covenant or rule), but the association failed to file a lawsuit for nearly two years after the association knew of the violation, the association could be precluded from pursuing its enforcement action even if its claim was brought before the applicable statute of limitations runs (as discussed below).
      • Waiver.  This defense is similar to the Abandonment Defense above, but generally would result in, if successful, an order precluding the association from enforcing the applicable covenant or rule against the owner (not any other owners) in the specific instance that is the subject matter of the lawsuit.
      • Statute of Limitations for Building Restrictions.  Colorado law (C.R.S. § 38-33.3-123) imposes a one year statute of limitations on actions brought to enforce the terms of any building restriction or compel the removal of any building or improvement on land. The one year mark is measured from when the association (or other enforcing party) knew or reasonably should have known of the violation.  A common error of associations is to believe that sending a violation letter prior to expiration of the statute of limitations will be enough; however, in fact, a lawsuit must be filed, although it does not have to be served within the statutory one year period.
      • Statute of Limitations for Use Restrictions.  Each day that a use violation occurs is considered a new violation.  Based on court rulings to this effect, the statute of limitations begins to run on the last day the use violation occurs.  Yet, unlike covenant and rule violations involving buildings or improvements, there is no statute of limitations specific to common interest communities for enforcing a use violation, so the nature of the claim provides for guidance on the applicable statute of limitations.  Covenants, and the rules passed through the authority of the covenants, are based on contract theory.  Therefore, without a statute specific to common interest communities, the courts treat covenants similarly to contracts.  Covenant enforcement actions which are analogous to breach of contract actions are held to the statute of limitations for contracts, which is three years. Covenants and rules may also result in a claim which is more analogous to a negligence action, which is two years.

    • The third group of additional defenses that are often asserted include:
      • Covenant or rule is being applied in bad faith and in an arbitrary and capricious manner.  This defense seeks to overcome the business judgment rule.  The phrase “arbitrary and capricious” generally means that the association has acted in an overreaching or malicious manner.
      • Violation of a constitutional right, statute, covenant, or public policy (frequently discrimination claims based on the Fair Housing Act).  Under this defense, the owner is arguing that the enforcement of the covenant or rule itself violates applicable state or federal law or a significant public right.
      • Board exceeded its authority – Under this defense, the owner would be contending that the association, through its board of directors, did not have the right to enforce the applicable covenant or rule against the owner or failed to follow the Bylaws for approval of the enforcement action against the owner.
      • The covenant or rule was not properly enacted in accordance with governing documents.  Colorado law requires association's to have a governance policy outlining how rules will be adopted.  Also, the Declarations generally state how Declarations could be amended or rules could be adopted.  If the association fails to follow such covenants or policies when adopting the covenant or rule it seeks to enforce, the covenant or rule is deemed void and unenforceable.
      • Enforcement procedures were not followed (i.e., procedure requires 30 days notice before lawsuit and only 10 days notice was given).  Specific enforcement procedures may be set forth in the Declaration, rules, or under a required governance policy.  Associations must comply with its enforcement procedures when enforcing a covenant or rule against an owner.  If an association fails to do so, it could be precluded from obtaining a judgment against the owner.
      • Covenant or rule is vague or ambiguous (no recreational vehicles).  This defense seeks to preclude enforcement because the covenant or rule is so difficult to understand and, therefore, to comply with it, the owner should be excused from such compliance.
  • Judicial Perspective on Association Covenant/Rule/Architectural Lawsuits. Unlike the defensive posture that associations often find themselves in on assessment collection lawsuits, enforcement lawsuits are generally better received by the courts.  Yet, demands on the judicial system — very high, crowded dockets —may make it difficult or time-consuming to get to a day in court.  Further, though better received, courts sometimes have perceptions that associations and boards are negative, unreasonable, arbitrary and controlling.  The board should prepare for this perception.  Also, courts have broad discretion to fashion an appropriate remedy.

No Action.  Board members often mistakenly believe they must enforce all violations either because they have a legal duty to do so or by failing to enforce a violation they will have waived the association's right to enforce against a future violation.  This can lead to unnecessary lawsuits and expenses for the association.

While the association, through its board of directors, is charged with enforcing its covenants and rules overall, not every single violation must be enforced.  Subject to the governing documents, the law permits the board to exercise its reasonable business judgment and make a case-by-case determination of whether (and what type of) enforcement is appropriate.

As long as the board acts reasonably, in good faith and in the best interests of the association, a court should not overrule the board's decision.  For example, the board may determine that there is a strong statute of limitations defense likely to be asserted if the association was to bring suit for a violation.  The board is within its rights to make a determination in this instance to not pursue legal action.  Such a decision does not breach any duty owed to the association, nor does it establish a legal precedence whereby all future violations cannot be enforced or all future requests must be approved.

Practice Pointers to Enhance Successful Covenant Enforcement

  • Communicate with owners before there is a problem.  It is often easier to educate than to correct.
  • Follow the association’s governing documents and act promptly and consistently.  In cases where the board decides not to act in accordance with general practices, document the reasons. When there is a violation, document the violation and follow due process procedures as set forth in the association’s covenant and rule enforcement policy.  Correspondence, records and exhibits are important if the violation is not easily resolved.
  • Consider the nature of the violation when considering a proposed sanction.
  • Consider alternative methods of dispute resolution – sometimes it just takes a third party to listen.
  • To limit the chances that a court will second-guess the association’s decision, the board should document its decision making criteria that evidence reasonable business judgment. 

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