Covenant Enforcement Violations and Cure Allowances
The following piece, written by Gabriel Stefu, was published in Common Interests Magazine’s 2024 Issue.
In 2022, Colorado adopted legislation that revised the covenant enforcement process of Homeowner Associations. Many questions have been raised since the adoption of HB22-1137 regarding repeat covenant violations and cure periods for repeat violations.
In general, repeat violations are violations of the same covenant rule that are usually cured soon after the violation occurred (usually within a matter of days), but they are repeated over time by Owners or residents, becoming continuing violations.
Currently, HB22-1137 has procedural provisions for two types of violations:
• Those that are considered to reasonably threaten the public safety or health (one 72-hour notice is required to be sent to the Owner); and
• Those that do not reasonably threaten the public safety and health (two separate 30-day notices are required to be sent to the Owner).
The Notice and compliance process for both is different and once an Association determines the type of violation, the processes outlined in HB22-1137 must be followed. Since fines should be applied to any Owner’s account without giving the Owner the opportunity for a hearing in front of the Board of Directors, it is recommended that all covenant violation notices contain language about the opportunity for a hearing.
However, since both types of violations could also be repeat covenant violations, HB22-1137 processes become hard to apply because a specific instance of a repeat covenant violation will probably be “cured” before the mandatory notice requirements expire. Since the new legislation does not define or provide specific guidance regarding the processes required to handle repeat covenant violations, Associations need to define what a repeat covenant violation is as well as provide some examples of what could be considered a repeat covenant violation (e.g. parking violations) and create an enforcement process that fits the general guidelines of HB22-1137.
The first step an Association must take in order to be able to properly address covenant enforcement, including application of fines or legal actions, is for the Association to adopt and follow a written Policy (“Covenant Enforcement Policy”) governing the imposition of fines and outlining the process for enforcement procedures. This written Policy should be the instrument that defines repeat/continuing covenant violations and the cure periods required for these violations. Please see C.R.C.P. 38.33.3.209.5, 2(c)(II) for specific requirements of the Covenant Enforcement Policy regarding the application of fines that are continuing in nature.
It is also recommended that the Association’s Covenant Enforcement Policy clearly identify the types of violations that are considered threats to public safety or health and the types of violations that are NOT considered threats to public safety or health, the process that the Owner must follow, the possible fines or remedies that the Association may utilize, and that the policy state the fine schedule as appropriate for each type of violation, etc.
If the repeat covenant violation is considered to reasonably threaten public safety or health, then the cure period for a repeat violation could be as short as 72 hours as mandated by the new legislation. After that, the Association could proceed with fines applied to the Owner’s account every other day, pursuant to HB22-1137, but only if the opportunity for a hearing has been provided to the Owner. It should be noted that HB22-1137 does not limit the total amount of fines that can be applied to an account for covenant violations that are considered to reasonably threaten the public safety or health. After the expiration of the 72 hours grace period, in addition to fines to the account, the Association could take action to remedy the violation as provided by the governing documents of the Association or commence legal proceedings against the Owner (e.g. injunction).
If the repeat covenant violations are not considered to threaten public safety or health, then the cure period should be at least thirty (30) days to be in compliance with the first notice requirement and grace period of HB22-1137. If the repeat violation in question keeps occurring during the thirty (30) day period, the violation will not be considered cured and the Association should send a second thirty (30) day compliance notice after the first notice has expired. Although this second notice is mandatory if the violation is not cured during the first thirty (30) day grace period, the Association is allowed to proceed with applying fines to the account as soon as the first thirty (30) day notice expires if the opportunity for a hearing has been provided. Unfortunately, for covenant violations that are not considered to reasonably threaten the public safety or health, the amount of fines limitation imposed by the statute is $500.00. If necessary, after the expiration of the second thirty (30) period, the Association could proceed with other available means provided by the governing documents or commence legal proceedings against the Owner.
Considering the intricacies and complexity of the statute, and the lack of specific guidance for repeat covenant violations, we recommend that Associations consult with legal counsel to determine the compliance process and the needs that are specific to their community. Adopting a clear and concise Covenant Enforcement Policy and ensuring that it is properly implemented with each and every compliance action will ensure the Association’s success in enforcing the covenants of their Homeowner’s Association.