Every so often, I have a conversation with a homeowner that starts out something like this:
Owner: I got this letter that says I’ve been fined.
Attorney: That’s correct. You violated the leasing restrictions in the Declaration.
Owner: Oh yeah? Well, I never signed up to be in this association. You show me what I signed saying I agreed to be part of this thing and follow some silly rules. I never signed anything, so I don’t have to follow your rules – and you can’t fine me.
Attorney: Well, Ms. Owner, you agreed to be a part of this community when you purchased your home….
I’ve had similar conversations in response to letters asking owners to pay their assessments. In both cases, it becomes clear as I talk with the owners that they likely did not understand the impact of the governing documents—and, in particular, the Declaration—given to them at the time they purchased their home. At its core, the Declaration is a contract.
Most people understand the basic concept of a contract: I agree to do something for you and, in exchange, you agree to do something for me.
Contracts come in many forms. When it comes to homeowners associations, the “Declaration of Covenants, Conditions, Restrictions, and Easements” (or a similarly-titled document) is the contract between the association and its members. Under the Declaration, property owners promise to do or refrain from doing certain things (pay assessments, not lease, etc.), and the association agrees to do certain things (provide maintenance, insurance, etc.).
What confuses some owners is that they believe that, unless they personally sign a contract, they are not bound by it. While often true in other situations, that is not the case with declarations of covenants for homeowners associations.
Most declarations include statements like,
- “[Developer/Property Owner] hereby declares that the Property as legally described on Exhibit A attached hereto and incorporated herein by reference shall be held, transferred, sold, conveyed, occupied and used subject to the following easements, restrictions, covenants and conditions, which are for the purpose of protecting the value and desirability of, and which shall run with, the real property and be binding on all parties having any right, title or interest in the said properties hereinafter described or any part thereof, their heirs, successors and assigns, and shall inure to the benefit of each owner thereof.”
- “[Developer/Property Owner], for each Lot owned by it within the Property, hereby covenants, and each Owner of a Lot, by acceptance of a deed or other conveyance therefor, whether or not it shall be so expressed therein, shall be and is deemed to covenant and hereby agrees to pay to the Association: (a) annual assessments or charges, which shall be payable in regular installments and shall include, but not be limited to, Common Expenses, and (b) special assessments, such assessments to be established and collected as hereinafter provided.”
If we ignore some of the legalese, those statements boil down to two promises made by the Developer at the time it owned the property and recorded the Declaration:
- All the property described in the Declaration is subject to the Declaration and its promises AND anyone who ever owns any of the property is bound by its terms.
- By agreeing to buy any property subject the Declaration, every owner agrees to pay assessments.
In essence, then, the Developer who owned all the property subject to the Declaration when the Declaration was recorded “signed the contract” on behalf of all future homeowners. Future owners are thus bound by the terms of the Declaration and, since the Declaration references other documents governing the association (Bylaws, Rules, etc.), owners are bound by those documents as well.
The governing documents of an association are more than just a good doorstop. The Declaration is a binding contract between the association and its members. Failing to abide by the terms of the Declaration and the documents referenced in the Declaration is a breach of that contract, for which there are undoubtedly consequences.[1]
Promises are the uniquely human way of ordering the future, making it predictable and reliable to the extent that is humanly possible.
– Hannah Arendt
In order for a community association to operate in an orderly and effective manner, all members of an association need to ensure that they understand that, when they made the decision to live in a community association, they “signed up” to follow the applicable law and governing documents.
[1] Of course, many communities may be subject not only to the terms of the community’s governing documents but also to various state laws such as the Minnesota Nonprofit Corporations Act (Minnesota Statutes Chapter 317A) and the Minnesota Common Interest Ownership Act (MCIOA)(Minnesota Statutes Chapter 515B). Association members must also, of course, abide by the terms of all applicable laws.