Covenant-Controlled Communities
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Covenant Controlled Communities


Declaration documents, common interest communities and HOAs – What’s the difference?  Click on the tabs below to find out. 

A covenant-controlled community is a collection of home lots that are subject to various covenants, conditions and restrictions (aka "CC&Rs") provided in a declaration document. The declaration document is a real estate document filed with the county clerk and recorder's office and is attached to each home lot. The declaration document creates a covenant-controlled community comprised of all home lots subject to the declaration document. By virtue of purchasing a home lot in a covenant-controlled community, the owner has agreed to comply with the restrictions contained in the declaration document. Each lot is assigned a single vote when voting on matters regarding the covenant-controlled community. The declaration document typically assigns the power to enforce the CC&Rs to either a non-profit homeowners association corporation ("HOA") or a metropolitan district.

Covenant-controlled communities have become more prevalent beginning in the late 1990s largely due to cities and towns adopting land development policies requiring land developers and home builders to create and file CC&Rs against new residential developments. Cities and towns prefer residential neighborhoods be subject to minimum property maintenance standards and such standards are regulated by the neighborhoods rather than by the cities/towns.

The Colorado applicable to covenant-controlled communities for single-family home neighborhoods is found within CRS 38-33.3 (the Colorado Common Interest Ownership Act). The Colorado applicable to covenant-controlled communities for multi-unit neighborhoods (such as condos and townhomes) is found within CRS 38-33 (the Condominium Ownership Act).

Click on the tabs below to lean more about the relationships and differences between the CC&Rs, design guidelines and board enforcement policies.

Declaration Document (CC&Rs)

A declaration document contains covenants, conditions and restrictions ("CC&Rs") regarding the maintenance and use of real property such as a home lot. Generally, the CC&Rs are a combination of broad principal-based restrictions and specific restrictions. A common "broad principle-based" restriction common across most declaration documents is a requirement that home lots be maintained in an "aesthetically pleasing manner."  

Legal Definition: Per CRS 38-33.3-103 (“Definitions”), a declaration document is defined as “…any recorded instruments however denominated, that create a common interest community, including any amendments to those instruments and also including, but not limited to, plats and maps.”

Covenants Conditions and Restrictions (CC&Rs): A declaration document contains CC&Rs regarding the maintenance and use of real property such as a home lot. Generally, the CC&Rs are a combination of broad principal-based restrictions and specific restrictions. A common broad principle-based restriction common across most declaration documents is a requirement that home lots be maintained in an "aesthetically pleasing manner."  This broadly defined restriction is intended to allow an HOA board or metro district board to adopt specific written rules to clarify "aesthetically pleasing." These specific rules are usually contained in a document called "design guidelines." Although the HOA board and/or metro district board does not have the authority to modify the CC&Rs, they do have the authority to adopt and modify the rules contained in the design guidelines. The rules in the design guidelines cannot conflict with the CC&Rs.

Examples of specific CC&Rs found in declaration documents include prohibitions on sheds, raising livestock and changing the grading of a lot. The HOA board or metro district board cannot adopt rules in the design guidelines that conflicts with specific CC&Rs.

Enforcement Powers: A declaration document usually assigns enforcement powers to a corporate entity (such as a homeowners association) or to a metropolitan district.  In addition, a declaration document usually provides homeowners with the authority to enforce compliance with the CC&Rs upon other homeowners.  (One of the purposes of providing homeowners self-enforcement powers is to provide homeowners protection from an HOA that becomes disfunctional or inactive.)  However, a homeowner's self-enforcement powers may be significantly diminished in the eyes of the courts if a homeowner association or metropolitan district is already actively enforcing the CC&Rs and following established policies and procedures.

Amendment/Termination: A declaration document can be amended or terminated by the collective decision of homeowners.  However, attempting to amend or terminate a declaration document is usually very difficult.  Colorado laws require a high percentage of homeowners within the common interest community to approve any proposed amendment or termination.  A declaration document usually provides homeowners with the voting rules, restrictions and process necessary to amend or terminate the declaration document.  Of course, the declaration document must operate within the restrictions provided by Colorado law.  For proposed terminations of a declaration document, CRS 38-33.3-218 requires the approval of no less than 67% of all homeowners.  For most types of proposed amendments to a declaration document, CRS 38-33.3-217 requires the approval of no less than 50% of all homeowners.  (Also, per CRS 38-33.3-217(1)(a), the declaration document cannot require the approval threshold for proposed amendments to exceed 67%.)

Judicial Relief to Counter-balance Low Voter Participation (Amendments Only): Voter participation in most HOAs is very low and, consequently, makes it very difficult for HOA boards to achieve the minimum statutory voter approval thresholds required to modify a declaration document.  Fortunately, CRS 38-33.3-217(7) provides HOA boards with a solution.  An HOA board may petition a district court to issue an order to ratify a proposed amendment to a declaration document if all of the following conditions are met:

  • The HOA has sent notice of the proposed amendment to all homeowners on at least two different occasions;
  • At least one meeting has been announced and held to discuss the proposed amendment; and
  • At least 50% of votes needed to approve the proposed amendment have been obtained.  See the example scenarios below to learn more about how to apply this approval threshold.

Example Scenario 1: Assume an HOA is comprised of 300 lots and the declaration document requires 50% of all homeowners to approve a proposed amendment to the declaration document.  The HOA board would need to collect at least 75 “yes” votes (300 x 50% x 50%) before it could begin the process of petitioning a district court to issue an order to ratify the proposed amendment.  (Of course, if the HOA board was able to collect 150 “yes” votes, the proposed amendment would be ratified and the HOA board would not need to petition the district court to issue an order.)

Example Scenario 2: Assume an HOA is comprised of 300 lots and the declaration document requires 67% of all homeowners to approve a proposed amendment to the declaration document.  The HOA board would need to collect at least 100 “yes” votes (300 x 67% x 50%) before it could begin the process of petitioning a district court to issue an order to ratify the proposed amendment.

Example Scenario 3 (Tricky Question!): Assume an HOA is comprised of 300 lots and the declaration document requires 80% of all homeowners to approve a proposed amendment to the declaration document.  The HOA board would need to collect at least 100 “yes” votes (300 x 67% x 50%) before it could begin the process of petitioning a district court to issue an order to ratify the proposed amendment.  Remember, CRS 38-33.3-217(1)(a) disallows declaration documents from establishing approval thresholds in excess of 67% for proposed declaration amendments.  So, in this scenario the 80% approval requirement in the declaration document is invalid and must be reduced to 67%.

Within 10 days after a hearing date for the petition has been set by the district court, the HOA must send notice of the petition to all homeowners for review.  The district court must issue and order approving the proposed amendment if the district court does not receive written objections to the petition from:

  • more than 33% of all homeowners;
  • more than 33% of “eligible” lenders (per CRS 38-33.3-217(7)(e)(V));
  • the declarant (if applicable); or
  • Federal Housing Administration or Veterans Administration (if applicable)

No Alternatives to Ratifying Termination Proposals: Proposals to terminate a declaration document are much more difficult to enact because (1) the approval threshold requirement is high (i.e. 67% of all homeowners must approve the proposal to terminate) in the face of typically low voter participation in HOAs and (2) no alternatives exist (such as judicial relief) to ratifying a proposal to terminate a declaration document.

Design Guidelines

The design guidelines for a covenant-controlled community is a collection of written rules and minimum standards that homeowners are required to follow regarding (1) the maintenance of their properties and (2) the installation/removal of improvements on their properties. The design guidelines provide specific guidance on various property maintenance and improvement matters that are not clearly addressed by the CC&Rs. The design guidelines cannot conflict with the CC&Rs and the HOA board (or metro district board) has the authority to modify, add or delete rules and standards in the design guidelines. While homeowners do not have the authority to change the rules or standards in the design guidelines, homeowners do have voting power to replace existing board members.

 

Property Maintenance Standards

Design guidelines contain specific rules and standards regarding the maintenance of properties. For example, design guidelines can contain rules that address the following:

  • How often homeowners should be mowing their turf
  • Whether landscaping must be installed and maintained in backyards
  • How much of a tree's crown must be dead before the tree should be removed
  • Whether tree stumps should be removed
  • How high should trees be trimmed up over public sidewalks and streets
  • Whether radon pipes should be painted
  • Where trash cans should be stored when it is not trash pick-up day
  • When holiday decorations can be displayed
  • Whether oil-stained driveways should be cleaned
  • Whether furniture, car parts, building materials and other items are allowed to be stored in the driveway, on the porch or around the home exterior
  • Whether damaged exterior windows, doors or siding should be replaced 

The process and policies for enforcing the rules and standards in the design guidelines is provided in the board's written covenant enforcement policy. (See "Enforcement Policy" tab for further details.)

Guidelines Regarding Improvements

The design guidelines also provide specific rules and standards regarding the installation of improvements on a property. For example, design guidelines can contain rules that address the following:

  • What colors a house can be painted
  • What single colors and materials are allowed for roofs
  • What maximum dimensions are allowed for storage sheds
  • Allowed locations for sheds and dog runs
  • What stye(s) of window shutters are allowed
  • What styles and colors of storm doors are allowed for exterior doors
  • How wide can a driveway be extended
  • How many trees can be planted in a front yard
  • What landscape elements are allowed or required for xeriscaping
  • What style, color and maximum height is allowed for fence lines around a property

The declaration usually requires homeowners to submit design review request forms to the board regarding proposed home exterior improvement projects. (The board may delegate this responsibility to a separate design review committee.) 

Enforcement Policies

The HOA (or metro district) board should adopt written policies regarding the enforcement of the rules and standards provided in the design guidelines and the CC&Rs. Written policies address a variety of enforcement issues such as:

 

  • Process for addressing homeowner complaints regarding rule violations on properties
  • Violation notification process
  • Process for addressing homeowner appeals regarding violation notices issued by the HOA/district
  • When and how much the fines are that are assessed on properties for failure to address notices in a timely manner
  • When the board will turn over a property to its attorneys for legal action
  • When fines for violations can be accelerated
  • Process the board may follow when considering whether to reverse any fines assessed on a property account
  • Expectations placed on homeowners who rent/lease their property
  • Criteria that must be met before a violation notice is closed by the HOA/district
  • When are homeowners expected to comply with landscape maintenance-related rules and standards
  • How are weeds identified
  • How the HOA/district addresses neighbor complaints regarding noises and/or odors 

 

The HOA/district has sole authority over changing, deleting or adding policies in the board's covenant enforcement policy.