Seth G. Weissman of Weissman, Nowack, Curry & Wilco represents developers, builders, lenders, corporate and institutional property owners and real estate brokers. He heads the firm's real estate development and workout team and advises developers, lenders and new investor groups on their rights and responsibilities relative to troubled and/or foreclosed condominium, mixed-use, master planned and condominium communities. A lawyer for more than 30 years, he also has a master's degree in city and regional planning and is a professor of city planning in the College of Architecture at the Georgia Institute of Technology.
John Disney, Daily Report
Community associations, the nonprofit corporations that govern subdivisions, condominiums, planned communities and mixed-use developments, have become as common as fast-food restaurants. Nearly every new real estate development with multiple owners is governed by one or more community associations.
These private governments are not only more numerous than their public government counterparts, but their power and influence oftentimes is greater because, as private corporations, they are not subject to constitutional constraints.
Community associations were virtually nonexistent 40 years ago. As residents in communities began to share in the ownership of such things as swimming pools, clubhouses, tennis courts, landscaping and buildings, community associations emerged on the scene as a mandatory membership taxing and regulatory authority, established to ensure that these facilities were maintained on an ongoing basis and to help keep the peace among owners living in close proximity to one another.
A new body of law developed along with these community associations, principally dealing with balancing the rights of the individual residents versus the community associations that govern them. This article will discuss some of the legal issues and challenges that lawyers are grappling in this emerging area of the law.
Should there be limits?
Community associations, particularly in condominiums, always have regulated activities within residential units that negatively affect other owners. So, for example, it is typical for community associations to enforce elaborate sets of covenants that—among other things—may limit or prohibit noise, pets, the business use of units, leasing, excessive numbers of persons living in a unit, the types of window treatments owners can have that are visible from the outside of units and interior structural changes that could negatively affect other units. These types of covenants generally have been upheld, so long as they are reasonably related to protecting the health, safety, aesthetics or welfare of the community and do not violate laws such as those governing fair housing.
Practitioners regularly discuss whether there should be limits on the degree to which community associations can regulate what goes on inside units. The answer appears to be no, provided that the covenant benefits the community and is not arbitrary, capricious or grossly unreasonable.
Community associations in some high-rise condominiums are beginning to debate whether to adopt covenants restricting smoking inside of units. Should the rights of individual owners to be left alone in their homes outweigh whatever health benefits might result from not having cigarette smoke enter the air handling system that serves the building as a whole? While there have been few reported cases on this particular issue, courts generally have deferred to community associations in deciding how best to govern the communities they are serving.
Courts tend not to substitute their judgment for that of the community, particularly when the covenant in question has been approved by at least a majority of the owners. If there is a recognized health benefit to prohibiting smoking inside of units, a covenant approved by the owners that prohibits prohibiting is likely going to be upheld. However, if the covenant prohibited smoking on an exterior patio or balcony where the health benefits may be negligible or nonexistent, the enforceability of the covenant likely will be a closer question.
One related question periodically discussed by practitioners is whether there should be a difference in judicial review between a covenant that was in the original declaration of covenants versus one that was added to the declaration by amendment at a later time. Owners who do not like a particular covenant amendment often complain bitterly than they should not be bound by restrictions that were not in place when they bought their residences.
The contrary argument, of course, is that all owners bought knowing that amendments could be made to the covenants, so why shouldn't a super-majority of the homeowners be able to approve amendments?
