By Lindsay Smith, Winzenburg, Leff, Purvis & Payne, LLP
Community-to-community disputes often come down to one issue – money.
Shared Use Agreements
Developers often create shared use agreements for things like access roads, open space, clubhouses and pools, and other recreational amenities. While these agreements attempt to create structures that allow members of both communities a full and equitable opportunity to make use of the shared improvements, more often than not, they kick the can down the road and force future homeowner leaders to try to work out philosophical differences with neighbors who may be less than neighborly.
A shared use agreement will describe the shared property, and if you’re lucky, the proper method of allocating costs and use rights. When these agreements are poorly conceived, drafted without significant input from the developer, or not reflective of what was actually constructed, the inherent ambiguities can lead to litigation. Sometimes, agreement terms are included in the Declaration meaning that two Boards have to obtain homeowner approval to revise the terms of the agreement.
When you face a dispute about a shared use agreement – whether the dispute is based on funding, use rights, or something else – call the Association’s attorney early, before positions become entrenched. The attorney can review the agreement and help to determine whether any options exist for termination, the proper method to amend provisions, and provide guidance and suggestions that may not be apparent to the board members who are living with the agreement. If the dispute is emotional, the attorney can help bring objectivity and clarity to the discussions.
Shared Non-Agreements
More problematic are the informal non-agreements. For instance, where a community has used access over private property for years, and the new owner decides to stop the practice, the community may be faced with no option short of litigation. The Association may or may not have defense coverage in such litigation; this determination is specific to the individual policy, the nature of the claims asserted between the parties, and the presence of any exclusions to coverage related to pre-existing disputes.
It is axiomatic that communities that are able to work things out without litigation will spend less money on attorney fees. As with the analysis of shared agreements, the attorney’s early involvement can help mitigate future expenses by providing guidance before emotions cloud the dispute. Also, important for litigation, the attorney’s early involvement can help a community avoid errors that could subsequently impair litigation posture.
Other Disputes
Other common disputes relate to things that the developer determined weren’t important enough to justify a written agreement. It is common for perimeter and boundary wall and fence repair, replacement, and maintenance, to not be the subject of a stand-alone agreement. This repair and maintenance may be dictated by documents that are not included in the Association’s regular governing documents, such as a development agreement between the developer and the municipality. These disputes might not even arise for thirty or more years after development.
If the work performed in one community causes damage to a neighboring community (e.g., where new development changes drainage and grading patterns), call the lawyers first. A good quality builder will act promptly to correct problems caused by the work, but a builder who is short on funds may take shortcuts that are unacceptable.
Takeaways
Note that while legal advice is recommended and necessary to resolve these disputes with minimal (literal or figurative) bloodshed, I don’t speak to who pays for the legal advice. Many times, legal advice in community-to-community disputes must be borne as a business expense. Sometimes, the agreements between the parties will provide for a prevailing party attorney fee provision. We have also experienced courts that are willing to award attorney fees under CCIOA to a prevailing party in a dispute with someone outside the community association. However, unlike assessment collection and covenant enforcement, you should not assume you will be awarded attorney fees in a community-to-community dispute.
The risk of paying your own attorney fees is substantial, but the risk of paying litigation attorney fees – and perhaps the litigation attorney fees of your opposing community – is more so. Investment in good legal advice at the beginning of a dispute can help mitigate these risks, and create a stronger foundation for what comes next.
Lindsay Smith is a partner at Winzenburg, Leff, Purvis & Payne, LLP in Littleton, a full-service community association law firm. Lindsay focuses her practice on general community association law, including covenant enforcement, document amendment and interpretation, governance advice, and litigation.
