PastPaperHero | Rights in real property - Property owners' associations and common interest ownership communities

Learning Outcomes

This article explains property owners’ associations and common interest ownership communities, including:

The legal structure, creation, and governance of associations (HOAs, condominiums, and cooperatives), how declarations, bylaws, and statutes allocate power, and the business‑judgment and reasonableness standards courts apply.
The nature, elements, and exam‑relevant consequences of covenants, conditions, and restrictions (CC&Rs), including how they run with the land, what counts as “touch and concern,” and how notice is satisfied through recording.
The distinction between recorded covenants, association rules, and individual deed restrictions, and how courts review each category when assessing validity, arbitrariness, discrimination, or conflict with public law.
Typical enforcement tools—injunctions, damages, fines, assessment liens, foreclosure, and suspension of privileges—together with statutory and doctrinal limits on association power and remedies.
The rights, defenses, and remedies of individual owners and third parties, including standing to enforce restrictions, challenges to ultra vires or unreasonable actions, and doctrines such as waiver, abandonment, and changed conditions that may defeat enforcement or support modification and termination of covenants.

MBE Syllabus

For the MBE, you are required to understand rights in real property as they relate to property owners’ associations and common interest ownership communities, with a focus on the following syllabus points:

How common interest communities are created and how associations derive and limit their authority.
How real covenants and equitable servitudes operate through recorded declarations and CC&Rs.
Distinguishing valid restrictions and enforcement actions from those that are arbitrary, discriminatory, or contrary to public policy.
Typical remedies for breach of covenants or rules, including equitable and legal relief, and the use of association liens.
The relationship between private restrictions and public law (zoning, anti-discrimination statutes, constitutional rights).
Who may enforce covenants (association, other owners, original grantor, or outsiders) and how covenants are modified or terminated.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

Which of the following is most likely to be enforceable by a property owners’ association?
1. A rule prohibiting all political signs, regardless of size or content.
2. A covenant requiring all homes to have a specific style of mailbox.
3. A restriction banning all non-residents from entering the community.
4. A rule requiring all residents to vote in local elections.
If a homeowner violates a valid association covenant, the association may generally:
1. Impose criminal penalties.
2. Seek an injunction or damages.
3. Terminate the homeowner’s property rights.
4. Enforce the covenant only if all owners agree.
Which of the following is NOT a typical power of a property owners’ association?
1. Levying assessments for common expenses.
2. Amending covenants by majority vote, if allowed by the declaration.
3. Enacting rules that conflict with state law.
4. Maintaining and repairing common areas.

Introduction

Property owners’ associations and common interest ownership communities are now a standard feature of residential and mixed-use developments. On the MBE, they show up under restrictive covenants and servitudes. These communities are governed by a web of recorded covenants and association rules that limit how owners may use their property and allocate costs of maintaining shared facilities.

For exam purposes, it helps to think of an association as a private mini‑government whose powers are derived from, and limited by, real property documents and statutes. The MBE often tests:

Whether a given restriction is a valid covenant/equitable servitude.
Who has the power to enforce or change restrictions.
How association remedies (injunctions, fines, liens) operate.
How these private rules interact with zoning and public law.

Key Term: Property Owners’ Association
An entity, usually a nonprofit corporation, formed to manage a development’s common property, enforce covenants, and collect assessments from owners.

Key Term: Common Interest Ownership Community
A development in which each owner holds a separate interest in a unit or lot plus a shared interest or shared obligations relating to common areas, all subject to an association’s governance and recorded covenants.

Key Term: Common Area
Property within the community (such as streets, roofs, lobbies, pools, or green space) owned or controlled collectively for the benefit of all owners, and maintained by the association with funds from assessments.

Types of Common Interest Communities

Common interest communities on the MBE will usually appear in three forms: subdivisions with homeowners’ associations, condominiums, and cooperatives.

Key Term: Homeowners’ Association (HOA)
An association in a planned subdivision of separately owned lots, where each owner holds fee title to a lot and typically an appurtenant interest in common areas administered by the association.

Key Term: Condominium
A form of ownership in which each owner holds fee title to an individual unit plus an undivided interest (as tenant-in-common) in common elements, with a condominium association governing the building under a recorded declaration.

Key Term: Cooperative
A form of ownership in which a corporation owns the building and land, and residents own shares in the corporation plus a proprietary lease giving them the right to occupy a specific unit. Governance is exercised by the cooperative’s board.

In all three, the association enforces a recorded declaration (sometimes called a primary deed) and related covenants, conditions, and restrictions (CC&Rs).

Key Term: Declaration (or Primary Deed)
The recorded instrument that creates the common interest community, defines the units and common areas, establishes the association, and sets out covenants and rules binding on all current and future owners.

Creation and Authority of Associations

Associations are typically created by the developer through the declaration, which is recorded before or when lots or units are first sold. Ownership of a lot or unit automatically makes the purchaser a member of the association and subjects that owner to the declaration and valid rules.

The association’s authority is limited by:

The recorded declaration and CC&Rs.
The association’s bylaws and articles.
State condo/HOA/co‑op statutes.
General contract and property law.

Common express powers include:

Maintaining and repairing common areas.
Purchasing insurance for common property.
Levying assessments to fund common expenses.
Enforcing CC&Rs and rules through litigation.
Adopting reasonable rules to implement the declaration.

Key Term: Board of Directors
The governing body elected by owners to manage the association’s affairs, adopt rules within the scope of the declaration, and make enforcement and budgeting decisions.

Key Term: Quorum
The minimum number or percentage of members (or directors) who must be present at a meeting for the association or board to validly transact business.

Courts usually review board decisions under a business judgment or similar deferential standard.

Key Term: Business Judgment Rule
A standard under which courts defer to association or board decisions if they are within the board’s authority, made in good faith, and with a reasonable belief that they further the community’s interests.

Covenants, Conditions, and Restrictions (CC&Rs)

CC&Rs are the backbone of association control. They are usually set out in the declaration and are intended to “run with the land.”

Key Term: CC&Rs (Covenants, Conditions, and Restrictions)
The package of recorded promises and limitations governing use, appearance, and operation of property in the community, binding present and future owners.

Key Term: Covenant Running with the Land
A promise respecting the use of land that, if properly created, burdens or benefits successors in interest, so that subsequent owners are bound even if the promise is not restated in their deed.

Key Term: Equitable Servitude
A covenant concerning land use that equity will enforce against successors with notice, typically through injunctive relief, when the original parties intended the promise to bind successors and it “touches and concerns” the land.

Key Term: Restriction
Any limitation on property use contained in a declaration, deed, or association rule, enforceable if validly created and not contrary to statutes or public policy.

On the MBE, you rarely need to dissect all technical elements (horizontal and vertical privity, etc.), but you must recognize that:

A properly recorded declaration that expressly binds “owners, their heirs and assigns” creates covenants/equitable servitudes running with the land.
Later deeds need only reference the declaration; each buyer is bound by the recorded CC&Rs if they had record or inquiry notice.
CC&Rs typically “touch and concern” the land because they govern property use (e.g., single‑family use only, architectural standards, no commercial use).

Common CC&Rs include:

Use limits (residential only, no short‑term rentals).
Architectural and appearance controls (roof color, fences).
Occupancy limits and pet restrictions.
Maintenance obligations (landscaping).
Contribution requirements (assessments, reserve funds).

Even if a specific restriction is not repeated in the owner’s deed, it is enforceable if in the recorded declaration and the owner had notice.

Association Rules and Enforcement

The declaration usually authorizes the board to adopt rules and regulations to fill in details not specified in the CC&Rs (e.g., pool hours, visitor parking procedures). These rules are subordinate to the declaration.

To be enforceable, board‑made rules generally must:

Be within the scope of authority granted by the declaration/statutes.
Be consistent with the declaration and not alter substantive covenants.
Be reasonable (not arbitrary or capricious).
Be adopted through proper procedures (notice, vote, quorum).

Associations typically enforce both CC&Rs and rules using several tools.

Key Term: Assessment
A periodic or special monetary charge levied by the association on owners to fund common expenses and reserves, often secured by a lien on each lot or unit.

Key Term: Lien
A non‑possessory security interest in property securing payment of a debt or performance of an obligation; here, the association’s right to collect unpaid assessments.

Key Term: Foreclosure
The process by which a lienholder terminates the owner’s equity in the property and sells the property to satisfy the debt.

Key Term: Fine
A monetary penalty imposed by the association against an owner for violating covenants or rules, if authorized by the governing documents or statutes.

Key Term: Injunction
A court order requiring a party to do or refrain from doing specific acts, commonly used to compel compliance with land‑use covenants.

Typical enforcement methods:

Injunctive relief: Ordering an owner to comply (e.g., repaint a nonconforming color).
Damages: Recovering costs caused by violations.
Fines: Imposed after notice and opportunity to be heard, if authorized.
Assessment liens and foreclosure: For unpaid assessments and, sometimes, unpaid fines.
Suspension of privileges: Temporarily restricting use of common facilities for nonpayment or violations (but not denying access to the owner’s unit/lot).

Associations do not have criminal enforcement powers; any answer choice suggesting criminal penalties or imprisonment is incorrect on the MBE.

Limits on Association Powers

Although associations resemble governments, they are creatures of private law. Their powers are limited by:

The scope of the declaration and statutes.
The requirement of reasonableness.
Statutory and constitutional constraints on discrimination.

Key Term: Reasonableness Standard
A requirement that association actions and rules be rationally related to legitimate community interests and not arbitrary, capricious, or unduly burdensome.

Common limits include:

Conflict with law: Rules or covenants that conflict with zoning, fair housing statutes, or other public law are unenforceable. An association cannot authorize what zoning forbids, and it cannot enforce racially discriminatory covenants.
Discrimination: Federal and state fair housing laws prohibit covenants or enforcement decisions that discriminate on protected bases (race, religion, national origin, sex, familial status, disability, and sometimes others).
Unreasonable restraints on alienation: Restrictions that effectively prevent transfer (e.g., absolute bans on sale) are often invalid, though reasonable limitations (age‑restricted communities, rights of first refusal at market price) may be upheld.
Fundamental rights: Because associations are usually private actors, constitutional free speech protections generally do not apply directly. However, some states by statute limit how far associations may restrict political signs or meetings.

Courts often apply a business judgment or similar deferential standard: if the board acted within its authority, in good faith, and for a legitimate community purpose, courts will not second‑guess the decision—even if others would have chosen differently.

Key Term: Changed Conditions Doctrine
An equitable doctrine under which a restrictive covenant will not be enforced if conditions in the relevant area have so changed that the restriction no longer provides any substantial benefit to the property owners it was designed to protect.

Rights and Remedies of Owners

Owners are not merely subject to association power; they also hold rights against the association and against other owners.

Substantive rights typically include:

Use and enjoyment of common areas consistent with the CC&Rs.
Participation in association governance (notice of meetings, voting, running for the board).
Access to association records, budgets, and financial information as required by statute.

Remedial rights include:

Direct actions against the association to challenge ultra vires, unreasonable, or illegal rules or enforcement (e.g., seeking a declaratory judgment or injunction).
Actions against other owners to enforce covenants or equitable servitudes (if the scheme was intended to benefit all owners).
Defenses to enforcement (invalid covenant, changed conditions, waiver or abandonment, selective enforcement, laches).

Key Term: Implied Reciprocal Negative Servitude
A doctrine allowing owners within a common development to enforce uniform restrictions against each other when there is a common plan or scheme, even if the restriction does not appear in every deed, provided purchasers had notice.

The doctrine often appears where a developer sells lots in a subdivision subject to similar “residential only” restrictions; each owner can enforce the restriction against others, even if their individual deeds are silent, as long as there was a common plan.

Enforcement by Third Parties

Not every person who dislikes a particular use can enforce a covenant.

The association can enforce covenants that benefit the common property or all owners.
Other owners within the benefited tract can usually enforce covenants intended to benefit the tract as a whole.
The original grantor may retain the right to enforce covenants benefitting the land retained.
Outsiders not part of the benefiting scheme typically cannot enforce restrictions.

Modification and Termination of Covenants

Covenants and CC&Rs may change over time. The declaration often sets out the procedure:

Amendments usually require a specified owner vote (e.g., 2/3 or 3/4) and proper recording.
Some covenants may expire after a fixed term unless renewed.

Separate from formal amendment, courts may find that:

A covenant has been abandoned or waived by consistent non‑enforcement.
Changed conditions have destroyed the purpose of the restriction (changed conditions doctrine).

Worked Example 1.1

A homeowners’ association’s declaration requires all homes to have a white exterior. An owner paints her house blue. The association sues to enforce the covenant.

Answer:
The association is likely to succeed. The covenant appears in the recorded declaration, binds successors as a covenant running with the land/equitable servitude, clearly “touches and concerns” the land (appearance of homes), and is not arbitrary or unlawful. The association has standing to seek injunctive relief to compel compliance.

Worked Example 1.2

An association adopts a rule banning all yard signs, including political signs. A homeowner displays a small sign supporting a candidate. The association fines the owner.

Answer:
Even if the declaration is silent about signs, such a rule is subject to a reasonableness standard and must not conflict with applicable law. Many states protect certain political signs in residential communities. If state law grants owners the right to display political signs, the association’s rule conflicts with law and is unenforceable. Even without such a statute, a total ban may be struck down as unreasonable, especially if less restrictive alternatives are available.

Worked Example 1.3

A deed from a landowner to a developer of a 20‑acre tract provides: “All owners, their heirs and assigns, of any portion of the 20‑acre tract shall use their land for single‑family residences only.” The developer builds a subdivision and sells lots, each deed referencing the restriction. A homeowner on a perimeter lot wants to add a rental apartment over her garage. A nearby resident in a different subdivision sues to stop the construction based on the restriction.

Answer:
The outside resident will lose. The single‑family restriction is a valid covenant/equitable servitude that runs with the land within the 20‑acre tract and may be enforced by owners in that tract or by the original grantor if the covenant benefited his retained land. A neighbor in an adjacent subdivision is not part of the benefited class and thus has no right to enforce the restriction.

Worked Example 1.4

A declaration authorizes the board to “adopt reasonable rules regarding the use of common areas.” Without amending the declaration, the board adopts a rule banning all dogs from owners’ units and the entire property. The declaration previously allowed dogs in units but not in the clubhouse. An owner challenges the new rule.

Answer:
The rule is likely invalid. The declaration affirmatively permits dogs in units; a board rule cannot contradict or effectively amend the declaration absent a proper owner vote and recorded amendment. The board’s rule also goes beyond “use of common areas” by regulating inside private units, exceeding its delegated authority.

Worked Example 1.5

A condominium association levies a special assessment for roof replacement. An owner refuses to pay, arguing that her top‑floor unit is not leaking. The association records a lien for the unpaid assessment and forecloses.

Answer:
The association can generally enforce the assessment by lien and foreclosure if the declaration and applicable statutes authorize these remedies. Special assessments for shared components like the roof benefit the entire building and are a classic common expense. The owner’s use or current need does not control; she is bound to pay her share of properly adopted common expenses.

Exam Warning

Association restrictions in recorded declarations are treated more favorably than ad hoc board rules. On the MBE, ask:

Is the restriction in the recorded declaration (or a properly recorded amendment)? If yes, it is presumed valid unless it violates law or public policy.

Or is it merely a board‑adopted rule? Then check that the board had authority under the declaration, followed proper procedures, and acted reasonably.

Also watch who is trying to enforce the restriction. Outsiders or neighbors from other tracts usually lack enforcement rights.

Revision Tip

When analyzing an MBE hypo involving a common interest community:

First locate the restriction: declaration vs later rule vs individual deed.

Then identify the enforcing party: association, another owner in the tract, original grantor, or outsider.

Finally, test validity: creation (writing, recording, notice), scope (touch and concern, within authority), and any conflict with statutes or strong public policy.

Key Point Checklist

This article has covered the following key knowledge points:

Associations in common interest communities derive their powers from recorded declarations, bylaws, and statutes; ownership automatically carries membership and obligations.
CC&Rs in a recorded declaration generally create covenants/equitable servitudes that run with the land, binding successors with notice.
Board‑adopted rules must be authorized by the declaration or statutes, consistent with the declaration, and reasonable; they cannot rewrite recorded covenants.
Associations commonly enforce covenants through injunctions, damages, fines, assessment liens, and foreclosure, but not criminal penalties.
Association authority is limited by fair housing laws, public policy, and reasonableness; discriminatory or arbitrary restrictions are unenforceable.
Owners can enforce covenants against other owners within the same scheme and may challenge ultra vires or unreasonable association actions in court.
Outsiders who are not part of the benefited tract generally cannot enforce subdivision covenants.
Covenants can be modified or terminated through procedures in the declaration, or equity may decline enforcement based on abandonment or changed conditions.

Key Terms and Concepts

Property Owners’ Association
Common Interest Ownership Community
Homeowners’ Association (HOA)
Condominium
Cooperative
Declaration (or Primary Deed)
CC&Rs (Covenants, Conditions, and Restrictions)
Covenant Running with the Land
Equitable Servitude
Restriction
Common Area
Board of Directors
Quorum
Assessment
Lien
Foreclosure
Business Judgment Rule
Implied Reciprocal Negative Servitude
Fine
Injunction
Reasonableness Standard
Changed Conditions Doctrine

Rights in real property - Property owners' associations and ...