Chapter 2 - § 2.10 • JUDICIAL CONSTRUCTION OF THE DECLARATION

• Jurisdiction: Colorado

§ 2.10 • JUDICIAL CONSTRUCTION OF THE DECLARATION

The CCIOA provides some basic standards for construing declarations.⁴⁶³ The provisions of the declaration are severable.⁴⁶⁴ The severance provision neither explicitly nor implicitly empowers a court to rewrite a declaration to save an otherwise defective provision.⁴⁶⁵ The rule against perpetuities is not to be applied to defeat any provision of a declaration.⁴⁶⁶ That, however, does not totally invalidate the rule in common interest communities; for deeds or devises of units, the policies underlying the rule continue to have validity and remain applicable.⁴⁶⁷ When there is a conflict between the provisions of the declaration and the bylaws, the declaration prevails, except to the extent it is inconsistent with the CCIOA.⁴⁶⁸ In Heritage Village Owners Ass'n v. Golden Heritage Investors, Ltd.,⁴⁶⁹ the court said that pursuant to that language, the CCIOA prevails over anything inconsistent in a declaration.⁴⁷⁰ Title to a unit and common elements is not rendered unmarketable or otherwise affected by an "insubstantial" failure of the declaration to comply with the CCIOA.⁴⁷¹ The provision concerning title only applies to the marketability of units and common areas, and it was found inapplicable to the validity of a declarant's development rights.⁴⁷²

The CCIOA also prohibits, except as expressly provided, any attempt to vary its provisions by agreement.⁴⁷³ The rights conferred by the Act may not be waived, and a declarant may not act under a power of attorney or use any other device to evade the limitations or prohibitions of the CCIOA or of the declaration.⁴⁷⁴ Thus, once the declaration is recorded, the declarant — who created and, in most cases, recorded the declaration — is bound by it, at least to the extent it "limits or prohibits." That declaration may not impose limitations on the power of an association to deal with the declarant that are more restrictive than those imposed on the power of the association to deal with others.⁴⁷⁵ Note that this proscription applies only to limitations on the power of the association, not of the unit owners.⁴⁷⁶

There are also certain provisions that, if they are in a declaration, may not, under the CCIOA, be enforced. These proscriptions are discussed in greater detail elsewhere,⁴⁷⁷ but in general, they prevent an association from enforcing prohibitions on the display of American or service flags;⁴⁷⁸ the display of political signs;⁴⁷⁹ the parking of certain vehicles;⁴⁸⁰ the removal of certain vegetation;⁴⁸¹ modifications to units in accordance with the federal Fair Housing Act of 1968;⁴⁸² the right of a unit owner to restrict or specify the permissible sale price, rental rate, or lease rate of a unit;⁴⁸³ the use of xeriscape or drought-tolerant vegetative landscapes;⁴⁸⁴ the use of a rain barrel to collect precipitation from a residential rooftop;⁴⁸⁵ or the use of "renewable energy generation devices."⁴⁸⁶ Associations may also not require use of cedar shakes or other flammable roofing materials.⁴⁸⁷ Additionally, a Colorado statute that is not part of the CCIOA says that all restrictions as to the use or occupancy of real property must be strictly construed.⁴⁸⁸

There are also two CCIOA statutes that apply to contracts. Do they apply to declarations? In other words, is a declaration a contract? The Colorado Supreme Court has said that a contract "is a transaction involving two or more individuals whereby each becomes obligated to the other, with reciprocal rights to demand performance of what is promised by each respectively."⁴⁸⁹ Certainly, the parties to a common interest community declaration — the association and the unit owners — ordinarily number more than two,⁴⁹⁰ are obligated to each other, and have reciprocal rights to demand performance of what they have promised. Indeed, the CCIOA explicitly provides for a civil action to enforce or defend the declaration.⁴⁹¹ Courts in other jurisdictions have treated declarations as contracts.⁴⁹² While it does not appear that any Colorado case has specifically said that declarations are contracts, quite a few seem to have operated on the assumption that they are.⁴⁹³ Colorado courts have also said that the "operative documents" of a common interest community can create contractual obligations.⁴⁹⁴ Assuming then that, for purposes of the CCIOA, a declaration is a contract, it must be performed or enforced in "good faith,"⁴⁹⁵ and a clause of that contract may be found to be unconscionable and a court may refuse to enforce it.⁴⁹⁶ In the alternative, a court may apparently grant reformation.⁴⁹⁷

The declaration is also considered a "covenant running with the land."⁴⁹⁸ While it does not appear that any Colorado appellate decision has explicitly defined a declaration as a covenant — or as consisting of covenants — a number of cases have treated common interest community declarations as covenants.⁴⁹⁹

Colorado courts have applied some fundamental rules of construction to restrictive covenants, including declarations. Construction of a covenant is considered a question of law.⁵⁰⁰ Generally, the party seeking to enforce a covenant has the burden of establishing the existence of valid restrictive covenants applicable to the property.⁵⁰¹ The goal in construing a covenant is to ascertain the intention of the parties to it,⁵⁰² which controls over merely technical rules of construction and is gathered from the entire language used, considered in connection with the subject matter.⁵⁰³

When a court interprets a restrictive covenant, it must follow the dictates of plain English.⁵⁰⁴ The covenant's plain language must be interpreted considering its underlying purpose.⁵⁰⁵ If the language is clear,⁵⁰⁶ absent contrary equitable or legal considerations,⁵⁰⁷ the covenant will be enforced as written,⁵⁰⁸ and a court should not turn to parol evidence.⁵⁰⁹ Covenants are construed as a whole, keeping in mind their underlying purpose⁵¹⁰ and giving effect to all their provisions.⁵¹¹ Indeed, every word of a covenant must be given meaning.⁵¹² Use of the plural, as in statutory construction, will include use of the singular.⁵¹³ Courts refuse to rewrite covenants or add terms not contained in them.⁵¹⁴ Some courts have said that if there are inconsistent clauses, one that is specific and another that is general, the specific clause must prevail,⁵¹⁵ although sometimes that principle is limited to situations in which there is irreconcilable conflict,⁵¹⁶ and that is the Colorado rule for statutory construction.⁵¹⁷ A construction that nullifies a restrictive covenant should be avoided.⁵¹⁸

The rules of construction used to determine if provisions of a document are ambiguous apply to protective covenants.⁵¹⁹ When attempting to ascertain if the provisions of an instrument are ambiguous, a court must examine the language and construe it in harmony with the plain and generally accepted meaning of the words used.⁵²⁰ The court must consider all provisions of the document.⁵²¹ Generally, a term is considered ambiguous when it is susceptible of more than one reasonable interpretation.⁵²²

If the express language of a restrictive covenant on land is ambiguous and uncertain in its application, the parties' intention is controlling and, if possible, that intention is ascertained from the "entire language of the covenant agreement in connection with the subject matter of the covenants."⁵²³ When a court interprets an unclear covenant, the court is to resolve all doubts against the restriction and in favor of free and unrestricted use of property.⁵²⁴ Also, any ambiguity will usually be construed against its author⁵²⁵ (the declarant or the association, in most cases) or anyone seeking to enforce its covenants.⁵²⁶ Disagreement over the meaning of a declaration does not alone make it ambiguous.⁵²⁷

A great deal of the litigation about restrictive covenants concerns building restrictions, for example, prohibitions on non-residential uses. There is a fairly large body of case law interpreting building restrictions. Colorado courts have held that covenants restricting uses to residential must be clearly established and strictly construed, and limitations by implication are not favored.⁵²⁸ The commonly used phrase "single-family dwelling" only describes the type of structure permitted, not the type of use that can be made of the property.⁵²⁹ A restrictive covenant provision on the type of structure that may exist does not, by itself, constitute a restriction of the premises to a particular use.⁵³⁰ The word "private" when used in conjunction with "residence" means single-family residence, and a restriction that limits use to "private residence purposes" precludes multi-family uses such as duplexes.⁵³¹ On the other hand, child care does not violate a "residential use" requirement.⁵³² So long as the intent of a covenant is clear — generally to protect present and future property values — covenants establishing an architectural control committee have been upheld against the contention that they lacked specific restrictions providing a framework within which the committee must act.⁵³³

Equity may fashion a remedy to effect justice suitable to the circumstances.⁵³⁴ The doctrine of equitable estoppel may be applied to preclude enforcement by an architectural control committee of a homeowners association of a restrictive covenant that inures to the benefit of all the owners.⁵³⁵ Indeed, a court of equity has the power to remove or cancel a restrictive covenant as a cloud on a title.⁵³⁶

When covenants have a specific procedure for modification or amendment, that procedure must be strictly followed.⁵³⁷ If amendments become effective at the same time, they must be read together to discern the actual intent of the parties.⁵³⁸ A termination provision is a component of a covenant and generally must be interpreted in accordance with principles of covenant construction.⁵³⁹ When covenants specifically set forth a procedure for effective transfer of authority to...