The ARC and The Covenants

For this week’s Guest Post Friday here at Musings, we welcome back Mike Collignon.  Mike is a co-founder of the Green Builder Coalition. The Green Builder® Coalition amplifies the voice of green builders and professionals to drive advocacy and education for more sustainable building practices.

As we start to see signs of a housing recovery, slow as it may be, I feel the industry is in a great position. All the effort put in by so many to improve our energy codes, green building programs & rating systems will finally be able to bear fruit. We can start to build homes that are much more environmentally responsible. Sure, we can have a lengthy debate about implementation and adoption rates, but you’ve got to walk before you can run. Unfortunately, I can see that progress getting shackled by an unexpected impediment: the architectural review committee (ARC; sometimes called “architectural committee” or “architectural control authority”) and the covenants of a homeowners’ association.

When things were going gangbusters in the early to mid-2000s, builders couldn’t buy land/build homes fast enough. But when the bubble burst, a lot of developments were left incomplete. Lots have sat in waiting for years. We’re starting to see activity on some of those lots, but a neighborhood covenant that is sadly outdated awaits those projects. Yes, it might only be a 10 year-old document, but think about the monumental shift in required energy performance, or the increased interest in sustainable building practices, or the proliferation of product choices since 2002.

One of the main reasons for an ARC’s existence is “policing” architectural integrity/consistency. It’s a bit of hyperbole, but it helps prevent someone from constructing a sheet metal shack in a neighborhood of mid-level homes. Where it gets tricky is when a homeowner wants to use a material of equal or better quality, but because said material is not one explicitly specified in the covenants, the ARC deems it unacceptable.

For instance, metal roofs can utilize recycled content and have a much longer lifespan than asphalt shingles. An executive from a rainwater catchment manufacturer recently said, “A metal roof… is ideal for collecting rainwater. The slicker the surface, the better since the less contaminants will stick to it.”[1] However, some ARCs will not allow metal roofs. They make their decision based solely on aesthetic reasons, and not on the merits of the upgraded roof.

Same goes for log homes, though log home manufacturers are sorely familiar with such restrictions. I have seen neighborhood covenants explicitly banning log homes. Rather than allow an above-code home to be built, some developments would rather keep the standard of construction down in order to, in some people’s eyes, keep the neighborhood more aesthetically pleasing. As energy efficiency becomes more and more valued, either voluntarily or through formal programs like those proposed in the SAVE Act, the rationale behind these clauses will become even more asinine.

Another example of covenants not being able to adapt to the changing times is the topic of gardens. Some covenants will not allow the homeowner to have a garden. Others allow a very small one, and then only if it’s hidden from public view, as if it’s something shameful and hideous. I’m not suggesting anyone and everyone be allowed to plant small production crops in their yards (though urban farming is a movement having much success in the Detroit metro area). But why treat the growing of one’s own food with such disdain?

The ARCs consist of a handful of the respective neighborhood’s residents. Often, there is no requirement to have a background in the building industry. In fact, I recently asked a second-generation builder with 40 years of experience if he had ever encountered an ARC with any level of building industry experience. He quickly answered, “No.” That means you could have a baker, or a bus driver, or a shoe salesman making decisions that influence (or even change) someone else’s six-figure investment. Does anyone else find this absurd?

Do these committees have any real legal authority, or are their actions merely recommendations? To find out, I asked two attorneys whose focus is real estate and/or construction. Neal Wallace, a real estate attorney from Illinois, explained there are two facets to the question:

“When it comes to an association committee enforcing subdivision covenants, there are both legal and practical considerations. From a legal standpoint, generally if 1) the covenants are properly recorded, 2) the deeds are made subject to existing covenants, 3) the issue in question is specifically addressed in the covenants, and 4) the covenant does not violate public policy, then the association can enforce those covenants in court.  If the covenants do not specifically address the issue, but address a related issue, then the court would need to interpret the covenants to determine if the issue is governed by the recorded document.

As a practical matter, judges have little patience for petty issues. So if the association is going to take up court time and resources, it would be wise to make sure this is truly a battle worth fighting.  In most circumstances, an interpretative slant in favor or against one party can have a major impact on the outcome.  You can “prove” a technical point and still lose, particularly if the judge can be confident that no one would bother to appeal.  Furthermore, an association would need to be represented by counsel, incur court costs, obtain the necessary votes (unless the developer is still in charge), etc.”

Virginia construction attorney, Christopher Hill, added, “Given the general enforceability of ARC actions pursuant to neighborhood restrictive covenants, we should be moving toward amending the basic neighborhood covenants to allow for more sustainable building techniques, particularly in light of the more and more aesthetically pleasing “green” materials that exist today.”

Thankfully, some states have passed laws that protect the homeowners’ rights to generate their own solar and wind power, meaning HOAs have little to no governance over private renewable energy sources. Common sense has prevailed in certain areas of the country.

But what happens to those who want to utilize certain sustainable products or techniques, but are prevented from doing so? After all, Merriam-Webster defines neighborhood as “a: the people living near one another; b: a section lived in by neighbors and usually having distinguishing characteristics”.[2] Families are faced with making a choice between doing the right thing for the environment or their family. If they want to build their environmentally-friendly dream home, their choices include finding an infill lot in an older neighborhood that no longer has an ARC, or building on land not in a neighborhood (usually in a rural setting), contributing to urban sprawl while, in essence, treating them as outcasts. If they choose an available lot in an existing neighborhood, perhaps to be closer to their family or friends, then they have to compromise their desire for a responsible structure in order to conform to a narrow aesthetic expectation. It’s an unfair choice, and one that homeowners shouldn’t be forced to make.

As always, Mike and I welcome your comments below.  Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.