A homeowners association’s or condominium association’s Board of Directors (“Board”) is tasked with governing their association according to the terms described in the association’s governing documents. Generally, a Board has broad discretion regarding how to carry out this governance, but there are some legal doctrines and case law that limit a Board’s discretion. This article will describe some of these limitations; specifically promissory estoppel, equitable estoppel, and the law emanating from the case of Riss v. Angel[1] related to approval standards.
- Estoppel
There are two types of estoppel: promissory estoppel and equitable estoppel.
Promissory estoppel is when someone makes a promise to someone else and then takes actions inconsistent with that promise. A promise, in the legal sense, means a manifestation of intent to act or refrain from acting in a certain way. An example of such a promise in the context of a homeowner’s or condominium association would be a situation where a Board member provided an owner with authorization to install a heat pump, and the owner later spends $6,000 installing a heat pump. Thereafter, the Board adopts a rule to prohibit the installation of heat pumps and demands that the owner remove the heat pump. A court would find that the Board is estopped from requiring the owner to remove the heat pump because the Board “promised” (by approving the heat pump request) that the owner could install the heat pump, the owner relied on the promise, and the owner acted in reliance on the Board’s promise (by installing the heat pump).
Equitable estoppel is when someone takes a position inconsistent with a previous position taken where inequitable consequences would result to the person who relied on the previous position. An example of this would be if the Rules and Regulations of an association prohibit overnight street parking, but the Board has not enforced this prohibition for years. As a result of this lack of enforcement, association members/lot or unit owners commonly parked overnight on the street. Then new Board members are elected to the Board and the Board starts fining owners who violate the rule. A court would likely find that the Board is estopped from enforcing the rule because the Board has taken an inconsistent position on enforcement of this Rule and the owners have relied on the Board’s previous position.
There is some overlap between the two types of estoppel, but the primary difference is that promissory estoppel requires a promise from one person to another, while equitable estoppel only requires inconsistent action. Another key difference is that promissory estoppel can be used as a sword, i.e., a basis to pursue a lawsuit against someone, while equitable estoppel can only be used as a shield, i.e., a defense against someone else’s lawsuit. However, both types of estoppel can limit the Board’s discretion if the Board has been taking inconsistent actions in the community.
- The Riss v. Angel Decision as it Relates to Approval Standards
Many association governing documents contain provisions which consist of approval standards (e.g., harmony of external design, conformity with existing structures, open and spacious community, etc.) that owners must comply with when maintaining or modifying their homes or condominium units. Boards are afforded broad discretion when determining whether an owner is in compliance with these approval standards. However, the Washington Supreme Court has ruled in Riss v. Angel that these approval standards will not be enforced by the court when the standards have been applied so inconsistently that they result in a wide variety of buildings.
The limitation on a Board’s discretion presented by the Court in Riss v. Angel follows the same logic of equitable estoppel, as discussed above. In other words, if a Board has allowed for numerous different styles of buildings or structures which violate the approval standards, then the Court is not going to allow the Board to take an inconsistent position regarding these approval standards if the Board later starts to enforce these approval standards.
An example of when this issue may arise is if a provision of the association’s governing documents requires that the external paint colors of homes “conform” with one another, but the Board has allowed a wide variety of external paint colors that “contrast” with one another. Then the Board later denies an owner’s paint color request because the Board feels it does not “conform” with the neighboring homes. A court would likely find that this approval standard is unenforceable because there are numerous homes whose paint colors do not conform with one another in violation of this approval standard.
- The Takeaway
It is important for Boards and owners to be aware of these limitations on the Board’s discretion. A Board should be aware of the decisions that the Board has previously made to avoid taking inconsistent positions. Owners should be aware that they can challenge a Board’s decision if the decision is inconsistent with a previous position taken by the Board.
[1] Riss v. Angel, 131 Wash. 2d 612, 934 P.2d 669 (1997).
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