Dangers of “Deemed Approved” Clauses in Architectural Control Provisions of CC&Rs

  • Feb 14 2013

By Ted J. Schneider, Esq.

Many homeowners associations have architectural restrictions to protect the value and desirability of a harmonious and attractive residential community. Such restrictions range from limiting the type of shrub that may be planted within a subdivision, to restricting the type and color of material that may be used to construct a building. These architectural guidelines are generally enforced by an architectural control committee (“ACC”) that is established pursuant to the association’s governing documents. At times, the ACC may consist of the association’s board of directors, or it may be composed of persons who have been appointed by the board of directors.

The ACC generally is given the ongoing duty of ensuring that the association is maintained in compliance with the overall vision of the community that was set forth when the community was developed. As such, the ACC is given the tasks of inspecting the community on a regular basis to ensure compliance, as well as review owners’ requests to construct, maintain, or alter certain improvements within the community. Unfortunately, it is not uncommon to find a “deemed approved” provision within the association’s governing documents similar to the following:

Decisions by the ACC shall be transmitted by the ACC to the applicant at the address set forth in the application for approval, after receipt by the ACC of all materials required by the ACC and within thirty (30) days after receipt of the application by the ACC. Any application submitted pursuant to this section shall be deemed approved unless written disapproval or a request for additional information or materials by the ACC shall have been transmitted to the applicant within the time herein set forth.

Deemed approved provisions such as the one above can create many problems if the ACC is not diligent and fails to respond to an owner’s request. For instance, say you live in a community where the governing documents include a deemed approved clause, and also require that all exterior building walls shall only be painted with natural brown and tan earth tones. Perhaps an owner needs to repaint the outside of his home and decides that bright red matches the color of his favorite college football team and looks much better than the bland brown colors of other houses within the community. The owner submits an application to the ACC to paint his house red on June 1 but, as is often the case, the persons on the ACC are busy with work, summer vacations, baseball, and other activities and are unable to meet and respond to the owner’s request within thirty days. On July 2, the owner paints his house bright red, just in time for the Fourth of July fireworks.

The association is now confronting a dilemma – the owner is stating his request is deemed approved as a result of the ACC’s failure to disapprove his application, but the red house also may subject members of the ACC to litigation by other owners that purchased their homes with the belief they would never have a neighbor whose house is red.

Courts have gone in different directions under similar situations where the ACC has failed to timely deny or disapprove an owner’s application. Some courts have held that the association failed to timely respond, and the red house is deemed approved (to remain red). Other courts have veered from the strict reading and ruled that the ACC did not have any discretion to approve the red house, since it is expressly restricted by the governing documents (and, therefore, the application failed from the outset). Then some courts may find that the application fails on its face for being incomplete or not in compliance with the governing documents and, thus, has excused the ACC’s failure to timely issue a formal denial.

However, if you want to avoid spending tens of thousands of dollars in litigation, to potentially be ruled against by a court that thinks you buried your head in the sand when an owner applied for something that may be expressly prohibited by the association’s governing documents, it’s advised you respond to the owner’s request in a timely fashion. Although the “deemed approved” provisions are intended to provide incentive for the board or ACC to respond quickly to owner’s requests, you may consider amending the governing documents to ensure the ACC’s failure to respond does not result in a change to the harmonious and attractive residential community that was initially established or envisioned when you purchased your home.

I suggest the following to help avoid the foregoing quagmire: First, be familiar with the provisions in your governing documents that set forth time limits to respond to requests; Second, ensure that you timely respond to such requests; Third, when responding to a request, you may be required to expressly “deny” or “disapprove” the request, so a response seeking additional information from the owner or informing the owner to make certain revisions—without expressly denying the request—may not be construed as a denial, thus deeming the application approved; Fourth, if your governing documents do contain a deemed approved clause, consider amending the governing documents to provide that the ACC’s failure to respond timely is deemed a denial of the application. Finally, it is important to seek legal counsel to guide you away from the many pitfalls that exist as you volunteer your time in serving on an ACC or association board.

Posted in: Homeowners Associations & Non-Profits

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