Evergreen Highlands Ass'n v. West
In Evergreen Highlands Association v. West, 73 P.3d 1, 2 (Colo. 2003), an issue squarely before the court was whether a homeowners' association could levy assessments against lot owners in order to maintain a subdivision's common areas even if the declaration did not expressly grant the association such power.
The court adopted the position of the Restatement (Third) of Property: Servitudes 6.2 cmt. a, which reads as follows:
"An implied obligation may be found where the declaration expressly creates an association for the purpose of managing common property or enforcing use restrictions and design controls, but fails to include a mechanism for providing the funds necessary to carry out its functions." Evergreen, 73 P.3d at 8-9.
The Colorado Supreme Court held that even though a homeowners association may not have "an express covenant imposing mandatory assessments, it has the implied power to collect assessments from its members."
It reasoned that to promote efficient property management, it is necessary that "homeowner associations have the implied power to levy dues or assessments even in the absence of express authority." Id.
In Evergreen Highlands Ass'n v. West, membership in the association at issue and payment of assessments were initially voluntary until an amendment made both mandatory. 73 P.3d at 3. The association maintained a park area in the community that was open to use by residents. Id. at 2.
The Colorado Supreme Court held that a modification clause within a declaration of restrictions that allows the restrictions to be "changed" and "modified" allows for the addition of a new covenant, including one requiring all lot owners to be members of a homeowners' association and pay mandatory assessments for the maintenance of common areas. Id. at 2-4.
Evergreen declined to follow the "Lakeland line of cases," which disallowed amendments of restrictions that imposed substantial and unforeseeable impacts on lot owners. Id. at 6.
In Evergreen Highlands Ass'n v. West, the lot owners in the pertinent development had enjoyed the use of an extensive park containing hiking and equestrian trails, a barn and stables, a ball field, a fishing pond, and tennis courts, from the time of the initial development. Id. at 2. Latterly, through an amended declaration, a fee supporting the common elements was imposed. Id. at 3.
The court found the authority to impose the assessment was implicit in the original declaration, and well within the amendment provision of that declaration. Id. at 9.
By contrast, the court determined that "in those cases where courts disallowed the amendment of covenants, the impact upon the objecting lot owner was generally far more substantial and unforeseeable than the amendment at issue in the case before it." Id. at 6.