Article: The Potential Impact of Architectural Review Committee Decisions

Introduction

Architectural Review Committees (ARCs) play a crucial role in maintaining the aesthetic and structural integrity of community associations. However, their decisions can have significant legal and financial implications. Understanding the risks and responsibilities associated with ARC decisions is essential for homeowners, community associations, and HOAs. This article explores the potential impact of ARC decisions, focusing on common claims, risk control measures, and best practices.

The Role of the Architectural Review Committee

The ARC is responsible for enforcing a community’s architectural standards. Their role involves reviewing homeowner requests, adhering to governing documents, and ensuring compliance with local zoning rules. In smaller communities, the HOA board may assume the role of the ARC. The typical process involves the submission of a request, review by the committee, a decision, and the opportunity for appeal or revision.

While ARC decisions are meant to ensure conformity, they sometimes result in disputes or lawsuits. Disagreements can arise from denials, approvals, or perceived inconsistencies in how decisions are applied.

Common Claims Involving ARC Decisions

Several types of claims may arise from ARC decisions, including:

1. Untimely Denial of Applications

   • One common issue is when the ARC fails to approve or deny a request within the stipulated timeframe. If the ARC does not respond within the 30 to 45 days often required by Covenants, Conditions & Restrictions (CC&Rs), the homeowner may consider their request approved by default, potentially leading to conflict.

2. Wrongful Denial of Applications

   • Another prevalent issue is the wrongful denial of applications. ARC decisions are sometimes based on ambiguous criteria, such as aesthetic standards or community harmony, which can be subject to interpretation. This subjectivity opens the door to claims if a homeowner believes their application was denied unfairly or without clear grounds.

3. Selective Enforcement

   • Homeowners may also claim selective enforcement if they believe that the ARC or HOA applied rules inconsistently. For example, if a similar request was approved for one homeowner but denied for another, allegations of discrimination or arbitrary decision-making can arise. In fact, according to CNA data, 29% of discrimination claims are based on allegations of selective enforcement. Courts will scrutinize whether the ARC's decisions are reasonable, made in good faith, and applied consistently across the community.

4. Claims by Neighbors

   • Disputes can also arise between neighbors. For instance, if an ARC approves a structure that impacts a neighbor’s view or property value, the neighbor may file a claim against both the homeowner and the HOA. These disputes often center around property rights and whether the ARC followed proper guidelines in granting approvals.

Risk Control Measures for ARCs

To minimize the risk of disputes and lawsuits, ARCs should adhere to a set of clear, objective standards and follow best practices for decision-making:

1. Timely Responses

   • ARCs must adhere to deadlines when reviewing requests. Many CC&Rs stipulate a 30 to 45-day period for responding to requests, and failure to meet these deadlines can result in automatic approval of applications. Some states even require that ARC decisions be made during open meetings, which, if violated, can void a denial.

2. Objective Criteria

   • The ARC should avoid relying on subjective terms such as "aesthetic" or "harmony" without defining these concepts. Instead, the community's standards should be explicitly outlined. For example, the committee should specify if homes must adhere to a particular architectural style or color scheme. Clear, objective guidelines help reduce the ambiguity that can lead to disputes and claims.

3. Uniform Enforcement

   • To avoid allegations of selective enforcement, ARCs must apply the community’s rules consistently. Courts will examine whether the ARC's exercise of authority was reasonable and made in good faith. To withstand scrutiny, ARC decisions should be fair, procedurally sound, and consistent.

4. Clear Communication

   • It is important for ARCs to communicate clearly with homeowners. The governing documents should outline the review process and standards that the ARC will use in decision-making. Homeowners should be educated on the ARC guidelines provided by the CC&Rs to set expectations and reduce misunderstandings.

Conclusion

Architectural Review Committees have a significant responsibility in shaping the appearance and cohesion of a community. However, their decisions can carry legal and financial consequences. To mitigate risks, ARCs should follow well-defined, objective processes, enforce rules uniformly, and respond to requests in a timely manner. By adhering to best practices, ARCs can maintain community standards while minimizing the potential for disputes and claims.

Ultimately, both homeowners and ARCs must work together, with clear communication and adherence to guidelines, to create a fair and harmonious living environment.