It is proverbial in California that Homeowners Associations (“HOAs”) have come to play an important part in home ownership. Whether you want to paint your house, remodel it, re-landscape your yard, and most other common scenarios of home ownership, chances are that if you live in California in property subject to an HOA you will have to deal with your HOA in doing these things. As California courts have noted, HOAs function as a sort of combination municipality and landlord function. The purpose, of course, is to preserve the value of the community homes by maintaining agreed upon standards, as recorded in Covenants, Codes, and Restrictions (“CC&Rs”) and often architectural regulations that derive from them. Disputes between homeowners and their HOAs are ubiquitous in California. In this brief Blog article, we will discuss several common mistakes that Buffington Law Firm’s HOA attorneys have seen HOAs make which constitute actionable violations of homeowners’ rights.
A. General Rule of Judicial Deference to HOA Boards of Directors.
Courts do not seek to micromanage the decisions of HOA Boards of Directors and it is quite true that all things being equal, Courts prefer to take a “hands off” approach to second-guessing their decisions and rulings. HOA Boards of Directors often assume that Courts will give them great deference in terms of how they do their jobs. This is both true and not true. Courts will defer to the judgment of an Association Board of Directors so long as the decision was made in adherence to an even-handed application of CC&Rs that does not appear to be arbitrary or capricious. [See Cohen v. Kite Hill Community Assn. (1983) 142 Cal. App. 3d 642, 652]. However, judicial deference does not apply to all board decisions. The rule of judicial deference does not apply to a board’s improper construction of the governing documents. [Dover Village Assn. v. Jennison (2010) 191 Cal.App.4th 123, 130.]. Nor does it apply when there is evidence of arbitrary, capricious, or selective enforcement of CC&Rs or disparate treatment as between members. It is limited where the board fails to enforce the governing documents. [Nahrstedt v. Lakeside Village (1994) 8 Cal.4th at 361, 386; Cohen v. Kite Hill Community Assn142 Cal.App.3d at 642, 651-654; Lamden v. La Jolla Shores (1999); Dolan-King v. Rancho Santa Fe (2000)].
B. Recurring Misconduct by HOA Boards of Directors that constitutes a breach of fiduciary duty.
1. Selective or Disparate Enforcement of CC&Rs. Far and away the worst type of misbehavior by HOAs is selective enforcement of CC&Rs, i.e., CC&Rs enforced against one homeowner but not another, or CC&RS enforced differently against one homeowner versus another. California courts have made the law abundantly clear on this point: it is forbidden. This point is so well-known in the legal community that one would think that HOAs would know better than to engage in this sort of behavior. Unfortunately, it is still common. Too often an HOA is influenced by one or more members of its Board of Directors who have a personal stake in some sort of selective enforcement, e.g. a neighbor against whom one of the directors bears a grudge or somesuch. A common scenario is where an HOA director dislikes something that one of his or her neighbors is doing, such as landscaping or construction. Since the director sits on the board and can influence its decisions, he or she may influence the HOA Board of Directors to apply the CC&Rs in a manner that is plainly contrary to either the plain language of the CC&Rs or longstanding application of such. In either case, this may not be done and constitutes a breach of fiduciary duty by the HOA to the victimized homeowner. [See generally e.g. Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642, 650]. These scenarios, if proven in Court, will nearly always lead to a decision against the HOA.
2. Optional Enforcement of CC&Rs by the HOA. An odd variant of the selective enforcement breach of fiduciary duty by an HOA presents itself when an HOA decides that it has the option, but not the duty, to enforce CC&Rs. Sometimes an HOA will declare that it is only going to enforce some or all CC&Rs if some homeowner or other complains. Other times an HOA will claim that it has the right, but not the duty to enforce CC&Rs i.e. it can decide whether or not the HOA wishes to become “involved” in the “dispute”. This is all wrong as a matter of law and essentially this kind of behavior is really nothing but a form of selective enforcement and constitutes a breach of fiduciary duty by the HOA which is actionable in court. Homeowners’ Associations have a duty to enforce CC&Rs “regardless of whether a given homeowner may complain….” [Duffy v. Superior Court (1992) 3 Cal. App. 4th 425, 430].
3. Outright Refusal to Enforce the Governing Documents. Sometimes an HOA Board of Directors will simply decide not to enforce some or all of the CC&Rs. This scenario sometimes presents itself, to name one common example, in the context of preserving view restrictions. For example, in some communities the CC&Rs restrict the height of trees, vegetation, or construction to preserve scenic views. Sometimes the HOA seeks to evade its duties to enforce these CC&Rs. This can be due to a wish to avoid legal disputes and the attendant legal expense, or it may derive from a preference of allowing the construction or landscaping of the type that the CC&Rs expressly prohibit. Whatever the motivation, California courts have made it clear that the HOA Board of Directors has a duty to enforce the CC&Rs. . [Nahrstedt v. Lakeside Village (1994) 8 Cal.4th at 361, 386; Cohen v. Kite Hill Community Assn. 142 Cal.App.3d at 642, 651-654]. When an HOA shirks its duty to enforce the plain letter of the CC&Rs, it is committing a breach of fiduciary duty to any community member who is harmed by such non-enforcement. As discussed above, judicial deference to the HOA does not apply in this context.
These are three of the more common patters of misbehavior that Buffington Law Firm’s HOA attorneys have encountered in protecting homeowners against misbehaving HOAs. If you have an HOA dispute, Buffington Law Firm invites to to arrange a Free Legal Consultation. All consultations are with an experienced HOA litigation attorney and are protected by the attorney-client privilege. There is never any charge or obligation.
Roger J. Buffington