Homeowners’ Associations (“HOAs”) serve an important purpose in many California communities. Essentially, an HOA serves as a kind of municipal authority over many aspects of home ownership in the community in which it is established. HOAs derive their existence and authority from Covenants, Conditions, and Restrictions (“CC&Rs”) which are recorded against the deeds of the homes in the applicable community. Put simply, the CC&Rs contain the authority for the existence and authority of the HOA, and the CC&Rs themselves are a condition of the deeds of the homeowners in the community. In layman’s terms, this means that there is basically no way to get out of being bound by the CC&Rs, or of having to deal with the HOA, so long as the homeowner owns the property. And it is from the CC&Rs that the HOA derives its authority.
Disputes between homeowners and their HOAs are unfortunately all too common. HOAs are run, by law, by directors who are volunteer members of the community. While these directors generally mean well, they do not always fully understand the legal framework within which HOAs must operate. Unfortunately, sometimes HOA Board members abuse their authority for various reasons. Sometimes a Board selectively enforces CC&Rs. Other times a Board acts unreasonably or capriciously. Buffington Law Firm’s HOA litigation attorneys have handled many such cases. In this brief Blog article, we will discuss the fundamental steps in handling a dispute between a homeowner and the Homeowners’ Association.
1. Retain counsel if the situation is not settled at the early stage. Obviously, when a dispute between a homeowner and the HOA first develops, normally the homeowner does not have legal counsel. In a perfect world, the homeowner and HOA will work out their differences to solve the problem. All without lawyers. Well, not quite. Even at this early stage, remember that the HOA is very likely being advised behind the scenes by legal counsel. Even so, we can hope that a given dispute will be resolved without the need for the homeowner to retain counsel. Unfortunately this sometimes is not feasible. Sometimes this is because the HOA simply will not agree to a reasonable compromise. Usually when this happens the HOA has its lawyer contact the homeowner, and/or the HOA begins fining the homeowner for whatever claimed infraction causes the dispute. While Buffington Law Firm encourages early resolution and compromise of disputes without lawyers, once the HOA’s lawyer contacts the homeowner, we recommend that the homeowner retain counsel. The reason is quite simple. We believe that it is always a mistake for an unrepresented party to deal with the other side’s lawyer. Such a negotiation is always unequal, and the HOA’s attorney will believe, usually rightly, that he or she has the upper hand and that the homeowner is dealing from a position of weakness. Retaining counsel will level the playing field and also ensure that the homeowner properly understands his or her legal position. Sometimes when a homeowner retains Buffington Law Firm we review the case and determine that the client needs to change his or her position. More commonly, we can represent the homeowner and advocate his or her position effectively and deal from strength with the HOA’s attorney. Often this can result in resolution of the dispute at low-cost and with a minimum of difficultly.
2. Demand mediation. If a homeowner cannot resolve the dispute at the early stage, i.e. after retaining counsel, the next step is usually to demand mediation of the dispute. This sends a strong message to the HOA that the homeowner means business and intends to assert his or her rights in the matter. HOAs expect this because pre-litigation is required by California law prior to filing a lawsuit against the HOA in California concerning enforcement of CC&Rs (which is almost always what HOA litigation is about). California Civil Code Section 5930 provides:
“An association or a member may not file an enforcement action in Superior Court unless the parties have endeavored to submit their dispute to alternative dispute resolution…”
[Cal. Civil Code Section 5930].
Alternative Dispute Resolution of this type is generally referred to as mediation. Mediation is an extremely effective process in which both parties, usually represented by counsel, submit their side to the dispute to a neutral, trained mediator, usually a retired Superior Court Judge. In our experience far more than 50% of the disputes are resolved and settled at that stage, for a relatively nominal cost to all concerned, normally a few thousand dollars. While not negligible, this cost is wildly lower than proceeding in Superior Court from the onset. A typical mediation is around 4 hours in length, and if successful the parties enter into a written settlement agreement resolving the dispute.
3. Proceed to litigation if necessary. In particularly contentious cases it may be necessary to proceed to litigation after mediation has failed. ln HOA litigation, Civil Code Section 5975 provides that the prevailing party is entitled to recover its attorney’s fees. [See also Salehi v. Surfside III Condominium Owners Assn. (2011) 200 Cal. App. 4th 1146, 1152]. Never forget that this provision makes HOA litigation particularly hazardous, since it is a rare kind of litigation in which there is a “loser pays” provision. Incidentally, most CC&Rs also provide for this. Nonetheless sometimes litigation is the only way for a homeowner to protect his or her rights and property, and at least in a meritorious case there is the prospect of recovering attorney’s fees when the litigation concludes if the case does not settle out of court.
Proceeding in litigation is a subject that merits more than one Blog article all by itself. Usually these cases settle out of court before trial. Sometimes not.
If you are involved in a dispute with an HOA, Buffington Law Firm invites you to contact us for a Free Legal Consultation. All consultations are with an experienced HOA litigation attorney and are fully protected by the attorney-client privilege.