Arbitration (ADR/IDR)

Legislative & Case Law Update (2013) Now Available!

Published on: January 7, 2013 | by Steven J. Tinnelly, Esq.

hoa laws Our annual “Legislative & Case Law Update” newsletter for the year 2013 is now available in our library!

The Legislative & Case Law Update provides an overview of the new legislation and case law impacting California Homeowners Associations (“HOAs”) as we head into 2013. The new legislation includes, among other items, bills that impact Bank foreclosures, the re-organization of the Davis-Stirling Act, EV Charging Stations and fees charged by HOAs in producing certain records. The new case law includes rulings that may impact the architectural restrictions placed on the installation of solar panels, arbitration provisions for construction defect disputes, “no-cost” HOA collections contracts, election disputes and defamation claims. The Legislative & Case Law Update also addresses some new Fannie Mae and FHA regulations impacting condominium insurance and certification requirements.

Click here to read our Legislative & Case Law Update (2013)

Have questions on any of the new legislation or case law? Click here to send us a question online.

Arbitration Provisions Rise Again in Construction Defect Disputes

Published on: August 17, 2012 | by Steven J. Tinnelly, Esq.

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On August 16, 2012 the California Supreme Court announced its decision in a case that will undoubtedly impact homeowners associations (“HOAs”), developers, owners and insurers in disputes arising from construction defects. The ruling in Pinnacle Museum Tower Association v. Pinnacle Market Development (US) LLC sets the stage for construction defect disputes to be resolved via binding arbitration as opposed to jury trials.

The Court’s ruling in Pinnacle reverses the lower courts’ decisions which previously hampered the enforceability of arbitration provisions contained in recorded Declarations of Covenants, Conditions and Restrictions (“CC&Rs”). Central to the Court’s ruling was its recognition that CC&Rs constitute a contract and that there is strong public policy favoring arbitration/alternative dispute resolution over litigation–a public policy which is embodied in various Civil Code provisions pertaining to HOAs.

In reaching its conclusion, the Court reasoned that “the Davis-Stirling Act ensures that [CC&Rs]–which manifest the intent and expectations of the developer and those who take title to property in a [HOA]–will be honored and enforced unless proven unreasonable. Here, the expectation of all concerned is that construction disputes involving the developer must be resolved by the expeditious and judicially favored method of binding arbitration.” Accordingly, unless an arbitration provision contained in the CC&Rs is deemed “unreasonable,” a developer is entitled to rely on the terms of the contract and the enforcement of the arbitration provision.

The ruling in Pinnacle will create far-reaching and immediate impacts in the HOA industry. Depending on the terms of the CCRs, HOAs and owners seeking to pursue claims against the original developer may now be contractually obligated to forego litigation for binding arbitration. However, Developers wishing to compel binding arbitration may be precluded from doing so to the extent that the binding arbitration provision at issue fails to meet the “reasonableness” test implied by the Court.

Arbitration Provisions in Developer CC&Rs: NOT ENFORCEABLE?

Published on: January 17, 2011 | by Steven J. Tinnelly, Esq.

Arbitration provisions contained in a developer’s recorded CC&Rs are held not to be binding contractual terms…

Our recent blog post titled “Enforceability of Arbitration Provisions in Disputes with Developers” discussed the 2010 case of Pinnacle Museum Tower Association v. Pinnacle Market Development (US), LLC, 187 Cal.App.4th 24 (2010). In Pinnacle, the court held that binding arbitration provisions contained in a recorded declaration of covenants, conditions and restrictions (CC&Rs) are not enforceable against a Homeowners Association (HOA) in a dispute between the HOA and the developer. Pinnacle is up for review by the California Supreme Court; however, if it stands it will effectively invalidate most binding arbitration provisions contained in CC&Rs with respect to HOA Disputes with developers.

The even more recent case of Villa Vicenza Homeowners Association v. Nobel Court Development LLC, 2011 WL 72200 (2011) (Nobel) may serve to expand the holding in Pinnacle. In Nobel, the CC&Rs required condominium owners and the Association to arbitrate any claims they had against the developer. After buyers noticed defects in common areas and facilities, the Association filed suit against the developer. The developer’s motion to compel arbitration under the CC&Rs was denied by the trial court and the developer appealed.

In affirming the trial court’s decision, the appellate court in Nobel asserted that CC&Rs cannot be used as means for creating any continuing contractual rights between the developer of common interest developments and either a HOA or the individual homeowners. The ruling in Pinnacle did not go so far as to also render binding arbitration provisions invalid as to individual homeowners.

The court in Nobel concluded that CC&Rs, which are equitable servitudes under California Civil Code Section 1354, did not constitute contracts to provide non-owners, such as the developer, continuing and irrevocable benefits.

These rulings could significantly impact both a HOA’s and an individual unit owner’s ability to bring suit against the developer despite binding arbitration provisions contained in the recorded CC&Rs. The force of these ruling, however, hinge on the determination to be made by the California Supreme Court in its review of Pinnacle.

To read the full text of Nobel, click here.
To read the full text of Pinnacle, click here.

HOAs Must Strictly Adhere to Arbitration Provisions in their Governing Documents

Published on: December 27, 2010 | by Steven J. Tinnelly, Esq.

A HOA’s failure to comply with its own arbitration provisions nullified its request to compel binding arbitration…