Code Blues : Rules That Govern Life in Homeowners Associations Are Being Challenged in Court by Angry Owners

When you move into a homeowners association--be it a condominium, a townhome or a master-planned community--you must agree to abide by rules and regulations that restrict both what your property can look like and what you can do there.

It is these regulations--formally known as “covenants, conditions and restrictions” (CC&Rs;)--that have been the most controversial aspect of the homeowners association boom.

As associations become more popular, and particularly as more new housing includes mandatory homeowners associations, CC&Rs; are beginning to be challenged in court by homeowners angry at the restrictions on their lifestyles.

Those debating CC&Rs; usually form two camps--those who live with the restrictions without complaint because of the neat, uniform look they provide and because of their stabilizing influence on property values, and those who find the regulations Draconian and their enforcement oppressive.

The latter camp usually bolsters its argument with a list of nationally publicized horror stories involving overzealous boards of directors enforcing ridiculous regulations.

Among the most infamous cases are the Santa Ana grandmother whose condo association cited her for “kissing and doing bad things” while parked in the complex’s circular driveway one night. In reality, the woman said, she had given a friend a good-night kiss.

Then there was the New Jersey man whose homeowners association restricted residents to people 45 years of age and older. He was told to move out or get a divorce after he married a 43-year-old woman.

Perhaps the most infamous of all the CC&R; stories is the Boca Raton, Fla., homeowners association resident who had to attend a court-supervised weigh-in of his 29 1/2-pound dog. His association had a 30-pound weight limit for pets.

Many similar stories have also captured national attention, including several in which patriotic homeowners who wanted to display large American flags or post signs supporting the Gulf War were ordered to take down their displays or risk fines.

CC&Rs; can range from the obvious, such as not parking cars on your lawn and not painting your house chartreuse, to the onerous, such as how many people can spend the night in your home and what kind of swing set your children can play on.

The problem that so often arises is people who do not read the rules before they move in and may not even realize they exist until they find themselves in violation.

Political scientist Evan McKenzie, a former homeowners association attorney who has written a book about associations called “Privatopia,” criticizes CC&Rs; as archaic and written in confusing legal jargon.

“It is nonsense to state that people who live in this form of housing have agreed to live by the rules,” he said. “The majority of them are ignorant about what they are getting into when they buy property in one of these common-interest developments.

“Real estate agents have zero incentive to tell them, and really, the rules are just too complex for most people. You get 200 pages of rules and regulations and there is no way anyone could integrate that into their life. It cries out for being a doorstop.”

But other experts disagree.

“In the past five to 10 years, the CC&Rs; have gotten a lot easier to understand than many people want to admit,” said Jan Hickenbottom, a property manager and consultant who writes the “Condo Q&A;” column for The Times.

John Paul Hanna, a Bay Area attorney specializing in real estate law and an author of several books about homeowners associations, says people who live in these developments should know they must follow the rules.

“Invariably, there are rugged individualists who refuse to live by the rules, or those who are willing and financially able to challenge the rules in court,” Hanna said.

“But by and large, people do have a right to set up their own communities with their own reasonable rules provided that the distinctions they make have some rationale behind them.”

All too often, disputes over CC&Rs; wind up in court, some taking years to work their way through the legal system while they rack up fees for the attorneys who specialize in handling them.

A recent California Department of Real Estate survey found that more than 40% of homeowners association board members reported they had been threatened with lawsuits during the previous year.

Experts hope that number will be reduced because of a new law that requires two parties involved in a legal dispute in a homeowners association to try to resolve the conflict through non-binding mediation or arbitration before they file a lawsuit.

Alternative dispute resolution--a process that is cheaper and faster than a court filing--gets the two sides to sit down with an impartial third party and work out a solution to the problem.

If alternative dispute resolution is not tried before the parties come into court, a judge can award attorneys fees against the party that would not cooperate.

“It’s a start. It’s weak in that it applies narrowly to minor disputes--what we call ‘people, pets and parking’--that arise over CC&Rs; and not to more serious matters like non-payment of assessments, personal injury, construction defects, et cetera,” said Sacramento lobbyist Robyn Boyer-Stewart, a consultant who specializes in homeowners associations and publishes a legislative newsletter for association boards. “But it’s a start.”

Besides finding better ways to resolve disputes over CC&Rs;, some advocates are trying to make it easier to change restrictive or, in some cases, ridiculous rules.

Currently, CC&Rs; are put in place by the developer who builds the project and whose first priority is to protect his investment. Usually, CC&Rs; are boilerplate that is used in project after project by law firms that specialize in homeowners associations.

And they are not easy to change.

It usually takes more than 50% of the owners of a homeowners association to vote to amend the CC&Rs;, according to Boyer-Stewart, but the percentage needed varies from association to association.

In associations with a high percentage of renters, it can be difficult to get 50% of the owners to vote to change the rules. If a board shows it made a diligent effort to contact the owners and still could not get the required percentage of votes, it can petition the court, and if a judge approves it, the change can be made anyway, Boyer-Stewart said.

Aside from getting enough owners to vote on rule changes, many associations require that lenders also approve such a change, which often proves very difficult. The lender on a property can change several times, and lenders tend to automatically turn down requests to change anything, she said.

Recently, however, the law in California has changed, making it easier for the board to amend the CC&Rs; if they want to, Boyer-Stewart says.

The law now says that once the developer is no longer involved in an association, the board can delete the portion of the CC&Rs; that refer to the developer. Many times those portions--which refer to the developer’s voting rights and to the initial sales of the units--account for 90% of the CC&R; document itself. Getting rid of that language can drastically reduce the amount of paperwork that a prospective buyer will have to read in order to understand the CC&Rs.;

Everyone agrees that in a homeowners association, where housing is more dense and people live more closely together, certain rules are necessary to make life pleasant.

“The rules ought to be kept to the absolute minimum needed for people to live in peace and harmony,” attorney Hanna said.

Author McKenzie agreed. “Developing some sort of sane, reasonable rule enforcement is necessary,” he said. “But I defy anyone to prove that putting a sign in your window or having a 31-pound dog is going to jeopardize anyone’s property values.”

The key to making homeowners associations less restrictive is to temper enforcement of the CC&Rs; with common sense, McKenzie contends in his book.

“The level of rule enforcement (in a homeowners association) is far more repressive than it is elsewhere in our society. Discretion and common sense is the key to law enforcement--any police chief will tell you that,” he wrote.

Examples of intolerance, he said, are the women running home day-care operations or the telecommuters working in a home office who have run into trouble with their boards for failing to comply with a rule that bans businesses in the home.

“That kind of regulation goes back 100 years or more, and it was derived so that a house wouldn’t be turned into a gas station. Now, it’s the 1990s. We should be encouraging local, quality day care and telecommuting, not discouraging it,” he said.

Most experts believe that onerous CC&Rs; and angry disputes are beginning to dissipate as the homeowners association industry grows up and as developments begin to mature.

Experts say that the neighbor wars that make such titillating news stories are all a part of an uneasy adaptation to the homeowners association revolution.

Most Americans are not used to cooperating on little things. As we get used to living closer together both physically and communally, the rough edges are bound to be smoothed out, the experts say.

Klein is a Monrovia free-lance writer.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

How Are HOAs Run?

Most homeowners’ associations are self-governing, nonprofit corporations. The association’s board of directors is an all-volunteer group, usually of seven members, elected by the residents of the association.

Most of the newer associations are incorporated as nonprofit mutual benefit corporations. The association’s board of directors is mandated to enforce the rules spelled out by a handful of papers known as the governing documents.

Governing documents of HOAs usually include:

1--CC&RS; (Covenants, Conditions and Restrictions), which dictate the powers and duties of the corporation and regulate both the physical characteristics of the development and the lifestyles of its residents.

2--The Bylaws, which dictate the powers and duties of the board of directors (when meetings occur, how board members are elected, etc.).

3--The Articles of Incorporation, which is a one-page document that must be filed with the Secretary of State.

Sources: Community Assns. Institute; Hanna & VanAtta, attorneys at law; Assembly Select Committee on Common Interest Subdivisions.