In California, where many individuals own and/or live in planned unit developments, significant disputes have arisen in regard to the authority of the owners association to impose rules and regulations. The California Supreme Court has ruled that, in general, the courts will apply judicial deference in upholding decisions made by an owners association so long as the association’s decisions represent good faith efforts to further the purposes of the common interest development, are consistent with the development’s governing documents and comply with public policy [Lamden v. La Jolla Shores Clubdominium Homeowners Association (1999) 21 Cal.4th 249 (“Lamden”); see also, Nahrstedt v. Lakeside Village Community Condominium Association (1994) 8 Cal.4th 361]
One issue that has arisen is whether the holding in Lamden limits judicial deference to ordinary maintenance decisions. Some have argued, citing Affan Portofino Cove Homeowners Association (2010) 189 Cal.App.4th 930, a sewer line dispute, that the “Lamden” judicial deference standard only applies to ordinary maintenance decisions. Others have argued that the Lamden holding applies to most any decision by the owners association citing Dolan–King v. Rancho Santa Fe Assn. (2000) 81 Cal.App.4th 965, 979 (where the court gave deference to an association board's decision denying an owner's application for a room addition on aesthetic grounds).
This question appears to have been answered, in favor of owners associations, in Watts v. Oak Shores Community Association (2015) WL1321669 (“Watts”). In the Watts case, three owners in a large single-family residential common interest development known as Oak Shores challenged the owners association’s rules and regulations concerning short term rentals and the imposition of a wide range of fees. Oak Shores consists of 851 parcels of land. 660 parcels are developed with single family homes. Approximately 66 absentee homeowners rent their homes to short term vacation renters. The three owners challenged a rule stating that the minimum rental period is 7 days, challenged another rule which imposed an annual fee of $325 on owners who rent their
The Morrison Law Journal
March 2015
Volume X, Edition 3
As The Door Shuts Further…Court Of Appeal Rules That Owners
Association’s Rules Concerning Short Term Rentals Of Condominiums
And Imposition Of Fees Will Be Subject To Significant Judicial Deference
By: Edward F. Morrison, Jr., Esq.
Larry A. Schwartz, Esq.
1
homes, and also challenged rules concerning the number of automobiles, boats and other watercraft that renters are permitted to bring into Oak Shores as well as a mandatory garbage collection fee, boat and watercraft fees, building permit fees and property transfer fees.
The owners association filed a cross-complaint against the owners. The owners association prevailed at trial on the complaint and cross-complaint. The trial court also awarded the owners association statutory fees and costs.
On appeal (in the published portion of the opinion), the Court of Appeal ruled that the trial court had acted consistently with California law in upholding all of the regulations imposed by the owners association even though the rules only applied, in reality, to a certain segment of the ownership and went well beyond ordinary maintenance decisions. In that regard, the Court of Appeal, citing the Lamden decision, ruled that, while the owners association’s rules and regulations did not deal with ordinary maintenance decisions, the rules came well within the Lamden judicial deference standard.
The Watts case is significant in that it provides further authority for the proposition that the decisions of owners associations for common interest developments will be subject to (significant) judicial deference.
About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at www.morrisonlawgroup.com.
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