Homeowners Association Wins Challenge to Enforcing Rules

 In Litigation, Real Estate
  1. Homeowners Association Given Deference By Appellate Court In Establishing and Enforcing Its Own Rules.

    In the case of Watts vs. Oak Shores Community Association, 235 Cal App 4th 466, the Appellate Court affirmed the Superior Court decision applying judicial deference to the HOA decisions.

    In this case, a group of property owners (“Owners”) filed a lawsuit challenging the HOA’s regulations and fees that were adopted by the HOA as they relate to short term vacation rentals. Oak Shores consists of 851 homes. The majority of the homes are vacation homes in San Luis Obispo County. Only 20% of the homes are occupied on a full time basis. 66 of the absentee homeowners rent their homes to short term vacation renters.

    The Owners filed a lawsuit complaining that the association violated their rights in establishing rules in the form of revisions to the CC&Rs that required a minimum 7 days rental; an annual fee of $325.00 for those who rent their homes; rules limiting the number of cars, boats and other water craft that are allowed into the association by the renters; and imposing other fees such as garbage collection fees, boat and water craft fees, etc.

    The HOA filed a Cross Complaint seeking declaratory relief to enforce the revised CC&Rs. The association also presented expert testimony in the Superior Court that explained the detriment caused to the HOA by having these renters and the additional costs imposed to the HOA because of the renters and their guests.

    The trial court found for the HOA finding that the amended CC&Rs were reasonable and valid. The HOA was also awarded attorneys fees in excess of $1.1 million dollars against the Owners that sued the HOA.

    The Appellate Court not only affirmed the trial court’s decision, but also affirmed the large attorneys fees award against the Owners that sued.


Comment: Comment: Anytime I receive a phone call from a person who lives in a community association who wants to inquire about suing the HOA the first thing I always let them know is that if you lose you will pay their attorneys fees which generally are substantial. This case just points out the risk one takes as courts generally give deference to the governing elected officials of the HOA and allow them to exercise their business judgment. Courts are reluctant to substitute their decision as to how they would have decided as opposed to the majority of the board. If, in fact, the HOA does not follow the CC&Rs or is arbitrary or capricious then that is a totally different matter.

About the Author

  • Scott Souders
    Scott Souders Attorney & Author


Scott Souders is a real estate attorney who has practiced real estate law in excess of 42 years in Southern California. The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.

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