Many HOA disputes originate from a board’s decision and how a decision may impact a particular homeowner. The CC&Rs authorize Boards to make decisions that will benefit the association. While an HOA cannot enforce a rule that is arbitrary or serves no benefit to the HOA, California Courts give a wide berth to an HOA Board’s authority to make a business decision and will often not disturb the decision as long as it benefits the HOA and is not arbitrary, discriminatory or otherwise illegal.
Items such as external unit décor, paint color, parking, architectural renovations and budgetary decisions (to name a few) will be within the Board’s sound discretion. Homeowners who are on the adverse end of a particular Board decision, have every right and even a duty to scrutinize the decision, but homeowners should be mindful of the fact that Courts will allow Boards to make decisions whether they agree with the decision or not and without concern about how the decision affects the particular homeowner challenging the same.
This is not to say that a Board is free to make any decision it wants. The Supreme Court in California articulated a formulation that courts can apply in deciding whether a particular Board decision is lawful and within its sound discretion. The Supreme Court in Lamden v. La Jolla Shores Clubdominium Homeowners Assn., (1999) 21 Cal. 4th 249 held as follows:
“The formulation we have articulated affords homeowners, community associations, courts and advocates a clear standard for judicial review of discretionary economic decisions by community association boards, mandating a degree of deference to the latter’s business judgments sufficient to discourage meritless litigation, yet at the same time without either eviscerating the long-established duty to guard against unreasonable risks to residents’ personal safety owed by associations that “function as a landlord in maintaining the common areas”…or modifying the enforceability of a common interest development’s CC & R’s.
Common sense suggests that judicial deference in such cases as this is appropriate, in view of the relative competence, over that of courts, possessed by owners and directors of common interest developments to make the detailed and peculiar economic decisions necessary in the maintenance of those developments. A deferential standard will, by minimizing the likelihood of unproductive litigation over their governing associations’ discretionary economic decisions, foster stability, certainty and predictability in the governance and management of common interest developments. Beneficial corollaries include enhancement of the incentives for essential voluntary owner participation in common interest development governance and conservation of scarce judicial resources. Id at 251-52.”
If you have a question regarding your HOA Board’s decision which impacts you or your property, contact one of our HOA Dispute Attorneys today for a free consultation and case evaluation.