Declaration of Covenants, Conditions and Restrictions
A "Declaration of Covenants, Conditions and Restrictions" is referred to as "CC&Rs" or as a "Declaration." It is a recorded document that contains a legal description of the development and a statement that it is a community apartment project, condominium project, planned development, or stock cooperative. The declaration must additionally set forth the name of the association and the restrictions on the use or enjoyment of property. (Civ. Code § 4250.) Unlike bylaws, which address the governance of an association, CC&Rs describe property rights and obligations of the membership, such as (i) restrictions on the use of property, (ii) member and association maintenance duties, (iii) enforcement powers, (iv) lender protection provisions, (v) assessments obligations and lien/collection rights, (vi) duty to insure, and (vii) dispute resolution and attorneys' fees provisions.
"Covenants" are promises. In effect, a buyer in a common interest development promises to abide by the governing documents and pay his/her assessments. The buyer does not sign an agreement making a promise to abide by the documents; the promise is imposed on the buyer as an equitable servitude that runs with the property and is fully enforceable against the property owner. A positive covenant is a promise to do something, and a restrictive covenant is a promise not to do something.
"Conditions" in a contract or agreement can suspend, rescind, or modify an obligation. In other words, an event must take place before a party to a contract must perform its obligation. There are very few, if any, real conditions in a set of CC&Rs. Arguably, paying assessments is a condition of keeping one's house or condominium. Failure to pay them can result in losing ownership of the house or condo.
"Restrictions" are limitations imposed on owners on the use of their property. For example, restrictive covenants often limit the number and kinds of animals an owner may keep, the alterations they can make to their property, the number of vehicles they can park, etc. The purpose of the restrictions is to maintain property values and order among neighbors. They also confer rights on owners. For example, restrictions on the height of trees protect the views of owners. (Ekstrom v. Marquesa.) Other rights conferred include rights of ingress and egress and easements.
Categories of Restrictions. There are two categories of restrictions--those found in the CC&Rs (equitable servitudes) and those later adopted by an association's board of directors (rules & regulations). Restrictions found in the CC&Rs are "clothed with a very strong presumption of validity which arises from the fact that each individual unit owner purchases his unit knowing of and accepting the restrictions to be imposed," while rules and regulations are subjected to a reasonableness analysis. (Villa de Las Palmas v. Terifaj.)
Use Rights. Another aspect of CC&Rs is the creation of "use rights" in the negative. In other words, restrictions such as setback requirements, tree height limitations, open areas, etc., protect rights to views and privacy that benefit owners. Although not binding, a lower court decision agreed that CC&Rs conferred rights via the restrictions. (Pasternack vs. Fidelity National Title Insurance Company, Nov. 21, 2017, Case No: 30-2014-00742249-CU-IC-CJC.)
CC&Rs Are Equitable Servitudes
Even though the courts sometimes treat CC&Rs as contracts, they are not. They are equitable servitudes. An "equitable servitude" creates an obligation or encumbrance on land, enforceable in equity. Because many attorneys and judges fail to understand the difference between breach of contract and breach of CC&Rs, there has been a blurring of the difference. An argument can be made that the cause of action labels are unimportant. It is the substantive allegations that matter. "It is not what a paper is named, but what it is that fixes its character." (Parnham v. Parnham (1939) 32 Cal. App.2d 93, 96 [89 P.2d 189]; also Williams v. Beechnut Nutrition Corp.(1986) 185 Cal.App.3d 135, at fn.3, quoting Parnham.) In addressing a demurrer, the court in Williams reasoned that it does not matter what one labels a cause of action, and in that case, the plaintiff did not even label them. It's the substantive allegations that matter. Courts have characterized CC&Rs as a contract for limited purposes in the following cases:
CC&Rs as Contracts. Courts sometimes describe CC&Rs as contracts for limited purposes. (E.g., Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 512-513 [CC&R's as contract between condominium owners association and unit owner]; Villa Milano, supra, 84 Cal.App.4th at pp. 824-826 [CC&Rs as contract between developer and community association]; see Barrett v. Dawson (1998) 61 Cal.App.4th 1048, 1054 [right of neighbors to enforce a recorded restrictive covenant limiting the neighboring property's use was "clearly contractual"]; Harbor View Hills Community Assn. v. Torley (1992) 5 Cal.App.4th 343, 346-349 [amendment to Civ. Code § 1717, which governs contractual attorney fees, applied to CC&Rs of community association]; see also Franklin v. Marie Antoinette Condominium Owners Assn. (1993) 19 Cal.App.4th 824, 828, 833 [accepting parties' assumption that CC&Rs formed a contract between condominium owners and owners association].) (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (2012) 55 Cal.4th 223, 240.)
Effective Upon Recordation. CC&Rs may be amended and restated and are effective upon recordation.
Proper Abbreviation. The appropriate way to abbreviate "Declaration of Covenants, Conditions and Restrictions" is CC&Rs, not CC&Rs. See explanation.
Enforcement. “[T]here appears no question that, under the Davis-Stirling Act, each owner of a condominium unit either has expressly consented or is deemed by law to have agreed to the terms in a recorded declaration.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Dev'l (2012) 55 Cal.4th 223, 241.) See "Enforcement of CC&Rs."
CC&Rs Presumed Reasonable
An association's CC&Rs shall be enforceable equitable servitudes unless unreasonable. (Civ. Code § 5975.) Use restrictions in a recorded declaration are afforded a "presumption of validity" and enforced unless found unreasonable under a deferential standard. (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 372, 383.) Whether CC&Rs are reasonable is determined not by reference to facts specific to the objecting homeowner but by reference to the common interest development as a whole. Restrictions contained in CC&Rs are presumed reasonable and will be enforced unless the restriction:
- Is arbitrary,
- Imposes burdens on the property that substantially outweigh the restriction's benefits to the development's residents or
- Violates a fundamental public policy. (Nahrstedt v. Lakeside Village)
CC&R provisions are presumptively valid, and the burden of proving otherwise rests on the challenging owner. (Villa De Las Palmas v. Terifaj.) Also, because CC&Rs are recorded, members are deemed to have constructive notice of the restrictions whether or not they received them in escrow or whether or not they read them.
Recordation Gives Constructive Notice
A recorded declaration of covenants, conditions, and restrictions (CC&Rs) serves as constructive notice of the restrictions contained in the document. Actual notice consists of express information of a fact. Constructive notice means notice given by the public records. With constructive notice, people are presumed to know the contents of recorded instruments.
Constructive notice is the equivalent of actual knowledge; i.e., knowledge of its contents is conclusively presumed. (Citizens for Covenant Compliance v. Anderson)
By statute, any instrument "affecting the title to ... real property may be recorded" by the "county recorder of the county in which the real property affected thereby is situated." (Gov. Code, § 27280, subd. (a); Civ. Code § 1169.) "Recording consists of copying the instrument in the record book and indexing it under the names of the parties. (See Govt. C. 27257, 27322 et seq.)" (4 Witkin, Summary of Cal. Law, supra, Real Property, § 200, p. 406.) Civil Code section 1213 provides that every "conveyance" of real property recorded as prescribed by law provides "constructive notice" of its contents to subsequent purchasers. The term "conveyance" is broadly defined to include "every instrument in writing ... by which the title to any real property may be affected ...." (Civ. Code, § 1215, italics added.) Constructive notice "is the equivalent of actual knowledge; i.e., knowledge of its contents is conclusively presumed." (4 Witkin, Summary of Cal. Law, supra, § 203, p. 408, italics in original.) CC&Rs, which affect title to real property, have long been recorded under these provisions. (See, e.g., Riley v. Bear Creek Planning Committee (1976) 17 Cal.3d 500, 504 . . .; Scaringe v. J. C. C. Enterprises, Inc., 205 Cal.App.3d at pp. 1540-1541, 1543-1544 . . .” Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th 345, 355.)
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