QUESTION: Our board wants to eliminate a tennis court. It needs a lot of maintenance and hardly anyone uses it any more. One of our homeowners said it was illegal to eliminate the court since that was why he bought in our association. Can the board eliminate the court? Does it need membership approval?
ANSWER: I am not aware of any statute or case law in California that addresses this issue. I believe the board does have the authority to eliminate the tennis court provided it follows the Business Judgment Rule (a good faith decision made in the best interests of the association after due diligence). There is a case out of the New Hampshire Supreme court that addresses this issue. Even though the case is not determinative in California, it gives an idea how our courts might decide a similar case.
New Hampshire Decision. A homeowners association was sued by some of its unit owners because the board decided to close a ski lift. The court concluded that:
...an association's power should be interpreted broadly, the association, through its appropriate governing body, is entitled to exercise all powers of the community except those reserved to the members. [internal quotes omitted] (Schaefer vs. Eastman Community Association (N.H. 2003) 836 A.2d 752, 756.)
The court reasoned that,
This rule preserves the concept of delegated management and carries out the expectations of property owners who purchased property subject to, and with notice of, the association's governing instruments. Moreover, the rights of property owners are safeguarded by the terms of the governing instruments and through their power to remove or replace the board members through the election process. (Id.)
Accordingly, the court upheld the association's decision to close the ski lift. California courts would likely render a similar decision for the same reasons.
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