In addition to fines and suspension of privileges (see Rules Enforcement Menu), CC&Rs can be enforced through arbitration (see Dispute Resolution Menu) or by filing a lawsuit in superior court (see Litigation Menu) for breach of CC&Rs.
Breach of CC&Rs not Breach of Contract. CC&Rs are equitable servitudes and not a contract. An "equitable servitude" creates an obligation or encumbrance on land, enforceable in equity. Once recorded it runs with the land and continues to burden/benefit successor owners of the land and is enforceable without resorting to a breach of contract cause of action. (Franklin v. Marie Antoinette.) Attorneys filing actions to enforce the CC&Rs often make the mistake of suing for breach of contract instead of breach of CC&Rs. A breach of contract action is not appropriate because the formation of the CC&Rs did not involve (i) negotiation over the restrictions and duties imposed on owners, (ii) no offer and acceptance, (iii) no agreement regarding respective rights and duties (iv) no promise to perform, and (v) no valuable consideration exchanged. Nor can it be argued that CC&Rs are contracts of adhesion:
[A] major distinction between the typical adhesion contract and CC&R's is that, once the homeowners have made their purchases, they ordinarily have the collective power to amend the CC&R's to suit their changing needs. (Civ. Code, § 1355.) This is because the CC&R's, unlike most contracts, establish a system of governance. (Villa Milano Homeowners Assn. v. Il Davorge (2000) 84 Cal.App.4th 819, 827.)
SOL and Remedies. The statute of limitations for a breach of contract is four (4) years (Code Civ. Proc. §337) and the remedy is generally limited to money damages. The statute of limitations for breach of a CC&Rs is five (5) years (Code Civ. Proc. §336(b); Pacific Hills HOA v. Prun) and the remedy is injunctive relief. In addition, enforcement of CC&Rs is subject to equitable defenses such as laches, waiver and unclean hands.
Breach of Contract. 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 not important. 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]; see also Williams v. Beechnut Nutrition Corp.(1986) 185 Cal.App.3d 135, at fn.3, quoting Parnham.) The court in Williams reasoned, in addressing a demurrer, 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:
[C]ourts have described recorded declarations as contracts. (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&R's as contract between developer and homeowners 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, was applicable to CC&R's of homeowners association]; see also Franklin v. Marie Antoinette Condominium Owners Assn. (1993) 19 Cal.App.4th 824, 828, 833 [accepting parties' assumption that CC&R's formed a contract between condominium owners and owners association].) (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (2012) 55 Cal.4th 223, 240.)
Attorney's Fees. Earlier cases construing the CC&Rs as a contract sought attorney's fees under Civil Code §1717 (see Deane Gardenhome Assn. v. Denktas). Some attorneys seek fees under both Civil Code §1717 and Civil Code §5975. (Martin v. Bridgeport Community Assn. [fees sought under both but apparently awarded only under predecessor to Civ. Code §5975].) The court in Farber v. Bay View Terrace offered some guidance:
The court [in Salawy v. Ocean Towers] held fees were not recoverable because the action was based on a breach of promise, not the governing documents. (Salawy, at p. 671.) Here, the essence of Farber's claim is that the CC&R's place the obligation to fix Stiffler's roof on the Association, so she cannot be liable for the cost. There is no promise here, only an obligation she finds in the CC&R's. That is an action to enforce the CC&R's, whether framed in terms of Farber's rights against the Association or Stiffler's.” (Farber v. Bay View Terrace; italics in text.)
Who Can Enforce. Associations and homeowners both have the right to enforce the CC&Rs. See "Legal Standing."
Enforceability. CC&Rs have a presumption of validity and are enforceable unless found unreasonable.
Enforcement Discretion. Associations have an obligation to enforce their governing documents. However, boards have a certain amount of discretion when it comes to enforcement decisions related to CC&R violations. See "Duty to Enforce."
NOTE: Putting an apostrophe in "CC&R's" is improper. An apostrophe followed by an "s" signifies a contraction such as "That's my car" or the possessive form of a word such as "Henry's car." CC&Rs are neither possessive nor a contraction; it is an abbreviation for Covenants, Conditions and Restrictions. Accordingly, the proper convention is CC&Rs. For more information, see "Proper Terminology."
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