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Action Against Association. Although decisions of the board are granted deference under the business judgment rule, deference is accorded only if the association acts upon reasonable investigation in good faith with regard for the best interests of the association and its members. Associations have a duty to enforce their CC&Rs; when they fail or refuse to enforce its CC&Rs, members can sue the association for damages and compel it to enforce the covenants. (Affan v. Portofino Cove: the board failed to investigate and take action to fix a sewer line; Telford v. Sagewood HOA: a board approved a construction project that violated the association's architectural guidelines and then failed to monitor the project they approved.)

Loss of Right to Enforce. If a board fails or refuses to enforce a restriction, the association can lose its right to enforce the restriction.

  1. Laches is based on the theory that equity aids the vigilant and not those who procrastinate when it comes to exercising their rights. If a person is slow to assert a right or claim such that the lapse of time harms the other party, the person may lose that right. "The defense of laches requires unreasonable delay plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from the delay." (Pacific Hills HOA v. Prun.)
  2. Waiver is the knowing, intentional relinquishment or abandonment of a known right or privilege. (Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1320.) “The right to enforce a restrictive covenant may be deemed generally waived when . . . ‘substantially all of the landowners have acquiesced in a violation so as to indicate an abandonment.’ ” (Alfaro v. Community Housing Improvement System & Planning Ass'n., Inc. (2009) 171 Cal.App.4th 1356, 1380.) However, failure to enforce one or even a few violations is not sufficient to deem a restriction unenforceable. (Kapner v. Meadowlark Ranch Ass 'n (2004) 11 6 Cal.App.4th 1182, 1190.)
  3. Estoppel may be found where the party to be estopped has by false language or conduct led another to do that which he or she would not otherwise have done and as a result thereof that he or she has suffered injury. (Steinhart v. County of Los Angeles (2010) 47 Cal.4th 1298, 1315.) Thus, “the party asserting [estoppel] must be ignorant of the true facts and must reasonably rely on the other party’s conduct to his detriment.” (Alfaro v. Community Housing Improvement System & Planning Ass'n., Inc. (2009) 171 Cal.App.4th 1356, 1381.)
  4. Statute of Limitations
    1. CC&R violation: 5 years from the time the board discovers the violation or, through the exercise of reasonable diligence, should have discovered the violation. (Code Civ. Proc. § 336(b); Pacific Hills HOA v. Prun.) 
    2. Breach of contract, the SOL is 4 years (Code Civ. Proc. § 337);
    3. Breach of fiduciary duty it is 3 years from the discovery of the wrongful act (Smith v. Superior Court);
    4. To challenge election results is 1 year.
    5. Construction defects varies depending on the particular defect.
    6.  Property damage is 3 years. (Code Civ.Proc. § 338.)

Recommendation: Boards have discretion in how they enforce their documents but the clear message is that boards must investigate and take some form of good faith action. They cannot sit on their hands and do nothing. Boards should consult legal counsel whenever they believe action must be taken on an issue so as to not exceed applicable statutes of limitations. Otherwise, they can lose the right to bring an action.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC