Legal Updates

California Supreme Court released its opinion in Villa De Las Palmas

On June 14, 2004, the California Supreme Court released its opinion in Villa De Las Palmas Homeowners Association v. Terifaj, holding that restrictions in amended CC&Rs are binding on all homeowners and entitled to the same judicial deference given restrictions in a development's original CC&Rs. Margaret G. Wangler and Peter E. Racobs of Fiore, Racobs & Powers represented the homeowners association before the high court. The Court's holding in Villa De Las Palmas follows its earlier opinion in Nahrstedt v. Lakeside Village Condominium Association (1994) 8 Cal.4th 361, where the Court interpreted Civil Code Section 1354(a), part of the Davis-Stirling Common Interest Development Act ("Act"), to mean that the covenants and restrictions in the CC&Rs are enforceable equitable servitudes unless they are arbitrary, violate public policy, or impose a burden on the use of the affected property that outweighs any benefit. Significantly, the Court has now addressed the enforceability of covenants and restrictions added to CC&Rs after an owner has purchased an interest in the development.

Villa De Las Palmas is located in Palm Springs and was constructed in 1962. The Association had a long standing, unrecorded written rule against pets. The defendant, Paula Terifaj, knew about the no pets rule when she purchased, but brought her dog to the development anyway, despite the Association's repeated requests to comply with the rule.

In August 1999, the Association initiated a lawsuit to enforce the rule against pets. After the trial court denied the Association's motion for a preliminary injunction, the Association's members voted to adopt the Amended and Restated Declaration of Covenants, Conditions and Restrictions ("Amended Declaration"), which included a restriction prohibiting all pets and animals. The Association amended the CC&Rs under Section 1355(b) of the Act, which permits amendments where the CC&Rs are silent regarding amendments.

Following a court trial, the Superior Court issued a permanent injunction prohibiting the defendant from bring any animals into the property. The Court also awarded the Association $15,000 in attorneys' fees. Terifaj appealed to the California Court of Appeal. The Court of Appeal affirmed the trial court's decision, and the Supreme Court then granted Terifaj's petition for review.

In its decision, the Supreme Court held that under the plain language of Civil Code Section 1355(b), an amendment of the CC&Rs is enforceable against all homeowners, no matter when a homeowner purchased his or her interest. Citing its decision in Nahrstedt, the Court noted that CC&Rs must be uniformly applied for the benefit and burden of all, and that "this requirement would be severely undermined if only one segment of the condominium development were bound by the restriction." Further, "it would delay the benefit of the restriction or the amelioration of the harm addressed by the restriction until every current homeowner opposed to the restriction sold his or her interest. This would undermine the stability of the community, rather than promote stability as covenants and restrictions are intended to do."

The Court also upheld the trial court's award of attorneys' fees to the homeowners association.

Under Villa De Las Palmas, homeowners associations and their members may amend their CC&Rs to address new issues or to conform to changing needs in their communities, confident that the amendments will be enforceable against all owners, under the same standard as the Court adopted in Nahrstedt.