CC&R’s, or Covenants, Conditions and Restrictions, are legal limits of usage that can be placed on a piece of property. Ordinarily when we think of CC&R’s we think of a condo complex, but believe it or not, some cities have homes associations. When you are purchasing a property in California, you will receive a Transfer Disclosure Statement(TDS) from the seller of the property and one of the questions on the TDS is, “Is there a Homeowners’ Association which has any authority over the subject property?” and another is, “Are there CC&R’s or other deed restrictions or obligations?” When the buyer sees on the TDS that the seller has said yes to these questions, he should request that the title company provide a copy of the CC&R’s with the preliminary title report.
California Law allows that either the association or an owner in a common interest development may file a lawsuit asking the court to enforce the CC&R’s. The law currently requires, with some exceptions, that either the owner or the association must offer to engage in some form of alternative dispute resolution process before filing a lawsuit. You may wish to consult wth an attorney who specializes in this type of law if you are faced with or contemplating an enforcement matter.
When the rules are broken, penalties might include fines, forced compliance, or a lawsuit by the association. For example, if an owner attempts to sneak in a large dog into a condominium unit despite a rule specifying a maximum weight for pets, the owner may be forced to get rid of the dog as well as pay fines or face a lawsuit if necessary.
In Citizens for Covenant Compliance vs. Jared A. Anderson, the California Supreme Court concluded that recorded CC&R’s are enforceable even when they are not mentioned in a purchaser’s deed to the property. As long as the CC&R’s are recorded prior to the execution of a purchase agreement, they are enforceable, even if a misdrafted deed fails to mention them.
I would like to share one of my recent experiences with CC&R’s of a condominium association. I was showing townhouses in a popular development in Rolling Hills Estates. My clients wanted to purchase a townhouse and rent it out for a couple of years and then retire there. We found a unit that they liked and wanted to make an offer on. Lo and behold, the CC&R’s required that the owners could not rent out their unit until they had lived there for at least three years. Well, of course, that sale did not occur.
Another thing to be aware of is that some of the CC&R’s were written in the 1920’s or 1930’s and some of the restrictions are now illegal. One of the cities in which I sell property has CC&R’s and a Homes Association. The restrictions were composed when the property was initially developed and because the developers did not want little cabins or mobile homes on the lots they were selling, there are restrictions about what can and cannot be built. There are different architectural zones with height restrictions, lot coverage restrictions, and so on. The CC&R’s also state that if the owner violated the building directives, the Homes Association can require that the owner tear down the structure and if the owner did not, the Association would tear it down and charge the owner for the cost of demolition. The Association no longer does this but it is still in the CC&R’s. I recommend that people who are purchasing in that city pay a visit to the Homes Association for clarification about any of the restrictions they may have questions about.
The upside of CC&R’s and the Homes Association is that no weird construction or unsightly exteriors, like bright neon paint and zero-lot-line structures, are allowed. This city is beautiful and property values are the most stable in the Palos Verdes area.
