Homeowners Associations (“HOAs”) are associations formed, most often as non-profit corporations, to own and manage common interest developments in California. The shareholders of an HOA (or “members,” as they’re more commonly referred to) own not only their individual homes, but a piece of the common areas located throughout their development. And like all corporations in California, an HOA is considered a separate person under the law, capable of entering into contracts, suing other persons/entities, or, as this blog is intended to discuss, being sued.
So, under what circumstances might members of an HOA wish to take their HOA to court?
To answer that question, we first need to look at how HOAs are actually governed. To begin with, HOAs in California are largely governed by the Davis-Stirling Act, a series of statutes located in the Civil Code (although there are sections of other laws, such as those found in the Corporations Code, that also apply to HOAs). The Davis-Stirling Act lays out the ground rules regarding how HOAs may be formed, governed, and dissolved. In other words, all HOAs in California must abide by the Davis-Stirling Act, as well as other applicable California laws.
Each HOA in California is further governed by its own set of “governing documents,” the most important of which is the Covenants, Conditions, and Restrictions (“CC&Rs”). The CC&Rs describe not only the rights and obligations that each member owes to the other members of the HOA, but also the mutual rights and obligations between the members and the HOA itself (remember, the HOA is considered a person under the law). An HOA’s CC&Rs are, therefore, intended to address a wide scope of governance type issues ranging from the maintenance of the common areas and property use restrictions (e.g., setbacks, view rights, neighborhood “character,” architectural guidelines, etc.), to enforcement powers, the raising and spending of revenues (e.g., assessments), and dispute resolution. There are other governing documents (e.g., articles, bylaws, etc., rules & regulations, etc.), but it’s not necessary for purposes of this blog to go into too much detail about those documents.