“Associations and Government:  Who Is In Charge?”

Associations and Government:  Who Is In Charge?

LHC NEWSLETTER VOL. 10, VOL. 4

By: David A. Loewenthal, Esq.

Loewenthal, Hillshafer & Carter, LLP

Cities and counties generally favor new home communities to be developed as homeowner associations since certain infrastructure items, such as streets, sewers, hillsides, etc. which otherwise would typically be the responsibility of the municipality to construct, maintain, repair and replace may be delegated to the Association and its members.  As such, the municipality enjoys the benefit of new residential housing, influx of taxes and a boost to the local economy without the added expense of infrastructure items associated with it.

Notwithstanding the symbiotic relationship between Associations and the local municipality, Associations and their Board of Directors often have issues understanding and determining where the Association’s power and authority starts and stops in relationship to the local municipality.  This occurs and impacts various issues including street parking, speeding, speedbumps, stop signs, open meetings, rental restrictions, trimming of protected trees (such as Oak trees), the growing of marijuana, smoking regulations, converting garages into living space, etc.  This Article will focus on several of these issues; however, by no means is this the extent of issues where the rights and governance of the Association may bump up against the local municipality.

Preliminarily, an issue that Associations seem to always face is who is allowed to attend Association meetings.  There is a general misconception that Association meetings are open to the public and not just to members of the Association.  In essence, people consider Association meetings to be quasi-governmental and therefore should be open to the public.

Open Meeting Act

People often cite in error that Associations are governed by the Brown Act which deals with public meetings.  The Brown Act does not apply to homeowner associations which are in fact private entities wherein only their members are allowed to attend rather than the public in general.  Associations are governed by the Open Meeting Act (Civil Code section 4900, et seq.).  Civil Code section 4910 entitled “Board Action Outside of Meeting Prohibited” states as follows:  “(a) The board shall not take action on any item of business outside of a board meeting.”  Association meetings are open to the members only and not to the outside general public.

As such, though Associations may act in a quasi-governmental way including governance of the Association, it is not in fact a public governmental entity or agency and thus the Brown Act allowing the public to attend meetings does not apply.

Parking

Another area of concern deals with street parking and speeding.

The issue as to parking can manifest itself in several forms including parking on public streets, parking on private Associations streets and parking of commercial and recreational vehicles on the streets.

Often you will hear the argument presented that the Association has no control over nor rights to control parking on a public street that is contained within the confines of the Association.  In truth, the Association’s ability to control the streets (public or private) will largely be determined by what their governing documents, most notably the Declaration of Covenants, Conditions and Restrictions, set forth.

Specifically, in the case of Association private streets, i.e. where the streets are in fact owned by the Association as a lot or as a result of reciprocal easements that exist between the owners and the Association, the Association has the right to control parking on the private streets as defined in the Declaration.  As an example, if the governing documents state that recreational vehicles and commercial vehicles cannot be parked on the street then that generally would be an enforceable provision, especially if it is part of the original Declaration.  The thought being that owners purchased with notice of the parking restrictions.  The local municipality generally will not get involved in private street parking issues.

Conversely, on public streets that are within the confines of the Association, parking can still be restricted regarding commercial vehicles and recreational vehicles if the Declaration includes such prohibitions and the owners bought subject to those prohibitions.  The difference however is that such restrictions only apply to the owners, tenants and guests and may not apply to the general public overall since the streets are in fact public and the general public are not subject to the Association’s governing documents and restrictions including public street parking prohibitions.  Again, it is my opinion that such governing documents restrictions are in fact enforceable as to the owners, tenants and their guests, as long as they are reasonable, since the owners have agreed to be bound by such restrictions by purchasing the residence that is subject to the Declaration.

Civil Code section 5975 entitled “Enforcement of Governing Document” states as follows:

“(a) The covenants and restrictions in the Declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interest in the development.  Unless the Declaration states otherwise, these servitudes may be enforced by any owner of a separate interest or by the Association, or by both.  (c) In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.”

It is important to note that the Association should not issue parking tickets on public streets, but can certainly take enforcement steps as to a violating owner for their parking violations and that of their tenants and guests.

As stated above, the determination as to the enforceability of a restriction, including a parking restriction, is determined by whether the restriction is in fact reasonable.  The principal case in determining reasonableness of a restriction in an Association’s Declaration of Covenants, Conditions and Restrictions is Nahrstedt v. Lakeside Village which held “An equitable servitude will be enforced unless it violates public policy; it bears no rational relationship to the protection, preservation, operation or purpose of the affected land; or it otherwise imposes burdens on the affected land that are so disproportionate to the restriction’s beneficial effects that the restriction should not be enforced.”

Speeding

Speeding is also a significant issue that Associations are plagued with and one in which the rights of the Association to control may very well be dependent upon whether the streets are private or public.  Clearly, if anyone speeds on a public street they are subject to the laws of the city and the state and can be cited by local law enforcement.  Conversely, an Association does not have the power to issue speeding tickets on public streets located within the Association; however, it does have the right to take enforcement steps such as conducting a hearing and possible issuance of a fine.  An owner can also be responsible for the speeding or improper driving of a tenant or guest within the Association.  In the case of speeding on Association’s private streets, assuming that the Association has created “reasonable speed limits” the Association could take similar action.  Again, the key factor is whether the speed limit is reasonable based upon various factors including the street grade, turns, speed bumps, etc.

If the Association has first-hand knowledge or learns of a speeding violation, it is well within its rights to schedule a hearing for the violating owner during which time the owner would have the right to present their side of the story regarding the allegations after which the board would consider the information and evidence provided and reach a decision.

Ostensibly, if the Association’s documents so allow, the Association could suspend an owner’s rights to drive within the community assuming that the streets are private.  An Association cannot preclude an owner from accessing their home; however, if warranted, they could suspend that owner’s rights to drive their vehicle on the private streets.  Clearly, if an Association proceeded forward with such a suspension of driving on the Association’s private streets the Association must be prepared for a significant challenge and should have strong evidentiary support for taking that action.

Overall, Associations can enforce their own speed limits on private streets, as long as it is reasonable; however, it should not be considered enforcement of the Vehicle Code, but rather enforcement of the Association’s speeding policies.  As such, a violation would be a fine as opposed to a ticket.

Rental and Occupancy Restrictions

Who should control the nature, type, extent and number of occupants within any given home?  Does the Association have unilateral authority to control short-term rental issues?

Associations attempting to limit the number of occupants in a unit or the make up of occupants within a unit (such as what is a “single family”) is a touchy situation at best and one in which the Association can easily run afoul of the law.

With respect to occupancy issues, including the number of individuals who can occupy a given unit or home, the Association generally has a reasonable basis to limit occupancy since excessive occupancy in units can overburden the Association’s infrastructure and common area facilities.  Examples may include, but not be limited to, excessive number of individuals using common area facilities such as the swimming pool or gymnasium or more basic elements such as number of vehicles on the Association private streets.  In addition, in condominium developments where the Association may pay for certain utilities including water, gas and electricity, higher occupancy can create higher utility costs which is then shared amongst all unit owners.  As such, a fundamental fairness issue arises such as whether a person who is an individual should pay the same assessments as an owner who has six (6) people living in their unit.  Is it fair if assessments are equal when there is clearly a dissimilar use of common area facilities and benefits?  The case of Ritchey v. The Lender Well supports the proposition for reasonable occupancy restrictions as long as they are not discriminatory in nature.  Of course the issue of discrimination is at the heart of many occupancy restrictions.

There are various “formulas” to determine the number of persons who may occupy any given unit.  Such restrictions include the California Department of Fair Employment and Housing and Housing and Urban Development which uses a two plus one rule.  Specifically, this means that two people may occupy each bedroom plus one additional individual can occupy the unit.  As such, in a three-bedroom unit, it can be occupied by up to seven people.

There are also formulas based upon the unit square footage.

Association’s must be very careful in attempting to limit occupancy and any formula that they use must be reasonable and should attempt to mimic standards set forth by the DFEH, Housing and Urban Development, etc.  Such restrictions are fraught with issues and can lead to discrimination claims.  In addition, Associations should be wary of attempting to enforce such formulas simply because the occupants’ conditions have changed.  As an example, using the two plus one rule, if initially the owners purchased a two bedroom unit and was comprised of two parents with three children but later, after purchase, had a fourth child thus exceeding the two plus one rule, I would strongly recommend that an Association not attempt to pursue a claim of violation of the governing documents against that owner.  This is of course different than owners who purchase a residence and, at the time of purchase, are already in violation of the occupancy restrictions.

The issue of occupancy also comes in to play with respect to short-term rentals (STR).  Generally speaking, Associations are empowered to create short-term rental restrictions.  However, the short-term restrictions may be limited depending upon the specific area in which the Association is located.  As an example certain communities allow homestays.  In addition, if the Association is near the coast, the California Coastal Commission has strongly weighed in on STR’s and the Court of Appeal has ruled that short-term rental restrictions in coastal areas must be approved by the California Coastal Commission and City.

In the case of Greenfield v. Mandalay Shores, the Association did in fact adopt short-term rental restrictions.  However, after a lawsuit was filed by one of the owners regarding the restrictions, it was ultimately determined by the Court of Appeals that in a coastal zone, an Association cannot unilaterally adopt short-term rental restrictions as it is considered a “development” which would require a development permit subject to review and approval from the Coastal Commission.  As such, Associations in coastal zones which are generally deemed to be within 1000 yards of the median high tide, require approval of both the city and the Coastal Commission.  Unfortunately, the Commission generally is against short-term rental bans since they deem short-term rentals as a reasonable means for the general public to access the coast.

As such, in developing short-term rental restrictions, Associations must be aware of possible requirements of the City and Costal Commission.

Overall, there is a tight, intertwined relationship between associations and the municipalities in which they are located.  There are issues where the Association has substantial autonomy to govern itself and its members and other times wherein the local municipality will have rights to engage and be involved in an Association’s governance and operation.