CC&Rs – To Update or Not
Published in the CAI-CIC Channels of Communication First Quarter 2013 Magazine By Ted J. Schneider, Esq. As HOA attorneys, we are often asked by homeowners and managers alike: "Should we now update our CC&Rs"? Given that most of the CC&Rs we see were written either while Nixon was President, the Berlin Wall was still standing, before there were cell phones, or when the Olsen twins were still in diapers, the answer should appear obvious. If you look at your existing CC&Rs, you will find a 60, 70 or 90 page instrument which is a model of ambiguity, obfuscation, flawed grammar and paragraph after paragraph of meaningless and legally irrelevant words. Perhaps your CC&Rs contain a requirement such as this one: "No unit may house more than 1 dog or 1 cat or both at any one time." Or, perhaps this nod to incredulity: "A unit may not be used for any illegal, illicit or immoral purposes without the consent of the Board of Directors". Perhaps the drafter of this provision wasn’t sure if in the future, the association would become a monastery or a bordello and believed that flexibility was the key. One provision we recently reviewed obligated the owner to be "strictly liable and responsible for the unruly and obnoxious behavior of their pets, including dogs, cats and fish." We certainly were glad to see that someone finally took a stand against those pesky annoying fish that plague our associations. One of our favorite CC&R statements is the one that limits the parking spaces to, "….owners, guests, tenants, invitees, and other persons authorized, including those who are not authorized but would be authorized if someone with authority would have authorized such person if they knew of their intent to park in a space reserved for authorized persons. Trespassers or those intending to cause damage or injury to persons or property on the premises, may not park in any space regardless of authorization…." You got to love lawyers. If you have read this far, keep reading because you will see something you may never see again. With respect to your CC&Rs, KEEP THEM SIMPLE! That’s right, attorneys advising you to keep things simple and easily understandable. That is not our usual style. Why say something in five words when it can be said in fifty? Most CC&Rs regurgitate the statutes as written at the time of the document’s adoption. Just as the world has dramatically changed since Richard Nixon was in the White House, so has the law pertaining to Common Interest Developments. We do not believe it necessary or even advisable to insert the terms of many of the statutes in an instrument which is very difficult to modify and which rather quickly becomes outdated. For example, many CC&Rs are bogged down by lengthy and complex financial reporting and budgeting requirements. However, these requirements are already required by the Davis-Stirling Act and explained in detail in the Civil Code, which constantly evolves. Homeowners reviewing their CC&Rs but not familiar with the statutory structure, may not realize that the section they are reading, and upon which they are relying as some authority for their position, no longer reflects the law. In our experience, it is a better practice to put as much of the governance and operational requirements in the by-laws or Rules, which generally are more easily modified than the CC&Rs. CC&Rs do have an essential function however, and its provisions should be limited to those. For example, your CC&Rs must clearly detail the respective maintenance obligations of the association and individual owners, contain provisions defining the common areas and individual units or lots, impose a covenant for the collection and imposition of assessments, grant the association the right to enforce the covenants, grant and reserve certain necessary easements, provide a mechanism for amending the CC&Rs, and detail insurance requirements. CC&Rs should contain dispute resolution procedures and establish an architectural review committee and process. In addition, CC&Rs should reflect the unique characteristics of the association and can deal with issues involving rental restrictions, parking, storage, rights and responsibilities with respect to exclusive use common areas, and FHA and other mortgagee protections. CC&Rs can lay out the distinctions between "special assessments" and "regular assessments" and other matters which should not be easily modified because of the whim of a current board. CC&Rs should be reserved for legally mandated provisions and such other guidelines that your association views as fundamental to maintaining a neat, peaceful and flourishing community. At the end of this year, the Davis-Stirling Act will undergo a major restructuring. Existing CC&Rs which attempt to recite the current law will become technically outdated on January 1, 2014. This is a good time to review your CC&Rs and consider simplifying them and making them relevant in light of the changes that have occurred in your association since the developer adopted them without the foresight of what was to come. You can create a meaningful modification that will create an instrument which will remain accurate and relevant for many years, if not decades. Remember, as with most things in life, the key is simplification…….and you heard that from a lawyer! Ted provides comprehensive legal services for community associations. Ted’s expertise in real estate, corporate law, employment law and the Davis-Stirling Act combine to provide the most effective and efficient representation of his HOA clients. He has a wealth of experience in this field and advises his clients on the challenges of association management. Ted has vast experience in amending, restating and interpreting association governing documents, including CC&Rs, bylaws, election rules and rules and regulations. He also assists his HOA clients with the enforcement of violations of association governing documents and provides collection strategies. Ted has counseled a wide array of community associations, including condominiums, planned developments, stock cooperatives, communities with common area recreational facilities, sub and master associations, age-restricted communities and senior communities and mixed-use associations.