Here’s how the law fell on these important HOA cases…
Homeowners associations must not record lis pendens on a homeowner’s property. Santa Fe Ridge Homeowners Ass’n v. Bartschi, — P. 3d —-, 2008 WL 2895897 (App. 2008).
In this case, Santa Fe Ridge Homeowners Association filed a complaint against Bartschi alleging that Bartschi had failed to maintain the landscaping on her property, failed to remove trash/debris from her front yard, and failed to remove a large crate from her lot. Santa Fe also recorded a lis pendens on Bartschi’s property a few days after it filed the Complaint should Barschi fail in the future to comply with any injunction order Santa Fe may obtain in the action. Bartschi argued that the lis pendens was premature at best and improperly recorded on her property because the lawsuit had not yet risen to an “action affecting title to real property.” It was merely an action regarding enforcement of the CC&Rs. The trial court agreed and awarded Bartschi statutory damages and other sanctions. Santa Fe appealed. The Court of Appeals affirmed the trial court’s decision, holding that “the lis pendens was simply premature.”
Homeowners associations must treat members fairly. Homeowners bear the burden of proving that the association acted unreasonably regardless of whether they are the Plaintiff or Defendant. Tierra Ranchos Homeowners Ass’n v. Kitchukov, 216 Ariz. 195, 165 P.3d 173 (App. 2007).
In this case, Tierra Ranchos Homeowners Association filed a complaint against Kitchukov and requested the court rule that its Architectural Committee properly exercised its authority to disapprove Kitchukov’s proposed garage construction and that Kitchukov improperly constructed the garage without obtaining the requisite approval. Kitchukov argued that the association argued that the association improperly denied his request to construct a detached garage. The trial court agreed and held that the association “improperly disapproved the construction of the garage in an arbitrary, unreasonable, and capricious manner.” Id. at ¶14. The association appealed, arguing that the trial court erred by not applying the business judgment rule—a rule that states courts should not second guess a board’s decisions.
The Court of Appeals rejected the association’s business judgment rule arguments and instead adopted the Restatement (Third) of Property: Servitudes approach. The Restatement imposes upon the association the duty to “treat members fairly” and the duty to “act reasonably in the exercise of its discretionary powers including rulemaking, enforcement, and design-control powers” Restatement § 6.13(1)(b), (c). Under the Restatement approach, a member challenging an action of the association bears the burden of proving that the association breached its duty. Id. at § 6.13(2). In addition, when the action is one within the association’s discretion, the member bears “the additional burden of proving that the breach has caused, or threatens to cause, injury to the member individually or to the interests of the common-interest community.”
Homeowners must abide by a CC&Rs requirement that they obtain approval before beginning construction or they may have to tear the improvements down regardless of the cost. Flying Diamond Airpark, LLC v. Meienberg, 215 Ariz. 44, 156 P.3d 1149 (App. 2007).
In this case, Meienberg met with the architectural advisory committee member, Bramhall, before he began construction. The plans presented to Bramhall were incomplete in that they did not include a measurement of the total height of the hangar and did not include the dimensions of the roof vents. After construction began, Bramhall saw the steel frame of the building and saw the roof vents lying on the ground. Bramhall informed Meienberg that, including the roof vents in the height calculation, the hangar would exceed the declaration’s 22 foot height restriction. He also told Meienberg that lower-profile vents that would not violate the restriction could be installed, and that he might be able to find a buyer for the higher-profile vents. Meienberg took the position that the vents should not have been included in the height calculation, and he continued construction. Flying Diamond sued. In the court action, Meienberg argued that the hangar did not violate the restriction, that Flying Diamond was estopped from seeking injunctive relief, and that the hardship on Meienberg in complying with an injunction would outweigh any benefit to Flying Diamond in obtaining an injunction. Flying Diamond countered, arguing Meienberg was not entitled to any equitable defenses because he did not have clean hands. The trial court concluded the hangar violated the height restriction, that Meienberg was aware of the restriction, and that the restriction was violated. It therefore concluded that Meienberg could not claim hardship or estoppel as defenses and that Flying Diamond was entitled to an injunction. Id. at ¶¶3-8. Meienberg appealed.
The Court of Appeals affirmed the trial court’s ruling, holding that “it is not error to refuse to consider relative hardships where a party is aware of a restriction and of some homeowners’ intent to enforce the restriction but nonetheless builds an offending structure.” Id. at ¶11. The court went on to say that Meienberg was deemed an “intentional wrongdoer” because he knew (record notice) of the restriction and built the offending structure anyways after being told by the Association to cease construction. Id. at ¶15.
