VILLA VICENZA HOMEOWNERS ASSOCIATION v. NOBEL COURT DEVELOPMENT, LLC
In this case the developer of a condominium project recorded a declaration of covenants, conditions and restrictions (CC&R's) which required that a homeowners association arbitrate any construction defect claim the association might have against the developer. As we explain more fully below, we find CC&R's are not an effective means of obtaining an agreement to arbitrate a homeowners association's construction defect claims against a developer.[1]
Although both federal and state law favor the enforcement of arbitration agreements, neither federal nor state law countenance imposition of arbitration where no agreement to waive judicial remedies exists. Admittedly, in other circumstances our cases and Civil Code section 1354 treat CC&R's as equitable servitudes which bind homeowners and homeowners associations with respect to claims they may have against each other. This treatment of CC&R's is not based on any determination the parties bound by them are in privity of contract with either their co-owners or a homeowners association. Rather, CC&R's are made binding in disputes between homeowners or between homeowners and a homeowners association because of their shared and continuing interest in the equitable and efficient operation of common interest developments. Here, the recorded CC&R's, standing alone, are not a contract between the developer and the homeowners association, which only came into existence after the CC&R's were recorded. Thus here there has been no showing the association entered into a binding arbitration agreement. Accordingly, the trial court did not err in denying the developers' motion to compel arbitration.
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