CC&Rs Not Sufficient To Require Homeowners To Arbitrate Construction Defect Claims Against Condominium Developer
California law permits parties to waive their right to jury trial and to resolve their disputes by binding arbitration. However, such a waiver must be contained in an agreement providing actual notice to all parties. In Villa Vecenza Homeowners Association v. Nobel Court Development, LLC, the California Court of Appeal held that covenants, conditions, and restrictions (“CC&Rs”) recorded by a condominium developer prior to selling the condominium units was insufficient to require the unit owners to arbitrate construction defect claims against the developer.
The Villa Vecenza court noted that a prior appellate decision held that jury waivers in CC&Rs were not effective. The court further held that the purpose of CC&Rs was to regulate the homeowners’ relationship with each other and with the homeowners’ association. CC&Rs are not to be treated as creating irrevocable benefits to non-owners like the condominium developer. Accordingly, a developer could not impose a binding arbitration agreement on the homeowners via the project CC&Rs.