Can the HOA board prevent owners from suing?

 By Donie Vanitzian, JD

Question: Even though our homeowner association has never had a problem with architectural guidelines or rules, board directors informed owners by letter that they’re being amended. The rewritten document speaks to “modifications, additions or improvements” but fails to define or explain those terms. It also includes this new language that I believe is exculpatory to the association:

“Each homeowner and his/her authorized agent, if any, who submits requests or plans to the board of directors for approval, agrees by reason of such submittal that no action or suit of any kind will be taken against the homeowner association, board of directors, any members or their designated representative to recover any damages.”

Can the board use a guidelines or rules agreement to prevent owners from suing?

Answer: Justices in the case of Villa Milano Homeowners Assn. vs. Il Davorge made it clear that besides an absence of the weaker party’s meaningful choice, courts look for oppression and inequality of bargaining power of the parties to the contract.

Here, the inequality is notable in the association’s failure to define material terms in the architectural guidelines, thus making the agreement difficult or impossible to follow. Similarly, broad waivers of titleholder rights are largely unenforceable and may be seen as oppressive enough to violate public policy.

Guidelines are not enforceable, rules are enforceable.

 Owners cannot be bound by rules that are unclear, and these new rules appear to prevent owners from doing almost anything with their properties. The terms “modifications, additions or improvements” must each be separately defined. Do the “modifications, additions or improvements” apply to the home’s interior or exterior?

The terms “temporary” and “permanent” also must be separately defined. Are hanging pictures a temporary modification? Without clearly delineated standards set by the board, owners won’t know whether they are abiding by association rules.

Regardless of whether these proposed guidelines are a breach of the board’s duty, a failure to address their inadequacies certainly may be.

Private parties may contract for lots of things, including a limitation of possible liability or a waiver of certain rights, including bringing lawsuits. However, to protect people from making potentially dangerous mistakes, the law places limits on these types of contractual agreements by setting out certain requirements for their enforcement.

Civil Code section 1668 states: “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”

Here, the board’s proposed language, which would waive an owner’s right to sue after submitting an architectural request, is extremely broad and vague. Parameters for fair enforcement are missing, and there are no exceptions for a board’s fraudulent or intentional acts that violate public policy.

Any attempt to enact these revised or amended architectural guidelines also may be unenforceable following a determination that the new guideline language is unconscionable.

Where one party, such as the owner, is at a disadvantage in bargaining power and the other party, such as the board, is at an advantage and submits a take-it-or-leave-it agreement with unreasonable terms, courts may refuse to allow the party with the advantage to enforce terms of the agreement.

Zachary Levine, a partner at Wolk & Levine, a business and intellectual property law firm, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian, JD, P.O. Box 10490, Marina del Rey, CA 90295 or noexit@mindspring.com.

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