June 2010 RCDs

By  Editorial Staff • Jun 2nd, 2010 • Category: June 2010 Journal, Recent Case Decisions

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HOA demand for arbitration must conform to clause in CC&Rs to enforce a refusal.

Reported by: Alex Gomory

A homeowners association’s (HOA) covenants, conditions and restrictions (CC&Rs) stated that all disputes between a homeowner and the HOA must be resolved through a three-person arbitration process in which both parties select an arbitrator, and the two chosen arbitrators then select a third arbitrator. The HOA disputed an owner’s behavior, and demanded the owner enter arbitration before a single arbitrator selected by the HOA. The owner refused, and the HOA sought to compel arbitration, claiming the owner was required to comply with their demand for arbitration since arbitration was required to resolve disputes under the CC&Rs. The owner claimed he had not violated the CC&Rs by refusing to arbitrate since the HOA’s demand did not conform to the three-person arbitration requirement. A California court of appeals held the HOA could not compel arbitration since the HOA’s demand for arbitration had not been stated in the form required by the CC&Rs. [Mansouri v. The Superior Court of Placer County (January, 28 2010) 181 CA4th 633]

Tax Assessment

Improvement district assessment allocated based on benefits each lot

Reported by: Alex Gomory

A local agency commissioned an improvement project for the benefit of property owners in a specific district. To allocate costs to owners as assessments to pay for the project, the agency divided the district into “benefit zones,” based on variations in the anticipated cost of implementing the project in the different areas. The benefit zones were then allocated a portion of the total cost based on each zone’s pro rata share of the benefits. The local agency then imposed a property benefit assessment on each individual lot within each benefit zone. Assessment amounts for individual lots varied from zone to zone depending on how much an individual lot would benefit from the allocation of costs with that zone. Owners claimed the agency’s practice of assessing different rates for individuals in different benefit zones rendered the assessment invalid since it required neighboring properties to pay disparate amounts for the same expected benefits. The local agency claimed assessing each property for its share of the total cost of improvement at different rates was proper since the assessment had been assigned to specific zones in proportion to that zone’s actual cost of implementing the project. A California court of appeals held the local agency’s assessment first by zones then by lots within the improvement district was invalid since the allocation of costs among property owners was not based solely upon each lot’s expected benefit from the entire project. [Town of Tiburon v. Bonander (December 31, 2009) 180 CA4th 1057]