Are CC&Rs as adhesion contracts good public policy?
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COMMENTS: CAPGH believes that one of the most serious problems with the homeowner association model/theory of governing planned community’s lies in the interpretation by the courts that the CC&Rs/Declaration is a binding contract between the homeowner and the HOA. It’s this opinion that the CC&Rs are a private contract that allows for abuse by rogue boards and the denial of civil liberties by all HOAs. This opinion permits them to be viewed as renegade communities in the sense that they are allowed to operate and are protected by the state, while the state chooses not to enforce any of its laws for the homeowners.
CAPGH further believes that this opinion of CC&Rs as a contract needs to be revisited and this contract declared null and void. There are 2 principle factors for this view:
1. The sale of HOAs are the result of questionable marketing techniques whereby the complete truth concerning the effect on a homeowner’s fundamental rights are deliberately hidden from the purchaser, thereby violating the “meeting of the minds” condition for a bona fide contract, and
2. The opinion by the courts that not only are CC&Rs a contract, it is an adhesion contract whereby the buyer has no say in the terms and conditions of the operation of the HOA. (Since it is a mandatory contract between an individual homeowner and the HOA, any requirements for the approval by other HOA members in order to modify this contract creates an illusory contract). Some have argued that this interpretation of an adhesion contract is unconscionable and against good public policy.
This report deals with item (2) and consists of a condensation of a California State Appeals decision that identifies these terms as well as the application of these terms. The appellate opinions have broad and widespread application to many areas of the commonly used CC&Rs provisions. While the contract does not involve the CID as a party, the claims by the homeowners can be used against repressive CC&Rs and abusive boards of directors. The Agreement being discussed in the case is the purchase contract for the homes.
This report is provided by CAPGH to help other homeowners and homeowner rights advocates better understand what can be accomplished in the courts, because CAI, the CID/HOA and the state government will not tell you these important aspects of how to stand up for your rights.
George K. Staropoli
Founder, CAPGH
Sept 2002