by Janell M. Bogue

Recently in San Diego County, an association of residents of two subdivisions (“Association”) sued the developer that retained control over the architectural committees responsible for enforcing the community’s CC&Rs. Property Owners of Whispering Palms, Inc. v. Newport Pacific, Inc. (2005) 132 Cal.App.4th 666.

The subdivisions were standard, which means that they did not have any areas of common ownership. The Association became dissatisfied with the enforcement of the CC&Rs and wanted the developer to relinquish control over the committees’ membership, but the developer declined. Next, the Association tried to amend the CC&Rs and the bylaws of the subdivision to state that only residents of the subdivision could be members of the architectural committees, but the developer said that the revisions were not validly adopted. Finally, the Association sued and asserted that the Developer’s ability to control the CC&Rs was limited by the requirements of California Code of Regulations, title 10, section 2792.28, which states:

(b) The subdivider may appoint all of the original members of the Architectural Control Committee and all replacements until the first anniversary of the issuance of the original public report for the first (or only) phase of the subdivision. The subdivider may reserve to himself the power to appoint a majority of the members of the Committee until 90% of all the subdivision interests in the overall development have been sold or until the fifth anniversary date of the original issuance of the final public report for the first (or only) phase of the subdivision, whichever first occurs.

(c) After one year from the date of issuance of the original public report for the first (or only) phase of the subdivision, the governing body of the Association shall have the power to appoint one member to the Architectural Control Committee until 90% of all of the subdivision interests in the overall development have been sold or until the fifth anniversary date of the original issuance of the final public report for the first (or only) phase of the subdivision, whichever first occurs. Thereafter the governing body of the Association shall have the power to appoint all of the members of the Architectural Control Committee.

The court did not agree with the Association, and found that the section was inapplicable to standard subdivisions. It found that section 2792.28 was an enabling section for the Subdivided Lands Act (Bus. & Prof. Code, §§11000-11200) which requires specific disclosures about both standard and common interest subdivisions, though there are more detailed requirements for common interest subdivisions. One of these requirements is that the Real Estate Commissioner must find that the governing documents for common interest developments are in conformance with applicable standards discussed elsewhere, including section 2792.28. The court held that although the text of the section did not say it specifically applied only to common interest subdivisions, when viewed in the context of the statutory scheme the limitation to common interest subdivisions is clear. Though the Association asked the court to extend the section’s protections to standard subdivisions, the court said that it “decline[ed] the Association’s invitation to interpret the Commissioner’s regulations to say something they do not.” Thus, in this case, the developer was able to keep control over the architectural committees, regardless of the wishes of the residents.

Janell M. Bogue is a law clerk with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.