– By Gary M. Letchinger, Esq. (originally published in October, 1997)
One issue that has been the subject of inquiry from associations this year has been the enforceability of provisions regarding basketball hoops.
We recently represented an association that sought to enforce a restriction in their Rules and Regulations regarding basketball hoops. The Rules state that only temporary basketball hoops and backboards are permitted. The Rules further require that hoops and backboards be stored at dusk.
One homeowner installed a “semi-permanent” hoop and backboard that could not be stored at dusk because it weighed 300 pounds and required three men to lift it into place. The Association demanded compliance with the Rules and served a notice requesting Alternative Dispute Resolution (“ADR”) on the homeowner.
Civil Code section 1354 requires that an Association must offer ADR prior to filing a lawsuit to enforce its governing documents, unless certain exceptions apply. When Civil Code section 1354 applies, an offer of ADR must be sent to the recalcitrant homeowner prior to commencing litigation. The offer specifies the type of ADR requested: mediation, non-binding arbitration, or binding arbitration. Mediation and non-binding arbitration offer the option to either party to pursue litigation after ADR should they be unhappy with the outcome. By contrast, binding arbitration results in a final decision that cannot be appealed and may be reduced to a court judgment for enforcement purposes.
After consideration of the options, the Association elected to offer ADR in the form of binding arbitration with a service that offers a low-cost arbitration for homeowners association disputes where the matter can be heard in one-half day. The homeowner accepted the ADR offer and the parties proceeded to arbitration a few months later.
The hearing on the matter lasted approximately three hours, and both sides had the opportunity to present witnesses, introduce documents into evidence, and argue their case. The Arbitrator issued a ruling thirty days later, in favor of the Association. The Arbitrator found that the CC&Rs allowed the Board to adopt Rules precluding permanent basketball hoops and standards. The Arbitrator further found this Owner’s “semi-permanent” hoop violated the Rule because it was not stored at dusk. Additionally, the Arbitrator awarded the Association the majority of their fees and costs pursuant to the terms of the CC&Rs.
The Association was successful in enforcing the CC&Rs at a fraction of the cost of conventional litigation. ADR proved to be a cost-effective alternative to a lawsuit for both the Association (who kept their up-front costs and fees to a minimum) and the homeowner (who ultimately will pay the majority of the costs and fees).
When should you consider binding arbitration? Each case is different, and you and your attorney should carefully weigh the pros and cons before making a decision. Generally, binding arbitration is an attractive alternative where the issues are clear-cut and the law clearly supports your position. Additionally, since there is no right to appeal, binding arbitration is appropriate only for smaller cases where losing the arbitration is an acceptable (although not desirable) alternative. Binding arbitration is well suited to matters where the greater costs associated with a lawsuit would be unacceptable.