– By Mark T. Guithues, Esq. (originally published in Fall 2000)

One of the most important issues homeowners face while living in a common interest development is obtaining approval from the association’s board and/or architectural committee regarding installation of improvements on their property. A recent California appellate court addressed the reasonableness of recorded covenants and unrecorded “guidelines” when used in denying an owners’ architectural application.

In Dolan – King v. Rancho Santa Fe Association (June 23, 2000), the Fourth District Court of Appeal upheld the power of an architectural committee to use subjective discretion in its denial of an application for improvements to a residence. In Dolan – King, the owner submitted an architectural application for a new perimeter fence as well as “turret-style” additions to her living and family rooms. The association’s “Art Jury” (i.e., architectural committee) denied her application, finding that her proposed fence designs were inconsistent with the unrecorded architectural guidelines. The Art Jury also found that her proposed dwelling additions were not consistent with the recorded covenants, which required that the Art Jury insure a “uniform and reasonably high standard of artistic result and attractiveness, in exterior and physical appearances.” The owner appealed to the Board, which upheld the Art Jury’s decision. The owner then brought suit seeking a determination of the enforceability of the architectural guidelines and the criteria which were used by the Art Jury and Board to reject her application.

The trial court ruled in Dolan-King’s favor and held that the Art Jury’s denial of her applications constituted an abuse of power. The association appealed. On appeal, Dolan-King did not challenge the power or authority of the board, nor its duty to enforce and interpret the CC&Rs. Rather, she argued that the CC&Rs only authorized the architectural committee to make very general suggestions as to the exterior design and location of the improvements and, thus, were not empowered to reject her application. The Court rejected this argument as too narrow, explaining that “reading the [CC&Rs] as a whole, the art committee and the board are empowered to render judgments on property improvement applications based upon subjective as well as objective criteria.”

Under the guidelines of the recent California Supreme Court decision, Lamden v. La Jolla Shores Clubdominium Association, here, the Appellate Court used a “judicial deference” test to determine whether the actions of the Board in upholding the Art JuryÕs decision were proper. As applied in this case, under the “judicial deference” test, “so long as the Art Jury and Board acted within the authority granted to it by the Covenant (CC&Rs), pursuant to a reasonable investigation, in the best interests of the community and not in an arbitrary manner, [the Court] will respect and uphold their decisions.” The burden of proving that the board has not acted properly is upon the person challenging the decision of the board. Here, the court examined both the Art Jury’s reasons for denying the applications, and the BoardÕs action in upholding those decisions and determined that Dolan-King did not meet her burden of proving that the Board acted improperly.

In reaching its decision, the Dolan – King Court was persuaded by the covenant’s stated goal of uniform and high standards and its purpose of protecting the attractiveness and value of the area. Importantly, the Court addressed the subjectiveness that such decisions must take:

  Inherently subjective by their nature, (such decisions) cannot be measured and quantified. Necessarily, any such evaluation of a property owner’s proposal for compatibility with these desired environmental qualities must be done on a subjective basis, as ‘attractiveness and artistry’ are, like beauty, well within the eye of the beholder.  

Associations enact and distribute architectural standards in order to guide the owners in what will be acceptable to the association. Courts will generally find nothing unreasonable about the guidelines, finding that such guidelines should be upheld if there is:

  …nothing inherently unreasonable about the guidelines themselves. . . They are the association’s attempt to give the property owners guidance by way of detailed examples and explanation, on the criteria used by the art committee and the board in reviewing proposed improvements and exercising their broad discretion under the covenant. The boardÕs desire to give property owners more concrete examples of how the committee may exercise its broad discretion is entirely legitimate and fair, even though guidelines are not building restrictions.  

Therefore, the subjective evaluations by an architectural committee, although not measurable or quantifiable, will be upheld unless the decision can be found to be “wholly arbitrary.”

The Appellate Court addressed the question of what is an “arbitrary decision” when it comes to denying architectural guidelines and indicated that where rules have been applied against one homeowner and not against others, the decision could be deemed “arbitrary” and not upheld.

The Dolan – King decision again upholds an association’s control over its community. However, in reviewing this case, many Boards will erroneously believe that because of prior approvals or installations, portions of their restrictions are no longer viable due to the defense of selective enforcement. Please be advised that many documents contain anti-waiver language and, with proper notice to the owners, the association has authority to enforce restrictions which had not been enforced in the past. Please contact our office if you have questions with regard to this issue at your association.