Common Interest Communities Flashcards
Common Interest Communities - Basic Concept
- individual units (apartments, townhouses, or freestanding homes) usually owned in fee simply by individual owners, then owners collectively organize themselves to manage common or shared facilities
Condominium
- individual units are held in fee simple + common areas + units co-owned by unit owners (w/o right of partition)
- unit owners typically required to be members of condominium association, which governs the common facilities
Cooperative
- individual units and common facilities are owned by a single entity (cooperative corporation) + individuals purchase shares in the corporation, which shares entitle them to perpetual lease of a particular unit
Association Subdivisions
- planned unit developments, especially in the suburbs, often w/ homeowners association
Covenants, Conditions and Restrictions for CICs
- developer will incorporate the plan for the common interest community in promises that are included in the deeds to the land + run w/ the land
- Provide basic framework for the management of the common interest community
- Binding on the managers of the common or shared facilities and the individual unit owners alike
Nahrstedt v Lakeside Village Condominium Association - Facts
- Nahrstedt purchases unit in Lakeside + moves in w/ three cats
- one of the CCRs of the condo complex prohibited owners from keeping cats and dogs
- N says her cats are indoor cats, never venture outside, noiseless + “created no nuisance”
- condo demands removal of the cats + fines her for every month she violates the order -> she brings suit
- California legislation said court must enforce CCRs “unless unreasonable”
Nahrstedt - Decision
- court interprets California statute as providing for a presumption of validity for such covenants
- says reasonableness of the CCR ought to be evaluated by reference to CIC as a whole, not facts specific to the individual homeowner
Nahrstedt - Standard Under California Statute
Challengers
(i) have burden of proving unreasonableness
(ii) unreasonableness can’t be shown by focusing on application to one homeowner but rather by showing that the covenant:
a) is arbitrary,
b) the burdens it imposes on effected properties so substantially outweigh the benefits of the restriction that it should not be enforced against any owner
c) violates a fundamental public policy
40 West 67th Street v. Pullman - Pullman’s actions
- Pullman acquires unit in Manhattan co-op-> complains about elderly neighbors above him playing TV + stereo late at night + running loud + illegal bookbinding business in their apt -> board finds no basis for these charges
- P launches campaign against these neighbors -> charges resulting in neighbor’s arrest (quickly released) + circulates flyers saying wife is having affair w/ Board Pres.
- makes extensive alterations to apt on weekend in violation of Board rules + w/o board approval
Pullman - Co-op’s Response
- coop calls special meeting to consider whether Pullman’s lease should be terminated on grounds of “objectionable” behavior -> requires 2/3 vote, gets over 75% (no one votes against at meeting) + Pullman doesn’t attend meeting
- P refuses to vacate -> coop brings lawsuit to cancel his shares (he’d get money back) + have him ejected
Pullman - Holding
- court applies business judgment rule (common-law doctrine by which courts exercise restraint + defer to good faith decisions made by boards of directors in business settings)
Says shareholder must show board acted:
- outside the scope of its authority
- in a way that did not legitimately further the corporate purpose
- in bad faith
Kiekel v. Four Colonies Home Association - Basic Community Setup
- Four Colonies = very large subdivision association + condo community
- declarations in the original CCRs don’t prohibit renting
- declarations can only be amended by vote of 75% of all lot owners (bylaws can be amended by majority vote of owners present at a meeting + voting)
Kiekel v. Four Colonies Home Association - Facts
- some residents unhappy that some of the units are rented - rented units have tenants who create more problems (fail to pick up dog waste + throw loud parties) + owners of the rented units tend not to maintain as well
- those unhappy w/ renters propose amendment to bylaws that would ban renting - squeaks by w/ 51% approval at meeting attended only by 55% of lot owners
Kiekel v. Four Colonies Homes Association - Procedural Posture
- Kiekels seek declaratory judgment that new anti-renting bylaws unenforceable
- HOA countersues - seeks injunction against further renting by the Kiekels
Kiekel v. Four Colonies Homes Association - Decision
- Kiekels win on both counts - court interprets declaration against a background rule that disfavors restraints on ownership - declaration sets forth owner’s basic property rights + by-laws set forth enforcement + procedures
- cross complaint for injunctive relief against Kiekels denied
