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ARTICLE · 21 NOVEMBER 2011

Condominium Developer Cannot Enforce CC&R's After Selling All Units

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Promenade at Playa Vista Homeowners Association v. Western Pacific Housing, No. B225086 (2nd Dist. November 8, 2011).

United StatesReal Estate and Construction
Alex Merritt
Alex Merritt
Michael Wilmar
Michael Wilmar
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This month the Second District Court of Appeal concluded that the developer of a condominium complex lacked standing to enforce the declaration of covenants, conditions, and restrictions (CC&R's) after it had sold all the units in the complex.

Western Pacific Housing and Playa Capital Company (the "Developers") constructed and sold a 90-unit condominium complex in Playa Vista, California. The homeowners association ("HOA") for the complex later filed suit against the Developers, alleging construction defects. The Developers sought to enforce a binding arbitration provision in the CC&R's.

The Second District Court of Appeal upheld the trial court's rejection of a motion to compel arbitration. It reasoned that the Developers could have enforced an arbitration provision in a contract. However, CC&R's are not contracts, but rather equitable servitudes, which may only be enforced by a property owner or an HOA.

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