HOA covenants and waiver of rights: enforceable contract or not?


[As a result of construction defects].  A provision of the Homeowners Association’s CC&R’s required that all disputes between it and Intergulf be decided by a general judicial reference  pursuant to Code of Civil Procedure section 638.1 [Essentially a judgment by a court appointed referee, which precludes a trial by jury. See excerpt from Court records, below.]  Intergulf moved for an order submitting the case to a judicial referee. Association opposed the order, arguing that the provision of its CC&R’s cited by Intergulf was not a contract as required by section 638 and that if it was, it was unconscionable and unenforceable.  [This is the HOA arguing against a contractual interpretation].



The court noted that “even those jurisdictions permitting predispute waiver of the right to jury trial do not uncritically endorse unregulated freedom of contract; rather, they seek to protect the constitutional right to jury trial with a number of safeguards not typical of commercial law, including  . . . restrictions on the type of contracts that may contain jury waivers, presumptions against a finding of voluntariness, inquires regarding the parties’ representation by counsel as well as relative bargaining power and sophistication, and consideration of font size and placement of waiver clause within the contract.”



Complete commentary . . .

Treo HOA v. Intergulf  opinion:  Jury trial.



Published in: on September 15, 2008 at 8:53 am  Comments (1)  

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  1. In response to a question on HOA abuse against homeowners:

    Like all things in HOA-land after 40 years of domination by CAI lawyers, all is not simple.

    A good example would be the lack of due process by an independent tribunal with the right to present and question witnesses, which is the accepted meaning of a fair hearing. A careful reading of the various state laws and CC&R provisions, the clever lawyers only say “after an opportunity to be heard”. Period. Implying, since they are all men of good will (are you laughing?), the rest would naturally follow. As we know, the lawyers quickly point to the explicit wording of the CC&Rs that is short of the accepted meaning of a fair hearing. GOTCHA!!

    Another abbreviated wording that leads to people it falsely assume a fair rule, as in court, is the access to HOA records and “contemplation of litigation.” Wrong, the discovery rule clearly allows access to normal corporate records and disallows only those items between a lawyer and client that pertain to strategy and tactics considered in the pending case. The implication is that the HOA restriction is the same as the discovery restrictions — IT IS NOT!

    A defense along these lines, and similar to the Treo case, would be ideal. Here, we also have the same issues regarding the level of judicial review — when and for what purpose can we allow a waiver of one’s rights — as raised in Treo. Is the “contract” and state laws sufficient to deny one’s right to a fair trail? In Treo, with trial by jury, the answer was NO!

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