All too often judges make decisions on HOA cases, making new law and new contract meanings, with unsupported statements not related to the case on hand. For example, in a question of signage, a court may state that the HOA is not a mini-government and offer no legal authority for that statement. It is referred to as a dictum (dicta) and is non-binding. However, it is used as if it were indeed a court proven and decided fact.
In the Nevada Supreme Court decision in Sanzaro v. Adiente HOA, Nev. No. 61288 (Oct. 16, 2015) we have a good example that deals with the question of proper notice. (“Proper notice” is a 14th Amendment due process requirement.) Here, arbitrators ruled that Sanzaro had “constructive notice” — here we go again, no need to read the notice — that no dogs were allowed and charged the homeowners with $17,000 in legal fees (and I thought arbitration was the best solution to HOA decisions). The district court upheld that decision, finding that the homeowners had “not shown by competent evidence any deficiency that would warrant the relief being sought.”
As it happened, the homeowners, at purchase time, were told to see the HOA webpage for a copy of the rules, but the web page rules were not the latest with the dog restriction. The HOA insisted that sending a welcome letter about the web page with its rules amounted to constructive notice. In other words, like with the CC&Rs, the homeowners were told that there was another document affecting them. Go get it and read it.
The Court found “that arbitration awards are reviewed to determine whether the arbitrator’s decision represents a ‘manifest disregard for the law’ . . . the error of accepting respondents’ [HOA’s] contention that appellants [homeowners] received proper “constructive notice” of the amended rule . . . or that such notice was even properly achieved in light of appellants’ arguments and evidence to the contrary, demonstrates a manifest disregard for the law.”
In regard to CC&Rs, most state laws and CC&Rs require a mailing or personal delivery of the changed rules, or other governing documents. Nevada is one of them. In other words, constructive notice does not trump statutory notice. Some allow constructive notice of amendments by simply filing with the county clerk — BEWARE!!!!
Of course, in regard to the CC&Rs, there are no provisions in the CC&Rs requiring the delivery of the documents to a new buyer. While some states require delivery of the governing documents before closing, this requirement is waived or the documents are not read to the detriment of the buyer.
The important point is that arguments used against homeowners by HOA lawyers must be based on evidence and legal authority and not on a vague statement, like 95% of the people in HOAs like HOAs. The HOA lawyers claim to be the experts; get them to prove it and demand the legal basis for their statements.