Nahrstedt v. Lakeside Village Condominium Assn., 878 P.2d 1275 

Supreme Court of California

1994

Chapter

23

Title

Creation and Validity

Page

448

Topic

Creation and Validity

Quick Notes

o         Appellant homeowner in a 530-condominium complex brought an action to prevent respondent homeowners' association from enforcing a restriction against keeping cats, dogs, and other animals in the condominium development.

Restrictions should be enforced unless such restrictions are

1.     Wholly arbitrary

a.     Bears no rational relationship to the protection, preservation, operation or purpose of the affected land.

2.     Violate a fundamental public policy

a.     Restrictions based on sex, race, color, religion, ancestry, national origin, or disability.

3.     Impose a burden on the use of affected land that far outweighs any benefit.

Book Name

Fundamentals of Modern Property Law: Rabin; Kwall, Kwall.  ISBN:  978-1-59941-053-1.

Issue

o         Whether a pet restriction that is contains in the recorded declaration of a condominium complex is enforceable against the challenge of a homeowner?  Yes.

o         Whether a condominium owner can prevent the enforcement of a use restriction that the projects developer has included in the recorded declaration of the covenants, conditions and restrictions (CC & Rs)?  No, unless the restriction is unreasonable.

Procedure

Trial

o         Sustained the demurrer as to each cause of action and dismissed the Nahrstedts complaint.

Appellant

o         Reversed.  The restriction hinges on the facts of a particular homeowners case.  However, the DISSENT that a case-by-case basis of reasonableness was at odds with the legislatures intent.

Supreme

o          

T-Analysis

Fee (Servient Estate)

Easement (Dominant Estate)

Court

Lakeside

Nahrstedt

Supreme Court of California

o         The pet restriction furthers the collective "health, happiness and peace of mind" of persons living in close proximity within the Lakeside Village condominium development, and therefore is reasonable as a matter of law

o         The restriction was unreasonable because she kept her three cats indoors and because her cats were noiseless and created no nuisance.

o         Court of appeals failed to consider the rules governing equitable servitudes.

o         Courts will enforce an equitable servitude UNLESS it violates a fundamental public policy.

o         The focus is on the restrictions effect on the project as a whole, no on the individual homeowner.

Facts

Discussion

Reasoning

Rules

Pl Nahrstedt (Appellant)

Df Lakeside (Respondent)

Description

o         Appellant homeowner in a 530-condominium complex brought an action to prevent respondent homeowners' association from enforcing a restriction against keeping cats, dogs, and other animals in the condominium development.

Lakeside Village Condominium

o         Subject to certain covenants, condition and restrictions.

o         Ownership of a unit includes: membership and pet restriction that provides No animals (which shall mean dogs and cats), livestock, reptiles of poultry shall be kept in any unit.

Nahrstedt Arg

o         The restriction was unreasonable because she kept her three cats indoors and because her cats were noiseless and created no nuisance.

Lakeside Action

o         Demanded removal and assessed fines.

Nahrstedt Action

o         Asked the trial court to invalidate the assessment, to enjoin future assessments, and to declare the pet restriction unreasonable as applied to indoor cats that are not allowed free in common areas.

Lakeside Arg

o         The pet restriction furthers the collective "health, happiness and peace of mind" of persons living in close proximity within the Lakeside Village condominium development, and therefore is reasonable as a matter of law.

Court of Appeals

o         The homeowners associate could enforce the restriction ONLY upon proof that the Pl - cats would be likely to interfere with the right of other homeowners to the peaceful and quiet enjoyment of their property.

Legislature

o         Has required the courts to enforce the covenants, conditions and restrictions contain in the record declaration of common interest development unless unreasonable.

Public Policy

1.     Because a stable and predictable living environment is crucial to the success of condominiums and other common interest residential developments, and

2.     because recorded use restrictions are a primary means of ensuring this stability and predictability

Presumption of validity

o         Legislature requires challengers to demonstrate the restriction's "unreasonableness" by the deferential standard applicable to equitable servitudes.

Standard (Enforcement of Restriction)

o         The enforcement of a restriction does not depend upon the conduct of a particular condominium owner.

Not Particular Owner, But Any Owner

o         Rather, the restriction must be uniformly enforced in the condominium development to which it was intended to apply UNLESS the plaintiff owner can show that the burdens it imposes on affected properties so substantially outweigh the benefits of the restriction that it should not be enforced against any owner.

Court - Court of Appeals Did not apply this standard

o         Accordingly, we reverse the judgment of the Court of Appeal and remand for further proceedings consistent with the views expressed in this opinion.

Section II (Broad Overview of the General Principles Governing Common Interests)

Condominiums, cooperatives, and planned-unit developments

o         Widely accepted form of real property ownership.

o         These ownership arrangements are known as "common interest" developments.

o         The owner enjoys many of the traditional advantages associated with individual ownership of real property

o         Also acquires an interest in common with others in the amenities and facilities included in the project.

o         It is this hybrid nature of property rights that largely accounts for the popularity of these new and innovative forms of ownership in the 20th century.

How a condominium is formed

o         To divide a plot of land into interests severable by blocks or planes, the attorney for the land developer must prepare a declaration that must be recorded prior to the sale of any unit in the county where the land is located.

Declaration (Operative Document)

o         The declaration is the operative document for the creation of any common interest development.

o         The declaration is a collection of covenants, conditions and servitudes that govern the project.

o         Typically, the declaration describes the real property and any structures on the property, delineates the common areas within the project as well as the individually held lots or units, and sets forth restrictions pertaining to the use of the property.

Use Restrictions (Viability of shared ownership rests on the existence of reciprocal servitudes)

o         Use restrictions are an inherent part of any common interest development and are crucial to the stable, planned environment of any shared ownership arrangement.

o         The viability of shared ownership of improved real property rests on the existence of extensive reciprocal servitudes, together with the ability of each co-owner to prevent the property's partition.

Use Restriction (Limit activities)

o         The restrictions on the use of property in any common interest development may limit activities conducted in the common areas as well as in the confines of the home itself.

Common Use Restrictions and Mandate

o         Common use restrictions preclude alteration of building exteriors, limit the number of persons that can occupy each unit, and place limitations on--or prohibit altogether--the keeping of pets.

o         Ownership also entails mandatory membership in an owners association

Elected Board

o         An elected board of directors is empowered to enforce any use restrictions contained in the project's declaration or master deed and to enact new rules governing the use and occupancy of property within the project.

Chief attributes of owning property in a common interest development

o         Subordination of individual property rights to the collective judgment of the owners association together with restrictions on the use of real property comprise the chief attributes of owning property in a common interest development.

States that lack legislature guidance (equitable reasonableness)

o         Some courts have adopted a standard under which a common interest development's recorded use restrictions will be enforced so long as they are "reasonable."

o         Most courts have applied what one commentator calls "equitable reasonableness," upholding only those restrictions that provide a reasonable means to further the collective "health, happiness and enjoyment of life" of owners of a common interest development.

Section III

Davis-Stirling Common Interest Development Act

o         The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development."

Determine when a restrictive covenant cannot be enforced

o         To determine when a restrictive covenant included in the declaration of a common interest development cannot be enforced, we must construe section 1354.

Step 1 (ascertain legislative intent)

o         In doing so, our primary task is to ascertain legislative intent, giving the words of the statute their ordinary meaning.

Step 2 (words must be read in context)

o         The words, however, must be read in context, considering the nature and purpose of the statutory enactment.

Enforceable equitable servitudes, unless unreasonable

o         Covenants and restrictions appearing in the recorded declaration of a common interest development are "enforceable equitable servitudes, unless unreasonable."

Actual Notice is provided by the covenants and declaration

o         The inclusion of covenants and restrictions in the declaration recorded with the county recorder provides sufficient notice to permit the enforcement of such recorded covenants and restrictions as equitable servitudes.

Legislature shifted from reasonable to unless reasonable

o         Shifts burden of proving the presumption of reasonableness to the challenging party.

o         The courts try to effectual the legitimate desires of the covenanting parties.

Restrictions should be enforced unless such restrictions are

1.     Wholly arbitrary

a.     Bears no rational relationship to the protection, preservation, operation or purpose of the affected land.

2.     Violate a fundamental public policy

a.     Restrictions based on sex, race, color, religion, ancestry, national origin, or disability.

3.     Impose a burden on the use of affected land that far outweighs any benefit.

Public Policy (Restrictions have a presumption of validity)

o         It discourages lawsuits by owners of individual units seeking personal exemptions from the restrictions.

Promotes stability and predictability in two ways.

1.     It provides substantial assurance to prospective condominium purchasers that they may rely with confidence on the promises embodied in the project's recorded CC&R's

2.     It protects all owners in the planned development from unanticipated increases in association fees to fund the defense of legal challenges to recorded restrictions.

Section IV (Court of Appeals Failed)

o         Court of appeals failed to consider the rules governing equitable servitudes.

o         Courts will enforce an equitable servitude UNLESS it violates a fundamental public policy.

o         The focus is on the restrictions effect on the project as a whole, no on the individual homeowner.

Section V (Holding)

Section 1354

o         Section 1354 is to be determined not by reference to facts that are specific to the objecting homeowner, but by reference to the common interest development as a whole.

Holding

o         Nahrstedt could prevent enforcement of the Lakeside Village pet restriction by proving that the restriction is arbitrary, that it is substantially more burdensome than beneficial to the affected properties, or that it violates a fundamental public policy.

o         For the reasons set forth below, Nahrstedt's complaint fails to adequately allege any of these three grounds of unreasonableness.

DISSENT

This Case Illustrates

o         "It is better to be a mouse in a cat's mouth than a man in a lawyer's hands."

Justice Arabian

o         Pet restriction is patently arbitrary and unreasonable.

o         Human beings derive substantial benefits from pet ownership, which promotes health, happiness, and peace of mind.

o         This restriction is a tariff on life.

o         This is an unwarranted intrusion into the circle of privacy.

o         There should be a compromise for pets that do not disturb the quiet enjoyment of others.

o         The American dream is sacrificed for the tyranny of the commonality.

Rules

Restrictions should be enforced unless such restrictions are

1.     Wholly arbitrary

a.     Bears no rational relationship to the protection, preservation, operation or purpose of the affected land.

2.     Violate a fundamental public policy

a.     Restrictions based on sex, race, color, religion, ancestry, national origin, or disability.

3.     Impose a burden on the use of affected land that far outweighs any benefit.

Public Policy (Restrictions have a presumption of validity)

o         It discourages lawsuits by owners of individual units seeking personal exemptions from the restrictions.

Promotes stability and predictability in two ways.

1.     It provides substantial assurance to prospective condominium purchasers that they may rely with confidence on the promises embodied in the project's recorded CC&R's

2.     It protects all owners in the planned development from unanticipated increases in association fees to fund the defense of legal challenges to recorded restrictions.

Class Notes