Amendments To CC&Rs Must Be Reasonable

Question: In recent columns you have said that, if the CC&Rs of a community are amended by the requisite number of homeowners, e.g., 51%, 75%, etc., the CC&R amendment is binding on all homeowners in the community, unless the CC&R amendment violates federal or state law. I am a real estate lawyer, and you are not correct. A CC&R amendment must also be reasonable. In 2010 the Arizona Court of Appeals invalidated a CC&R amendment requiring HOA membership and payment of monthly dues by all homeowners. The Arizona Court of Appeals ruled that the CC&R amendment was not reasonable because some homeowners had owned homes more than 20 years without HOA membership and monthly dues. 578 Ariz. Adv. Rep. 17.

Answer: Thank you for your comments. I agree that a CC&R amendment, in addition to not violating federal or state law, must also be reasonable. For example, if the CC&Rs of a community are amended to require that all homes in the community be painted a turquoise color, and have diamond-encrusted front gates, that CC&R amendment would not be reasonable. Amendments to CC&Rs, however, are usually deemed to be reasonable by the courts. For example, although short-term rentals by AirBnB and VRBO did not even exist 20 years ago, Arizona courts have generally enforced recent CC&R amendments that restrict or prohibit short-term rentals, including an April 29, 2021, decision by the Arizona Court of Appeals. Furthermore, although an HOA board of directors can be extremely arbitrary and capricious, the homeowners collectively are generally not. In other words, a majority, or greater percentage, of homeowners in a community generally will amend the CC&Rs to do the right thing for the community. Similarly, jurors collectively in a jury trial generally do the right thing.