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 Beware of

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Watch out for words in the opening sentence of the statute such as, unless otherwise provided in the governing documents” or "notwithstanding any provision of the governing documents" or has the word "shall" within its statute or governing documents. Your incorrect interpretation of text  can cost you thousands of dollars. 

Rules of Interpretation

Although CC&Rs are presumed reasonable, they sometimes have internal conflicts (provisions say opposite things) or conflicts between documents (CC&Rs say one thing and the bylaws another) or conflicts between an association's documents and your State Act (example: as in California, the Davis/Stirling Act) or the Corporations Code. When that occurs, associations should seek legal counsel. In most instances, the following rules of interpretation will apply.

Statute Overrides.
If the statute uses words such as "notwithstanding any provision of the governing documents to the contrary" or any similar language, the statute overrides the association's CC&Rs. For example, a civil code starts with "Notwithstanding more restrictive limitations placed on the board by the governing documents . . . " and then goes on to set a 20% limit on raising regular dues and a 5% limit on special assessments. 

This means that if your CC&Rs have a 10% cap on regular dues and a 3% cap on special assessments, they were nullified by statute and the higher limits of 20% and 5% now prevail. Another example is found in a civil

"No governing documents shall prohibit the owner of a separate interest within a common interest development from keeping at least one pet . . ."

Statute Defers.
If the statute uses words such as "Unless the declaration otherwise provides . . . " or similar language, the CC&Rs will prevail. For example, if a civil code states:

"Unless the declaration otherwise provides . . . the common area is owned as tenants in common, in equal shares, one for each separate interest."

Frequently, high rise condominiums will assign ownership interest (and the payment of dues) according to the square footage of the unit. If the CC&Rs were silent on the issue, then this statute would assign ownership in equal shares. Another example is found if a civil code states:

"Unless the governing documents impose more stringent standards, the board shall do  all of  the  following: . . ."

Statute is Silent.
Frequently, State Act (example: as in California, the Davis/Stirling Act) is silent on which controls, the statute or the CC&Rs, and you must decide from the general language of the statute which controls. For instance, if a civil code does not contain any of the language described above, nonetheless, it clearly controls because of its use of the word "shall":

"A common interest development shall be managed by an association that may be incorporated or unincorporated. The association may be referred to as an owners' association or a community association."

Source: Davis/Stirling.com

Example of A Costly Homeowner Dispute

$147.00 HOA Assessment Ends with HOA Judgment
 for Over $10,000.00 Plus Additional Attorney Fees

by Lawrence Szabo, Esq. | Oct 25, 2018 | Case Decisions, Dispute Resolution, Dues and Assessments

This case involved a dispute between homeowners (“Owners”) and their homeowners association (“Association”) over Association’s claim for unpaid assessments and the imposition of a lien on Owners’ property without first providing Owners with an opportunity for a hearing.

In January 2016, Owners failed to pay their annual assessment of $147.00 to Association. In February 2016, Association assessed a $20 late fee and advised Owners that interest was accruing on the unpaid amount and that a lien would be filed if the assessment was not paid. In April 2016, Association recorded a claim of lien against Owners’ property for $525.52, which consisted of the original assessment amount, late fee, interest, and the cost for recording the lien. In August 2016, Association filed a complaint against Owners seeking a money judgment for the $525.52 plus interest, attorney fees, and an order validating the lien and authorizing foreclosure in the event of non-payment. Thereafter, Owners made a payment of $200.00, leaving a balance of $325.52 exclusive of interest and attorney fees. The trial court granted summary judgment in favor of Association for $325.52 in unpaid assessments, plus an additional $9,540.00 for attorney fees and $429.00 for costs. Owners filed an appeal.

In their appeal, Owners contended that Association was required by statute to provide notice and an opportunity to be heard prior to filing a foreclosable lien against Owners’ property for collection of past due assessments. The language in the Washington statute relied upon by Owners stated in part, “Unless otherwise provided in the governing documents, an association may….(11) Impose and collect charges for late payments of assessments and, after notice and an opportunity to be heard by the board of directors …”

Referring to the plain language of the statute in question, the appellate court ruled that the words in the opening sentence of the statute, “unless otherwise provided in the governing documents granted Association discretion to establish its procedures within its governing documents. The appellate court also ruled that the relevant statutes delineated between the language about late payments of assessments and additional language that required an opportunity to be heard with levying reasonable “fines” (not assessments). Thus, the appellate court affirmed the trail court’s judgment and also awarded Association additional attorney fees and costs incurred in connection with the appeal.

Washington Appellate Court decision (October 22, 2018)