Is An Arbitration Provision In Recorded CC&Rs Ever Enforceable By The Developer?


Note To Reader: As this article goes to press, the Fourth District Court of Appeal has received the parties’ supplemental briefs, and is preparing to rehear Villa Vicenza Homeowners Association v. Nobel Court Development, LLC, a case squarely presenting the issue whether a provision in a declaration of covenants, conditions and restrictions (“CC&Rs”) recorded by a project developer requiring a yet-to beformed homeowners association to arbitrate any future construction defect claims against the developer is enforceable as an agreement to arbitrate. Prior to granting rehearing, the Court of Appeal had issued a decision (no longer citable) holding that such a provision is not enforceable. 1 Moreover, the same division of the same District Court of Appeal has just issued another decision, Pinnacle Museum Town Ass’n v. Pinnacle Market Dev. (US) (“Pinnacle”),2 in which it decided both that a binding arbitration provision in recorded CC&Rs is not enforceable by the developer/declarant against a subsequently-formed homeowners association, and that if it were, the provision under consideration would still be unenforceable because it is unconscionable.

This article will address the issues presented in Villa Vicenza and Pinnacle, the arguments advanced by the parties, and the practical consequences of the resolution of this controversy.

Please see full article below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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