CALIFORNIA RIVIERA HOMEOWNERS ASSOCIATION v. HACKEL

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Court of Appeal, Second District, Division 1, California.

CALIFORNIA RIVIERA HOMEOWNERS ASSOCIATION, Petitioner, v. The SUPERIOR COURT of Los Angeles County, Respondent; Stuart HACKEL, Real Party in Interest.

No. B080001.

Decided: August 30, 1995

Kane & O'Brien, Kevin P. Kane and Mark A. O'Brien, Los Angeles, for petitioner. No appearance for respondent. Law Offices of Ronald M. Katzman and Ronald M. Katzman, Sherman Oaks, for real party in interest.

We issued an alternative writ in this matter to address the question of whether a notice of violation of covenants, conditions and restrictions (“CC & R's”) is a recordable document.   Under the facts of this case, in which the CC & R's specifically authorize a notice of violation to be recorded, we answer the question in the affirmative.

BACKGROUND

Stuart Hackel owns residential property in the Pacific Palisades area of Los Angeles which is arguably subject to CC & R's recorded by predecessors of The California Riviera Homeowners Association (“California Riviera”) and later modified by California Riviera.   The CC & R's prohibit a structure from being erected or maintained closer than 10 feet from the side property lines of each parcel.  Article IV, section 10 of the CC & R's further provides that, in the event of breach, California Riviera may record a notice of violation with the county recorder of Los Angeles County.1

In 1991, Hackel completed a substantial remodel of his house.   He was later informed that California Riviera had recorded a “Notice of Violation of Restrictions” with respect to the property.   The notice stated that Hackel had failed to comply with the 1O-foot set-back requirement of the CC & R's.

On December 10, 1992, Hackel filed an action against California Riviera and two of its officers for slander of title, breach of fiduciary duty, declaratory relief, and injunctive relief.   Hackel's complaint alleges, in essence, that the set-back requirement of the CC & R's is unenforceable because the right of enforcement was not transferred to California Riviera from its predecessors in the early 1940's, and that long-standing violations of the CC & R's, as well as inconsistent enforcement by California Riviera, have rendered the set-back requirement a nullity.   The complaint further alleges that California Riviera exceeded its authority when it modified the CC & R's in the early 1950's by adding article IV, section 10, thereby creating the notice of violation procedure.   Finally, Hackel alleges that, irrespective of whether the set-back requirement may be enforced or whether the notice of violation procedure is beyond California Riviera's authority, a notice of violation is not a recordable document as a matter of law.

On August 18, 1993, Hackel filed a motion requesting orders expunging the notice of violation, enjoining defendants from recording, filing or publishing any disparaging statements as to the property, and for sanctions.   In support of the motion, Hackel submitted evidence by which he sought to establish his claims regarding the validity of the set-back requirement and California Riviera's authority.   In its opposition to the motion, California Riviera presented evidence to refute Hackel's factual assertions.   Both parties also submitted legal arguments on whether a notice of violation is a recordable document.

At a hearing on October 20, 1993, respondent superior court granted Hackel's motions.   The sole basis of its order was a finding that a notice of violation is not a recordable document as a matter of law.   On October 29, an order was filed expunging the notice of violation.

On November 23, 1993, California Riviera filed a petition with this court seeking extraordinary relief.   We issued an alternative writ of mandate, ordering briefing and placing the matter on calendar for oral argument.   Following briefing and argument, we filed an opinion in which we concluded that the notice of violation at issue in this case is a recordable document.   Consequently, we ordered that a writ of mandate issue commanding the trial court to vacate its order expunging the notice of violation.   Following our decision, Hackel filed a petition for review, which was granted by the Supreme Court.   The Supreme Court later transferred the matter back to us with instructions to vacate our decision and reconsider it in light of its intervening decision in Nahrstedt v. Lakeside Village Condominium Association (1994) 8 Cal.4th 361, 33 Cal.Rptr.2d 63, 878 P.2d 1275.

We have vacated our earlier opinion, and have afforded the parties the opportunity for further briefing and oral argument in light of Nahrstedt.   Having reconsidered that opinion, we conclude that Nahrstedt serves to bolster our original determination that the notice of violation prepared by California Riviera with respect to Hackel's alleged violation of CC & R's is a document that may be properly recorded with the recorder of Los Angeles County.   Accordingly, we again order the issuance of a writ of mandate.

DISCUSSION

At the outset, it is important to note the limited scope of this decision.   Our purpose in issuing an alternative writ was to resolve the legal question of whether, and under what circumstances, a homeowners' association may record a notice of violation of CC & R's.   To accomplish this purpose we have assumed, but do not hold, that Hackel is bound by the CC & R's, including the set-back requirement and the notice of violation procedure.   Issues regarding whether California Riviera acted beyond the authority conferred upon it by its predecessors or in contravention of any of its rules were not addressed by the trial court, nor shall they be addressed here.   The only act that this opinion requires is that the trial court reverse its order granting Hackel's motions on the sole ground upon which the ruling was based—i.e., that a notice of violation is not a recordable document as a matter of law.   We express no views as to how Hackel's other issues should be treated by the trial court when the matter is returned to it.

Turning to the substance of the matter before us, we first discuss whether a notice of violation of CC & R's is a recordable document as a matter of law.   We find no authority that would per se permit recordation of such a notice.   However, when we further consider that the CC & R's at issue here specifically authorized California Riviera to record a notice of violation, we find that such recordation was permissible.

1. Whether a Notice of Violation is Recordable as a Matter of Law

Government Code section 27280, subdivision (a), authorizes the recordation of “[a]ny instrument or judgment affecting the title to or possession of real property.”   In their treatise on real estate law, Miller and Starr set forth what they characterize as a nonexhaustive list of 99 instruments that may be recorded, the vast majority of which receive specific authorization from statutes other than section 27280, subdivision (a).  (3 Miller & Starr, Current Law of Cal. Real Estate (2d ed. 1989) §§ 8:4–8:5, pp. 275–292.)   Notice of violation of CC & R's is not included on that list, nor is it mentioned in any statute.2  Thus, the only possible statutory authority for recordation of a notice of violation is if it constitutes an instrument affecting title to or possession of real property.

In an early case discussing the Civil Code's use of the word “instrument,” 3 the Supreme Court observed that “ ‘instrument’ ․ will be invariably found to indicate some written paper or instrument signed and delivered by one person to another, transferring the title to or creating a lien on property, or giving a right to a debt or duty.”  (Hoag v. Howard (1880) 55 Cal. 564, 565.) 4  This venerable definition of “instrument” was utilized in Brown v. Johnson (1979) 98 Cal.App.3d 844, 849, 159 Cal.Rptr. 675.   There, the plaintiff conveyed real property to the defendant in exchange for promissory notes without obtaining any security for payment of those notes.   When the defendant defaulted, the plaintiff recorded a “notice of vendor's lien” on the property with the county recorder.  (Id. at pp. 846–847, 159 Cal.Rptr. 675.)   The Brown court determined that the vendor's lien should not have been accepted for recordation because it evidenced a “mere personal privilege” which did not create a lien or affect the title to or possession of the property.5  (Id., at p. 851, 159 Cal.Rptr. 675;  see also Rowley v. Davis (1917) 34 Cal.App. 184, 191, 167 P. 162 [grantor's recordation of an amendment to a grant deed stating that the deed was actually intended as a mortgage was not an instrument affecting title and did not convey constructive notice to subsequent purchasers].)

Relying on Riley v. Bear Creek Planning Committee (1976) 17 Cal.3d 500, 131 Cal.Rptr. 381, 551 P.2d 1213  (“Bear Creek I ”) and Bear Creek Planning Com. v. Title Ins. & Trust Co. (1985) 164 Cal.App.3d 1227, 211 Cal.Rptr. 172 (“Bear Creek II ”), California Riviera contends that a notice of violation is recordable as a matter of law.   We disagree.

In Bear Creek I, as in this case, a homeowner took the position that his homeowners' association's CC & R's did not apply to him, and the homeowners' association recorded a notice of violation of CC & R's.   The homeowner responded with a lawsuit against the association which stated multiple causes of action.  (17 Cal.3d at pp. 504–505, 131 Cal.Rptr. 381, 551 P.2d 1213.)   Determining only the quiet title portion of the action, the Bear Creek I court found that, because the CC & R's had not been recorded until after the property had been conveyed, they were not enforceable as to the homeowner even though he may have had actual knowledge of their existence at the time he took title.  (Id. at pp. 507–508, 131 Cal.Rptr. 381, 551 P.2d 1213.)

Bear Creek II involved the homeowner's slander of title cause of action, which had been severed from the matters considered in Bear Creek I.   The opinion recounts the facts of the filing of the notice of violation, noting that the homeowners' association had considered filing a lawsuit “but in lieu thereof determined to record a notice of violation, as [its] coffers ․ were at low ebb.”  (164 Cal.App.3d at p. 1234, 211 Cal.Rptr. 172.)   The homeowners' association tendered defense of the action to its title insurance company.   The title company refused the tender, and the homeowner prevailed at trial.  (Id. at pp. 1235–1236, 211 Cal.Rptr. 172.)   The only issues discussed in Bear Creek II concern the title company's obligation to indemnify the homeowners' association for a judgment that was entered in the homeowner's favor.  (Id. at pp. 1236–1250, 211 Cal.Rptr. 172.)

We find nothing in the Bear Creek cases to support the notion that a homeowners' association's notice of violation of CC & R's is a recordable instrument.   The cases do not discuss the recordability of the notice of violation, and therefore do not constitute authority on that issue.  (People v. Superior Court (Marks) (1991) 1 Cal.4th 56, 65–66, 2 Cal.Rptr.2d 389, 820 P.2d 613;  Carleton v. Tortosa (1993) 14 Cal.App.4th 745, 757, fn. 4, 17 Cal.Rptr.2d 734.)

From a policy point of view, we are troubled by the concept of a homeowners' association having an abstract right to file a notice of violation of CC & R's.   As seen from the perspective of a homeowners' association, the nominal fee charged by the county recorder provides the association with an economical enforcement mechanism for CC & R's because it shifts to the homeowner the burden of initiating legal action and carrying the laboring oar in determining the validity and applicability of the CC & R's.6  However, without accompanying legal action by the homeowners' association, a notice of violation purports to do nothing more than place a cloud on the homeowner's title in the hopes that the homeowner will comply with the association's demands so that the cloud can be removed without the expense and bother of a lawsuit.7  Moreover, the coercive power of a notice of violation must be viewed against a backdrop of a less than precise scheme regarding what documents properly qualify for recordation.   Indeed, the Legislature speaks of the statutory definition of instrument as not expanding the scope of “documents presently found by recorders to be eligible for recordation.”  (See fn. 4, ante.)

 In view of the foregoing, we find no basis upon which to stretch existing law to include a homeowners' association's notice of violation of CC & R's as a document that may be recorded as a matter of law.   Thus, were California Riviera to have recorded its notice of violation against Hackel without specific authorization to do so, we would be unable to find the recordation valid.   However, as discussed below, the existence of authorization within the CC & R's to record a notice of violation involves considerations separate from those previously discussed, and provides a basis for the recordation of such a notice.

2. Whether a Notice of Violation is Recordable When Specifically Authorized by CC & R's

California Riviera's attempt to enforce the CC & R's against Hackel is based on the law of equitable servitudes.  (See 7 Miller & Starr, Current Law of Cal. Real Estate, op. cit. supra, § 22:1, pp. 520–524.)  “Under the law of equitable servitudes, courts may enforce promises about the use of land even though the person who made the promise has transferred the land to another․  The doctrine is useful chiefly to enforce uniform building restrictions under a general plan for an entire tract of land or for a subdivision․  [¶]  [E]quitable servitudes permit courts to enforce promises restricting land use when there is not privity of contract between the party seeking to enforce the promise and the party resisting enforcement.   Like any promise given in exchange for consideration, an agreement to refrain from a particular use of land is subject to contract principles, under which courts try ‘to effectuate the legitimate desires of the covenanting parties.’ ”  (Nahrstedt v. Lakeside Village Condominium Association, supra, 8 Cal.4th at pp. 380–381, 33 Cal.Rptr.2d 63, 878 P.2d 1275, citations omitted.) 8

 “An equitable servitude will be enforced unless it violates public policy;  it bears no rational relationship to the protection, preservation, operation or purpose of the affected land;  or it otherwise imposes burdens on the affected land that are so disproportionate to the restriction's beneficial effects that the restriction should not be enforced.”  (Id. at p. 382, 33 Cal.Rptr.2d 63, 878 P.2d 1275.)   CC & R's will not be enforced in a manner that violates statutory or common law.   (Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 499, fn. 6, 229 Cal.Rptr. 456, 723 P.2d 573.)

 Hackel attacks the notice of violation procedure embodied in article IV, section 10 of the CC & R's as violative of the common law expressed in the following language from County of Butte v. Bach (1985) 172 Cal.App.3d 848, 867, 218 Cal.Rptr. 613:  “A covenant running with the land is not self-enforcing.   The persons aggrieved must seek equitable relief to obtain specific enforcement.” 9  We find that this language does not serve to limit enforcement procedures which are otherwise available.

In County of Butte, an attorney conducted a law practice from a house in a tract that was zoned for residential use.   The county sought to enjoin the attorney from doing so as a zoning violation.   The attorney's neighbors also joined the action, alleging that the attorney's actions violated a restrictive covenant prohibiting non-residential use of the property.   The attorney defended and cross-complained on grounds that enforcement of the zoning ordinance would violate his civil rights, and that changes in the character of the neighborhood adjacent to the tract rendered it inequitable to enforce the restrictive covenant.   The trial court partially granted an injunction in favor of the county, but denied the injunction requested by the neighbors.   (Id. at pp. 854, 857–859, 218 Cal.Rptr. 613.)   In reviewing the trial court, the Court of Appeal used the above-quoted language on which Hackel relies in the sole context of endorsing, not limiting, the neighbors' right to seek injunctive relief to enforce the restrictive covenant.  (Id. at pp. 867–868, 218 Cal.Rptr. 613.)

Hackel also attempts to draw a distinction between an equitable servitude and a land use restriction, apparently on the basis that CC & R's may contain restrictions that do not affect the use of land.   He then argues that the notice of violation procedure is not a true land use restriction, and the law of equitable servitudes should therefore not apply.   This purported distinction is of no consequence.   Hackel has not provided, nor have we found, any authority which would cause the enforcement procedure in the instant CC & R's to be regarded differently than any other provision of the CC & R's.   Consequently, we treat the law of equitable servitudes as being applicable to the notice of violation procedure at issue in this case.

Hackel further contends that the provision of the CC & R's which permits the recordation of a notice of violation is invalid because it is contrary to public policy and overburdens the property.   His arguments in this regard are nothing more than a reflection of the reality, noted above, that a homeowners' association which is authorized to record a notice of violation in the absence of an accompanying lawsuit possesses a powerful weapon which it can wield, at its pleasure, against an allegedly recalcitrant homeowner.10  Like a lis pendens, the notice of violation is usually fatal to the sale of the property on which the notice has been recorded, and to the owner's ability to use the property as security for a loan.   If a dispute over whether a homeowner has violated CC & R's cannot be resolved amicably by the parties and must ultimately be subject to judicial scrutiny, it is likely that the homeowner will be forced to initiate the legal action.

Regardless of whether one might think it is more fair for a homeowners' association, rather than an individual homeowner, to initiate an action over alleged violations of CC & R's, the notice of violation procedure in this case is part of the agreement that binds a transferee of land within California Riviera's boundaries.   By purchasing a home within those boundaries, Hackel agreed that a notice of violation could be recorded in the absence of an accompanying lawsuit.   We have the duty to “try ‘to effectuate the legitimate desires of the covenanting parties.’  [Citation.]”  (Nahrstedt v. Lakeside Village Condominium Association, supra, 8 Cal.4th at p. 381, 33 Cal.Rptr.2d 63, 878 P.2d 1275.)   The obvious desire of the parties who adopted the CC & R's was to facilitate their enforcement by giving the homeowners' association the upper hand in resolving disputes over their violation.   That desire, as reflected in the notice of violation provision of the CC & R's, should be enforced here.

DISPOSITION

Let a peremptory writ of mandate issue commanding the trial court to vacate its order granting Stuart Hackel's motion to expunge the notice of violation recorded by The California Riviera Homeowners Association.   The trial court is directed to conduct a new hearing to consider all arguments proffered by Hackel on his motion filed on August 18, 1993, except that the court shall not consider the issues of whether a notice of violation is recordable as a matter of law and whether article IV, section 10 of the CC & R's permits California Riviera to record a notice of violation.   The parties are to bear their own costs on this writ petition.

FOOTNOTES

1.   Article IV, section 10 provides, in pertinent part:  “Notice of any breach or violation of any of the restrictions, conditions and covenants hereby established, ․ shall, within a reasonable time after the occurrence of such breach, violation or failure to comply, be executed by the owner of the reversionary rights herein provided for, ․ and recorded in the office of the County Recorder of Los Angeles County;  and a copy of such notice, ․ shall be mailed by registered mail to the person, firm or corporation responsible for such breach of violation of, or failure to comply with, any of said restrictions, conditions or covenants.”

2.   Government Code section 66499.36 is the only statute we have found that authorizes a “notice of violation.”   However, it concerns notice of a violation of the Subdivision Map Act, and may be recorded only by a city or county.   It is plainly inapplicable here.

3.   E.g., Civil Code section 1215 [“ ‘conveyance’ ․ embraces every instrument in writing by which any estate or interest in real property is created, alienated, mortgaged, or encumbered, or by which the title to any real property may be affected, except wills”].

4.   More recently, the Hoag definition was codified as Government Code section 27279, which defines “ ‘[i]nstrument’ ” as “a written paper signed by a person or persons transferring the title to, or giving a lien on real property, or giving a right to a debt or duty.”   (Stats.1988, ch. 400, § 1.)   An uncodified provision of bill containing this statutory definition states that section 27279 “is declaratory of existing law and is not intended to expand or diminish the scope of documents presently found by recorders to be eligible for recordation.”   (Stats.1988, ch. 400, § 2.)

5.   “It is settled that an instrument which is recorded but which is not authorized to be recorded and given constructive notice effect by statute does not impart constructive notice to subsequent purchasers.   [Citations.]”  (Id. at p. 849, 159 Cal.Rptr. 675.)

6.   This was apparently the motivation for the Bear Creek Planning Committee, which found its “coffers ․ at low ebb,” to record a notice of violation of CC & R's rather than file its own lawsuit.  (Bear Creek Planning Com. v. Title Ins. & Trust Co., supra, 164 Cal.App.3d at p. 1234, 211 Cal.Rptr. 172.)Similarly, in Hanna, California Condominium Handbook (Bancroft–Whitney 1986) Supplement, section 14.59, pages 178–179, it is suggested that a condominium association record a notice of nonconformance as soon as it becomes aware of an unauthorized improvement.   The author further advises that, if the county recorder refuses the document on the ground that it is not authorized, the association should explain that such a notice is nowhere specifically prohibited.

7.   A “Summary of Restrictions” which California Riviera prepared in 1960 explains that California Riviera “desires as far as possible to avoid actual litigation.”   However, it acknowledges that recordation of a notice of violation would be “throwing a cloud upon an owner's title” and “may make it very difficult for the owner to obtain a building loan or a mortgage or to sell the property in question.”

8.   The specific issue in Nahrstedt concerned interpretation of Civil Code section 1354, which was enacted in 1985 as part of the Davis–Stirling Common Interest Development Act (Civ.Code, §§ 1350 et seq.).   Although the California Riviera tract does not fit within the Act's definition of a common interest development (see Civ.Code, § 1351), the Supreme Court's general observations about CC & R's and equitable servitudes are helpful to the analysis here.

9.   See also 7 Miller & Starr, Current Law of California Real Estate, op. cit. supra, section 22:17, page 569, which applies County of Butte to equitable servitudes as well as covenants.

10.   Indeed, the fact that a notice of violation is such a powerful mechanism goes far to prevent its abuse.   While a homeowners' association has a duty to enforce applicable CC & R's (cf. Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642, 650, 191 Cal.Rptr. 209), in recording its notice of violation against Hackel we suspect that California Riviera was well aware of the possibility that Hackel would respond with a lawsuit for slander of title.   Because Hackel has filed such an action, California Riviera is now potentially subject to liability if Hackel ultimately proves that the set-back requirement should not be applied to him, and to even greater liability if Hackel proves that the notice of violation was filed in bad faith.  (Cf. Seeley v. Seymour (1987) 190 Cal.App.3d 844, 857, 237 Cal.Rptr. 282 [recordation of a document which is not entitled to be recorded gives rise to an action for slander of title];  Ironwood Owners Assn. IX v. Solomon (1986) 178 Cal.App.3d 766, 772, 224 Cal.Rptr. 18 [in seeking to enforce CC & R's, a homeowners' association must act in good faith].)

MASTERSON, Associate Justice.

SPENCER, P.J., and MIRIAM A. VOGEL, J., concur.