Arbitration Clauses inserted in Homeowners’ Associations’ CC&RS by Builder are enforceable and create another roadblock to litigation

Covenant to Arbitrate Construction Defect Disputes Is Enforceable

“Promenade at Playa Vista Homeowners Assn. v. Western Pacific Housing, Inc., No. B225086, (Cal. Ct. App. Dec. 6, 2012)

Covenants Enforcement/Developmental Rights: The California appeals court agreed that a developer could require binding arbitration to resolve disputes it had with the homeowners association it developed, where the declaration of covenants, conditions and restrictions contains a mandatory arbitration clause.
Promenade at Playa Vista Homeowners Assn. v. Western Pacific Housing, Inc., 200 Cal. App. 4th 849 (Nov. 8, 2011) (reported in the January 2013 issue of Law Reporter) was overturned by the California Supreme Court (287 P.3d 68 (Oct. 10, 2012)). The following is a report of the latest developments in the case.

Western Pacific Housing, Inc. and Playa Capital Company, LLC (developers) constructed, marketed and sold units in Promenade at Playa Vista, a 90-unit condominium in Playa Vista, Calif. Before Promenade at Playa Vista Homeowners Association (association) was incorporated or the first unit had been sold, the developers recorded a declaration of covenants, conditions and restrictions (CC&Rs) against the property, which included a mandatory arbitration provision requiring that any disputes between the developers and the association be submitted to binding arbitration.

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