Berding | Weil Community Association ALERT Newsletter
Legal News and Comments for Community Association Boards and Managers Issue #88 • March 2012
Developer's Real Estate Brokers Liable to Association for Common Area Damage
by Melissa B. Ward, Esq.
An Association had the right to seek recovery of damages from brokers who were not in direct contract with the Association, but whose misconduct had directly injured the Association and its members. Association had standing to pursue damages resulting from a landslide from real estate brokers who originally sold Lots because of brokers' fraudulent concealment of DRE report status, budget information, and misrepresentation. Glen Oaks Estates Homeowners Association v. Re/Max Premier Properties, Inc., 2012 WL 579876.
After a major landslide damaged Common Area, the Association discovered that the original real estate brokers working with the developer had falsified the Association's DRE status; made material nondisclosures regarding the Association's budget; artificially lowered the Association's dues to induce buyers to buy Lots at the Association; and procured inadequate and false soils reports regarding the physical condition of Common Area. The Association sued two groups of realtors in connection with this allegedly fraudulent activity, seeking recovery of the damage caused by the landslide, among other things.
The defendants countered that the Association did not have standing to sue them, as they only owed a fiduciary duty to the individual buyers, not the Association. Further, the defendants claimed that the statutes of limitation had passed for all claims. The trial court found in favor of the defendant realtors. The Second District Court of Appeal found that the Association did have standing to pursue any claims that were not time barred on behalf of its members.
Case Summary: Promenade at Playa Vista HOA v. Western Pacific Housing
by Melissa B. Ward, Esq.
ARBITRATION: Supreme Court grants review of case finding that mandatory arbitration provision in CC&Rs did not apply to developer defending construction defect action brought by HOA. Promenade at Playa Vista Homeowners Association v. Western Pacific Housing (2012) 268 P.3d 1065. Earlier, we reported that the Second District Court of Appeal had denied a developer's motion to compel arbitration in a construction defect action based on language in the CC&Rs. The California Supreme Court will be reviewing this decision and will at the same time be considering similar issues raised by Pinnacle Museum Tower Association v. Pinnacle Market Development. For Associations, this terse procedural decision predicts future clarification by the Court on this issue, and, we hope, a bright line rule regarding the power and effect of mandatory arbitration clauses found in developer CC&Rs.
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