In Mission Shores Association v. Pheil, (— Cal.Rptr. 3d —, 2008 WL 4097269, Cal.App. 4 Dist., Sept. 5, 2008), a California Court of Appeal considered a homeowner’s objection to his homeowners’ association’s attempt to lower the number of votes required to amend its Covenants, Conditions and Restrictions (“CC&Rs”). The court ruled that because the amendment was reasonable, the balloting was done in accordance with the CC&Rs, and the security interest of mortgagees was not impaired, the lowering of the voting requirement was permissible under Civil Code Section 1356.
In 2005, the Mission Shores Homeowners’ Association (“Association”) attempted to amend its CC&Rs to prohibit rentals of property in the development for periods shorter than 30 days. Pursuant to the CC&Rs, the change required the affirmative vote of two-thirds—or 105—of the Association’s 157 homeowners. Ballots were received from 132 of the 157 homeowners, and of those, 93 voted in favor, 28 opposed, and 36 abstained. Pursuant to Section 1356, the Association petitioned the trial court to allow its CC&Rs to be changed with a simple majority, rather than a two-thirds vote, which would result in the 93 yes votes being sufficient to enact the change. The trial court ruled that the petition complied with Section 1356 and granted it. Homeowner David Pheil, an opponent of the change, appealed that ruling.
Quoting Blue Lagoon Community Assn. v. Mitchell (1997) 55 Cal.App.4th 472, the court said the purpose of Section 1356 is to provide homeowners associations with the “ability to amend their governing documents when, because of voter apathy or other reasons, important amendments cannot be approved by the normal procedures,” adding, that Section 1356 was, in essence, “a safety valve for those situations where the need for a supermajority vote would hamstring the association.” Pheil’s appeal charged that the change did not meet Section 1356’s requirements because it was not reasonable, the balloting did not conform with the CC&Rs due to inaccuracies in a letter accompanying the ballot, and it impaired the security interests of mortgagees.
First, the court ruled that the change was reasonable. The development was intended to be a residential community, the court noted, and the Association claimed the change was necessary to preserve that character and to prevent a more transient environment. Any burden that the 30-day-minimum rental imposed on either owners or tenants was “outweighed by its beneficial value in preserving the residential character of the development,” the court said.
Secondly, the court found the balloting did conform to the CC&Rs. Contrary to Pheil’s claim, there was no evidence to suggest a single owner had been misled by the association’s cover letter, which, the court added, “clearly indicated the language to be added and language to be deleted.” The results of the vote were reported at the Association’s next meeting and reported in the minutes in accordance with the CC&Rs.
Finally, the court rejected Pheil’s contention that because it limited his ability to rent his property, and could therefore affect his ability to pay his mortgage, the 30-day minimum impaired his security as a mortgagee in violation of Section 1356. “However, Mission Shoals is a residential development,” the court countered, and there was no evidence to support the contention that a 30-day-minimum would result in mortgage failures.
Since the amendment was reasonable, it conformed to the CC&Rs, and did not impair the security of mortgagees, it complied with the requirements of Section 1356. The trial court’s order allowing the amendment to be approved with the lower voting threshold was affirmed.