State High Court Strayed in 'Nahrstedt'

September 19, 1994

By Arnold A. McMahon
Copyright © AHRC

Boo Boo, Dockers and Tulip were ordered out of their home by six members of the California Supreme Court in a decision handed down on Sept. 2, Nahrstedt v. Lakeside Village Condominium Association. The Culver City cats, one of which is 17 years old, belong to Natore Nahrstedt, a 47-year-old woman who lovingly takes care of them and even gives them birthday parties. The cats are always kept inside and are not a nuisance to any neighbor.

From cat lovers everywhere, the question arises, "What does such an august body have against three cats? What has happened to The Land of the Free that a person cannot have three cats in her home?" The answer, in a nutshell, is homeowner associations.

Natore Nahrstedt belongs to a homeowner association whose CCRs – covenants, conditions and restrictions – forbid owners to have cats, though two fish or two birds are allowed with permission from the board. Some neighbors peered through Nahrstedt's windows and even entered her home without permission to verify that she had cats.

The California Supreme Court stated that Ms. Nahrstedt had voluntarily bought into the association and that therefore she had to live by the rules of the CCRs. I believe the Court was wrong for at least two reasons and that its error has profound social and economic ramifications that will reverberate throughout our society.

First, the Court demonstrated a dangerous ignorance of the realities of the housing market. It asserted that Natore Nahrstedt voluntarily bought into an association. This is analogous to saying that one is free not to drive a car in California. In theory this is true, but in practice we know that a car is a virtual necessity.

In certain areas, the same is true of joining a homeowner association. In 1964, there were 500 homeowner associations in the United States. Today there are over 150,000, housing over 32 million people – an explosion of 30,000 percent, or 1,000 percent a year. In California, there are 25,000 associations with over 6 million people, almost one in five of the state's residents.

The reality is that when it comes to buying a home, many people do not really have a choice. For example, Foster City is almost completely made up of homeowner associations. South Orange County is estimated to be 86 percent homeowner associations. If all 6 million California members decided tomorrow that they did not wish to belong, they literally would not be able to buy homes that are free of associations.

Courts in many areas have historically lagged behind the realities of the times. It was only slowly and painfully in the 1920s that courts realized that in an age of complex consumer products, the adage of "buyer beware" no longer applied. The manufacturers of such products were in the best position to evaluate their safety. Today, courts have to realize that from a practical standpoint, homeowners do not voluntarily buy into associations. No consumer can be expected to read and understand the 100 pages of dense legalese that make up most CCRs. Simply put, the court is relying on a fiction.

Nor do the courts realize that the homeowner associations have become significant profit centers for such groups as lawyers and management companies. The dense thicket of restrictions contained in CCRs would snare any homeowner. No basketball hoops on garage doors, no freedom to plant the flowers of your choice, no parking of cars on streets – all these and more become marvelous opportunities for lawyers to rack up legal fees for their enforcement. One Fullerton man is being charged over $54,000 in legal fees for a parking ticket. Other lawyers want $80,000 because a homeowner flew a POW-MIA flag.

In addition, some management companies have developed sophisticated scams. False late charges are posted to a homeowner's assessment account. If the homeowner disputes them, the management company turns the homeowner over to its in-house collection company, which imposes more charges. Eventually, the hapless homeowner is handed over to the in-house foreclosure company.

In one case, a foreclosure company demanded $2,900 for an alleged $5 late charge. The homeowner had to spend thousands in legal fees to get a restraining order. The association and its management company settled on the courthouse steps – but only after a roiling emotional experience for the homeowner.

The California Supreme Court relied on the assumption that people buy into associations expecting that all will have to abide by the rules. The lawyers have made a mockery of that.

In California, association lawyers have pounded the Legislature for years to pass bills that change association rules in order to produce more legal fees. AB 871, passed in 1991, changed the CCRs by allowing the reserves to be used for legal fees. Furthermore, it gave the board the power to levy special assessments for any amount without homeowner approval.

Most CCRs had contained a provision to protect homeowners by allowing a special assessment of only 5 percent without homeowner consent. But lawyers from the trade Community Association Institute and its lobbying arm, California Legislative Action Committee, got their friend Dan Hauser, chairman of the assembly housing committee, to push the bill through.

Pericles, the Greek statesman, said 2,500 years ago that"we are a city of free people, and nobody should intervene in others' lives if it does not affect them". The California Supreme Court in its Nahrstedt decision strikes another blow at such freedom, and tightens the belt of conformity another notch. Without freedom, a nation withers and dies. Cats many have nine lives, but nations generally have only one chance to get it right.


Notes This article is based on California Supreme Court Case #SO29132 Nahrstedt vs Lakeside Village Condominium Association. The court ruled on Friday September 2, 1994 that condominium and other homeowners associations may ban cats and other pets from dwellings.