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Builder exempt from CC&R requirement after association employee approves plans

Posted by   /  March 14, 2017  /  No Comments

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By Adam D. Martinez, Esq. | Chairman of Real Estate Litigation Department

Question:  My company builds custom homes throughout the Valley and is finishing the construction of a custom home on a lot in the Fountain Hills area. The lot is subject to Conditions Covenants and Restrictions (CC&Rs) which required us to obtain approval from the association. Recently, we went back to the association for approval to construct a pool and the office manager told us that as long as the town approved the plans, the association was fine with it. The town approved it and we constructed the pool. Now the association is telling us that we have violated several design requirements in the CC&Rs. I reviewed the CC&Rs, and the association is correct. We didn’t even refer to the CC&Rs after the office manager suggested we just needed town approval. The association is now threatening to file a lawsuit and obtain a court order requiring us to comply with the CC&Rs, which will cost thousands of dollars. Do we have any options other than to comply?

Answer:  Probably. The general rule is that owners are required to comply with CC&Rs even if they haven’t read them. In other words, an owner or builder who buys a lot subject to CC&Rs will be deemed to know the requirements contained therein and cannot claim ignorance. However, the important distinction in your situation is that someone with apparent authority for the association gave you express approval. Therefore, the association may not be able to make you comply with the CC&Rs after its office manager gave you the green light. Among the factors, the court would consider are whether, based on the circumstances, it was reasonable for you to rely on the office manager’s approval and whether your reliance on the approval caused harm to you. If so, the court would likely rule that the association is bound by its initial approval and cannot make you comply with any other requirements.

Adam Martinez is the Chairman of the Real Estate Litigation Department at Rose Law Group pc. and can be reached at amartinez@roselawgroup.com.

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