DD 3/27 revised Changing Condo Rules SERVITUDES; USE RESTRICTIONS; ASSOCIATION RULES: Provision adopted by association in tennis oriented condomium community prohibiting use of courts by non-resident owners is permitted under Declaration and satisfies "fair and reasonable" test. Liebler v. Point Loma Tennis Club, 47 Cal. Rptr. 2d 783 (Cal. App. 1995) This case is noteworthy particularly because it represents an application of the California Supreme Court's new articulation of judicial standards for review of condominium rules Nahrstedt v. Lakeside Village Condominium Association, 33 Cal. Rptr. 2d 63 (Cal. 1994) (reversing Court of Appeals and holding that condo rules may prohibit pets in units - rules are presumed reasonable and one attacking them must show they are arbitrary, violate a fundamental public policy, or impose a burden far out of proportion to any benefit.).

The first element of the case, however, evaluates an argument not present in Nahrstedt - since here, unlike Nahrstedt - the challenged restriction appeared in rules adopted by the Association seven years after the owner in question acquired his unit. The Declaration provided that each owner shall have a "right and easement of enjoyment" in all common areas, but that the Association may adopt reasonable rules concerning use of the common areas.

The owner had occupied his apartment for some time, but then moved out and rented the apartment first to his daughter and then to others. He continued to use the tennis facilities, but also conferred the right to use the facilities on his tenants. Obviously aware that he had a problem, the owner drafted a lease provision that provided that he had a "cotenancy interest" in the right of occupancy created under the lease. The court properly disregarded this provision, noting that there was no evidence that he actually occupied the unit despite this cotenancy right.

In addressing the argument that the owner had an easement that the owner's association could not abrogate by rule, the court pointed to other language in the Declaration that provided that the owner could not "sever his Unit from his undivided rights in the Common Area. . ." Although this obviously prohibited conferring tennis use rights on non-residents, the court concluded that it also prohibited retaining tennis use rights when one became a non-resident. Therefore, the association rules merely implemented the policies of the Declaration. Interestingly, the court took pains to state that the Declaration prohibited severance of tennis rights even where the owner did not confer such rights on the tenant. (The Declaration did provide expressly that owners could transfer tennis rights to tenants.)

On the question of whether the rule met the "reasonableness" test outlined by Nahrstedt, it seems obvious that this was a "slam dunk" given the facts that tennis facilities are inherently limited to a relatively small number of users and that increasing the user pool to include non-residents obviously restricts access. Although one might argue that if the owner had attempted to prohibit the tenant from use of the courts, while retaining the rights himself, this might not have had a negative impact on court usage, the court assumes, consistent with Nahrstedt, that a more general rule is within the reasonable discretion of the association.

Comment: The only area of the court's opinion that seems at all questionable is the determination that the regulations do no more than implement the provisions of the Declaration prohibiting severance of the Unit from the rights in the common elements. The Declaration does not address severance of "use rights," but actual severance of the "unit." It would seem safer to interpret the term "unit" in this context to refer to actual ownership, so that the express prohibition would be upon any attempt to transfer outright ownership of the Unit while attempting to retain interests in the common elements or any attempt to transfer the common elements interest alone while retaining the Unit. This would prohibit transferring use rights together with a lease of the unit, of course, which is why the Declaration contains a specific provision stating an exception to the general non-severance rule in such cases. As the exception does not contain any language permitting leasing of the unit with tennis use rights while still retaining those rights, one could assume that that type of "severance" would be restricted since not expressly permitted. Thus, owner's specific practice here was prohibited under the Declaration. But the leasing of the unit without transfer of the lease rights does not sever use rights from ownership and, contrary to the court's view, is not prohibited by the Declaration.

The court probably would have been better off addressing squarely the issue of whether a rule regulating use by non residents was appropriate regardless of the prohibition on severance. The editor believes such a rule ought to be regarded as an appropriate use regulation that owners should have anticipated the association could have adopted.

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