In a much anticipated decision, the California Supreme Court has ruled that a homeowners association can be compelled to arbitrate construction defect claims against a developer pursuant to an arbitration clause recorded by the developer as part of the applicable covenants, conditions and restrictions, or CC&Rs even though the homeowners association did not exist at the time of the recordation and cannot be said to have assented to the clause in any conventional sense.
In Pinnacle Museum Tower Association v. Pinnacle Market Development, the homeowners association brought suit alleging construction defects in a San Diego project known as the Pinnacle Museum Tower Condominium. The developer moved to compel arbitration, relying on language in the development’s CC&Rs providing that, by accepting the deed to any portion of the covered real estate, the association and all buyers waived their rights to a jury trial and agreed to resolve any construction dispute by binding arbitration in accordance with the Federal Arbitration Act and the California Arbitration Act to the extent it is consistent with the FAA.
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