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June 21, 2012 By Tracy Ettinghoff

Homeowner Associations May Not Be Sued Under Unfair Business Practices Act

In a new published decision, from the Appellate Court in Orange County, the court held that a Homeowners Association is not a business for the purposes of making a claim under Business & Professions Code section 17200 (Unfair Competition Law). In That vs. Alders Maintenance Assn. (2012), a homeowner disagreed with the results of a recall election. He first brought a small claims action, then a writ of mandate, then a lawsuit in Superior Court. Each action was unsuccessful. In the Superior Court case, a demurrer was sustained on the grounds that the action was untimely because it was not brought within one year from the date of the election, which is the statute of limitations. One of the causes of action in the complaint alleged that the Association was liable under Business & Professions Code section 17200 (Unfair Competition), which prohibits any “unlawful, unfair, or fraudulent business act or practice.” The court sustained the demurrer to that cause of action also because a Homeowners Association is not engaged in a competitive business and the Unfair Competition law was not designed to apply to non-business claims. The court also held in this case that the Association was not entitled to recover its attorney’s fees, even though it felt that the lawsuit was frivolous. In most cases involving enforcement of the governing documents of an HOA, the Association would be entitled to recover its attorney’s fees, but this case did not involve the enforcement of any governing document.

Filed Under: Homeowner Association Law

Practice Areas

  • Construction Defect Litigation
  • Easements
  • Escrow Disputes
  • Foreclosures
  • Interpretation & Enforcement of CCRs
  • HOA Assessment Collections
  • Real Estate Fraud
  • Real Estate Litigation
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  • Unlawful Detainers

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Law Offices of Tracy Ettinghoff
Orange County Real Estate Attorney

30011 Ivy Glenn, Suite 121
Laguna Niguel, California 92677
Phone: (949) 363-5573
Fax: (949) 363-1306
Email: te@ettinghoff.com

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