Court Says HOA Lacked Standing to Enforce its Own CC&Rs Against Owners

This case started with a lawsuit filed by a homeowner’s association (“Association”) against two owners of a home within the community managed by association (“Owners”), in which the Association sought to enjoin Owners from operating a daycare business from their home. Although the Association had knowledge of the fact that Owners had been operating the daycare business from their home continuously since 2013, and had demanded that Owners cease the business operations in 2013 or suit would be filed, the Association did not file its action until 2020.

The trial court granted judgment in favor of Owners after finding that the Association had waived its right to enforce the covenant at issue which prohibited conducting business activities on lots within the community. The Association appealed the trial court’s judgment in favor of Owners.

The appellate court began its analysis of the case by first considering: