A Community Built on Defects — and Governing Documents Written to Protect the Builder

Aldea Dos Vientos is a condominium development in Thousand Oaks, a planned community bordering the Santa Monica Mountains in western Ventura County. Like most common interest developments in California, the community was governed by a homeowners association and a set of recorded covenants, conditions, and restrictions — the CC&Rs — that established the rules under which the association and its members operated. Also like many such developments, those documents were drafted by the developer who built the project and recorded them before a single unit was sold.

In 2012, the association began discovering what would ultimately be identified as $5.6 million in construction defects affecting common areas and individual units throughout the development. The association engaged the developer — CalAtlantic Group, Inc., successor to the original builder — in discussions about the defects. Those discussions continued through 2013 without producing a resolution. In late 2013, the association filed suit.¹

What happened next had very little to do with the defects themselves — and everything to do with a clause buried in the CC&Rs that the developer had quietly written to protect itself years earlier.

Section 7.01B: The Clause That Almost Ended the Case

The CC&Rs contained two relevant provisions. Section 7.01A required that all disputes between the developer and the association be resolved through arbitration. That, standing alone, is unremarkable — arbitration clauses in HOA governing documents are commonplace in California.

Section 7.01B was different. It stated that before the association could file any claim against the developer — including a construction defect claim — the association was required to first obtain the vote or written consent of at least 51 percent of its membership. If that vote did not occur before the claim was filed, the claim could be dismissed outright — even if, after the fact, the membership voted overwhelmingly to proceed.²

The association, in initiating arbitration, had not obtained that pre-filing vote. It secured the vote later, and the membership approved proceeding by a wide margin. The developer argued it did not matter. The arbitrator agreed with the developer and dismissed the arbitration. The trial court confirmed the award. The association had discovered $5.6 million in construction defects in their homes — and was told their case was over because of the sequence in which paperwork was filed.¹

How the CC&R Trap Was Constructed

To understand why this case matters beyond its specific facts, it helps to understand how common interest development documents are created — and who holds the pen.

What the Court Actually Decided — and Why It Overturned Prior Law

The Court of Appeal's ruling directly disagreed with an earlier decision — Branches Neighborhood Corp. v. CalAtlantic Group, Inc. (2018) — which had reached the opposite conclusion on nearly identical facts involving the same developer. The Branches court had held that the pre-filing vote requirement was enforceable and that the HOA's failure to obtain the vote before filing forfeited its right to pursue the claim, even if members later voted to ratify.³

The Aldea Dos Vientos court rejected that reasoning on two independent grounds. First, it held that Section 7.01B violated California Civil Code Section 5986(b), enacted as part of Senate Bill 326 — which prohibits HOA governing documents from including provisions that unreasonably restrict or limit an association's authority to commence or maintain a civil action. Second, and more fundamentally, it held that the provision was unconscionable under the Davis-Stirling Act: the CC&Rs cannot be enforced when doing so would give a party that drafted those documents unilateral power to escape liability to the very homeowners those documents were supposed to protect.⁴

The Language the Court Used Matters

The Aldea Dos Vientos opinion is notable not just for its holding but for how directly it described what the developer had done. The court wrote that Section 7.01B "gives the Developer veto power over the Association's claims in spite of the members' vote to proceed with the arbitration." It described the provision as not merely unreasonable but unconscionable — a legal term that carries specific weight in California contract law, signifying conduct that is so one-sided and oppressive that no court should enforce it.²

The court also noted that the provision failed to inform the association or its members of the "devastating effect" that failing to comply would have, and that the failure to vote — however inadvertent — would be irremediable. A trap, in other words, that worked precisely because it was hidden.

The Legal Framework Governing HOA Construction Defect Claims in California

The Aldea Dos Vientos decision sits within a broader statutory framework that governs how construction defect claims work in California common interest developments. Understanding that framework is essential for any HOA board or individual homeowner navigating a dispute with a developer.

What Homeowners in Common Interest Developments Often Do Not Know

The facts of Aldea Dos Vientos exposed a dynamic that exists in a substantial number of California condominium and planned unit developments: the governing documents were written by the developer, often without meaningful review by the future homeowners who would be bound by them. Pre-litigation voting requirements, mandatory arbitration clauses, and limitations on the association's authority to act are frequently included in these documents as a matter of course.

Most homeowners purchase their units, receive a thick disclosure package, and never read the CC&Rs with the attention a real estate attorney would bring to them. The provisions that most affect their legal rights in a construction defect scenario are often the least prominent — and the most strategically drafted.

The Aldea Dos Vientos ruling means that the most extreme of those provisions — the ones that effectively allow the developer to defeat claims against itself — are now unenforceable. But it does not mean that all pre-litigation requirements in CC&Rs have been eliminated. HOA boards still need to understand what their governing documents require before initiating any legal action, and individual homeowners still need to understand what rights they hold for defects within their separate interest units versus defects in common areas.

How DiJulio Law Group Handles HOA and Construction Defect Disputes

Aldea Dos Vientos is a reminder that the legal rights of homeowners in common interest developments are shaped not just by what the developer built, but by what the developer wrote into the governing documents before the first unit was ever sold. Identifying those provisions, understanding which are enforceable and which are not, and advising boards on how to proceed without forfeiting procedural rights requires a careful reading of both the CC&Rs and the current state of California law.

DiJulio Law Group represents homeowners, associations, and businesses in construction law disputes and HOA matters throughout Glendale, Los Angeles, and Southern California. For more than 35 years, we have advised clients on the full range of construction defect issues — from pre-litigation documentation and developer negotiations to arbitration and litigation when those negotiations fail.

If your HOA has identified construction defects and you are uncertain about what your CC&Rs require before taking action — or whether a provision in those documents is enforceable — the time to get that clarity is before a claim is filed, not after. The procedural landscape matters, and the window for most structural claims does not stay open indefinitely.