CC&Rs recorded for a California condominium project contain a use restriction that limits rentals to a maximum of 90 days per year for any individual unit. A prospective buyer argues the restriction is unenforceable because it was imposed by the developer without a vote of future owners. Under California law, what is the most likely outcome?

Correct Answer

B) The restriction is enforceable as a valid equitable servitude that runs with the land, provided it was properly recorded and does not violate law or public policy

Under California Civil Code §4250 and the Davis-Stirling Common Interest Development Act, CC&Rs recorded by a developer at the time of project formation are enforceable as equitable servitudes that run with the land and bind all current and future owners who take title with constructive notice. A developer has authority to impose lawful use restrictions — including rental limitations — in the original declaration without a unit-owner vote. Courts apply a reasonableness standard and will uphold such restrictions unless they are arbitrary, violate a fundamental public policy, or impose burdens that substantially outweigh their benefits (Nahrstedt v. Lakeside Village, 1994).