Boards have discretion in enacting operating rules. A rule enacted by the Board is valid and enforceable as long as it is reasonable (as measured by the effect on the development as a whole, not an individual homeowner), within the board’s authority, not inconsistent with the governing documents, and adopted in good faith and in compliance with the statutory procedure. A rule is reasonable if it is rationally related to the protection, preservation and proper operation of the development and the purposes of the Association as set forth in the governing instruments, as well as fair and nondiscriminatory. By contrast, an unreasonable rule is one that is arbitrary and capricious, violates the law or a fundamental public policy or imposes an undue burden on property. Boards have this broad discretion because when a unit owner purchases a unit, knowing of the association’s discretionary power, the owner accepts the risk that the power may be used in a way that benefits the community as a whole but harms the individual. A prospective homeowner who purchases property in a common interest development should be aware that new rules and regulations may be adopted by the association either through the board’s rulemaking power or through the association’s amendment powers.
The board’s discretion is fettered not only by the requirement that the rule be reasonable, but also by the homeowners’ right to challenge the adopted rule, at least to the extent that
Under section 1357.140, subdivision (b), a homeowner may challenge an adopted rule by requesting a special membership meeting to dispute it, within 30 days of notification of the rule change. Due to an admitted lack of any record on whether this procedure was invoked or litigated here, we decline to apply any waiver principles from it, as respondent's brief now suggests. (See Fourth La Costa, supra, 159 Cal.App.4th at p. 585 [waiver rule].)
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