## Facts

- A homeowners association was formed in 1952 as a California nonprofit mutual benefit corporation whose members were owners of buildable lots in the Beverly Highlands tract.
- The association’s powers and tract restrictions were set out in recorded CC&Rs.
- The tract included four “open area” nonbuildable lots (Lots 53, 62, 65, and 66) subject to recorded use restrictions; the CC&Rs stated these restrictions were not a present dedication of the lots to the public or to owners of buildable lots.
- The CC&Rs assigned the association duties to plant, care for, and maintain certain open lots, and required association approval for specified uses.
- A faction of directors pursued dissolution of the association and steps affecting the open-area lots.
- Opposing homeowners formed a committee and sued for declaratory and injunctive relief to prevent dissolution and to enforce the CC&Rs.
- The trial court granted summary judgment for the homeowners, concluding the Davis-Stirling Common Interest Development Act applied and that dissolution required unanimous owner consent under Corporations Code section 8724.
- The association and individual directors appealed.

## Issues

1. Whether the tract qualified as a “common interest development” under the Davis-Stirling Common Interest Development Act based on the four open-area lots and the CC&Rs.
2. If not, whether dissolution was governed by the general dissolution statute for nonprofit mutual benefit corporations (Corp. Code § 8610) rather than the unanimous-consent provision applicable to certain common-interest associations (Corp. Code § 8724).

## Decision

- The Court of Appeal reversed the summary judgment and remanded.
- The court held the Davis-Stirling Act did not apply because the development lacked qualifying “common area” interests held by owners.
- The four open-area lots, though restricted and maintained by the association, were not “common area” for Davis-Stirling purposes because the CC&Rs disclaimed any present dedication to owners or the public.
- Because Davis-Stirling did not apply, Corporations Code section 8724’s unanimous-consent dissolution requirement did not apply; dissolution was governed by Corporations Code section 8610.

## Legal Principles

- A development falls within Davis-Stirling only if owners hold the statutorily required shared interest in “common area” (e.g., ownership, easement, or an equivalent property interest recognized by the Act).
- Use restrictions and maintenance duties in CC&Rs, without an owner property interest or dedication creating shared rights in the land, do not convert restricted lots into statutory “common area.”
- When an association is not part of a Davis-Stirling common interest development, dissolution proceeds under the general nonprofit mutual benefit corporation dissolution provisions (Corp. Code § 8610), not the unanimous-consent rule of Corp. Code § 8724.

## Conclusion

The Court of Appeal concluded the Beverly Highlands tract did not contain Davis-Stirling “common area” despite CC&R restrictions on open lots, making the special unanimous-consent dissolution statute inapplicable and requiring dissolution to be evaluated under the general nonprofit mutual benefit corporation dissolution framework.


Comm. to Save the Beverly Highlands Homes Ass’n v. Beverly Highlands Homes Ass’n, 112 Cal. Rptr. 2d 732 (Cal. Ct. App. 2001)