HOA Can Regulate Short Term Rentals

The California Court of Appeal recently found that a HOA can adopt reasonable rules and impose fees related to short term rentals of condominium units. Watts v. Oak Shores Community Association provides some guidance on an expanding area for landlords and property owners as to the proliferation of short term rentals, particularly in high demand vacation spots.

Oak Shores is a single family common interest development governed by a board of directors and regulated by its Covenants, Conditions, and Restrictions (CC&Rs). Oak Shores regulated short term rentals by prohibiting any rental period less than seven days, charging a $325 fee on homeowners who rent their units, prohibiting the number of automobiles, boats, and other watercraft that renters could bring into Oak Shores, and charging a mandatory garbage collection fee, boat and watercraft fees, building permit fees, and property transfer fees.

Oak Shores prohibited any homeowner from renting their property for less than seven days because various Board members and staff testified that short term renters brought a number of issues, including parking, noise and use violations, a lack of knowledge of the rules of the HOA and abuse of the facilities. The HOA also found that short term rents caused more issues and were more disruptive than other long term residents.

The $325 fee was charged to homeowners who rented their homes on a short term or long term basis; however, fees for watercraft use were only charged to short term rentals. The HOA testified that short term renters were only 8% of people entering the HOA but brought in 37% of the boats.

The trial court agreed with the HOA that it could reasonably restrict short term rentals. The Court of Appeals agreed because the HOA had reasonably restricted short term rentals by studying the use of facilities by short term renters. The Court of Appeals also found that the $325 fee charged to homeowners who rented their homes was reasonable in light of Civil Code Section 1366.1, which requires a reasonably close relationship between the contested fee and and the cost it is intended to offset.

This case has important implications for HOAs looking to regulate short term rentals and homeowners looking to rent their units on a short term basis. Please contact Attorney Anthony Marinaccio at 818-839-5220 for more information.