In recent years, the rise of short-term rental platforms like Airbnb has transformed the way people rent out their properties. For Arizona homeowners who are part of a homeowners’ association (HOA), the ability to rent out their property can be a complex issue. Generally, Arizona law allows an HOA to restrict short-term rentals. However, even if the HOA prevents you from renting out your property, there may be legal questions revolving around the validity of those restrictions.
HOA Restrictions on Short-Term RentalsÂ
When evaluating whether a homeowner is authorized to rent their property, the most important information will typically be found in their HOA’s governing documents (e.g., CC&Rs, Bylaw, Rules and Regulations, etc.). Many HOAs in Arizona have specific provisions in their CC&Rs that address short-term rentals. These provisions can vary widely from one HOA to another. Some HOAs may have explicit bans on short-term rentals, while others may impose minimum rental periods, such as 30 days. These restrictions are often put in place to maintain the residential character of the community and to prevent potential nuisances associated with short-term tenants.
Amending the CC&Rs to Restrict Short-Term RentalsÂ
If an HOA does not currently have restrictions on short-term rentals, they can amend the CC&Rs to include such restrictions. Amending the CC&Rs usually happens when a proposed amendment is voted on by all members of the association; i.e., the homeowners. If the homeowners unanimously approve an amendment, it is enforceable. However, if the amendment passes with majority approval – but not unanimous consent – the Arizona Supreme Court requires that the amendment fit within certain parameters to be valid and enforceable.
Validity of an Amendment to the CC&Rs Without Unanimous ConsentÂ
In Kalway v. Calabria Ranch HOA, LLC, 252 Ariz. 532 (2022), the Arizona Supreme Court held that non-unanimous amendments to CC&Rs must be reasonable and foreseeable in light of the original provisions. In other words, non-unanimous amendments are only valid if they merely refine or fill in a gap of the original CC&Rs. Unless there is unanimous consent amongst the homeowners, the HOA cannot adopt brand-new restrictions that were not contemplated by the original CC&R.
What Happens If My CC&Rs Were Amended to Restrict Short-Term Rentals?Â
If your CC&Rs were amended without unanimous consent to restrict the rental of your home, there is a complex legal analysis to determine the validity and enforceability of the new restrictions. The first step is to look at the original CC&Rs, and determine if there was reasonable notice that they could be amended in the future, even without a homeowner’s consent. The second step is to determine whether those CC&Rs provide additional notice that future amendments could restrict rentals. Therefore, if the original CC&Rs do not contemplate future restrictions on rentals, any subsequent amendment that bans rentals may not be enforceable.
Should I Rent My Home?Â
For homeowners who wish to rent out their property, it is crucial to review the CC&Rs to understand any restrictions that may apply. Ignoring these restrictions can lead to fines and other penalties imposed by the HOA. While Arizona law generally supports the rights of homeowners to rent out their properties, those who are part of an HOA must navigate the additional layer of restrictions imposed by their CC&Rs. At Lubin Pham + Caplin, we are well equipped to help you analyze your CC&Rs and determine what rights and obligations run with your property.
