Appellate Decision Allows Some Short Term Rentals

by | Aug 26, 2021 | Real Estate

Civil Code §4740(a) provides:

“An owner of a separate interest in a common interest development shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in that common interest development to a renter, lessee, or tenant unless that governing document, or amendment thereto, was effective prior to the date the owner acquired title to their separate interest.” (emphasis added)

In Brown v. Montage at Mission Hills, Inc., published August 20, 2021, Montage argued that the word “prohibits” did not prevent a common interest development (CID) from restricting or limiting rentals to more than 30 days. The Court of Appeal in San Diego held no, that the statute protects owners against new rules and new CC&Rs provisions, enacted after the owner acquired the property, which prohibit, restrict or limit short-term-rentals.

This holding against restrictions on short-term-rentals, applies only to owners who acquired their home before the restriction is enacted.

This ruling relies on the statute quoted above which addresses rentals specifically. This case and its reasoning will not apply to other rules and CC&R provisions enacted after an owner acquired her or his unit.

If you are thinking about covering any part of the costs of owning a home in a CID with CC&Rs, by short-term-rentals, please be sure to check both the CC&Rs and any HOA rules for any restrictions or limitations which were enacted before you bought your home.

If you have a question regarding retroactive enforcement of any new CC&R provision or rule, please give us a call or send us an email.