Prohibiting Short-Term Rentals
1. CC&R/ Getting Around Super Majority Requirements
In the case of Orchard Estate Homes, Inc. v. Orchard Homeowners Alliance, 32 Cal.App.5th471, the HOA attempted to enforce a rule prohibiting short-term rentals of units of durations of less than 30 days in the Association. This was a rule and not contained within the CC&Rs.
The Superior Court ruled that the rule was unenforceable because it was not contained in the CC&Rs. HOA then put the issue to a vote to amend the CC&Rs. The results were 62% of the owner/members voted to amend the CC&Rs to prohibit short-term rentals. The CC&Rs require a super majority or 67% to accomplish an amendment to the CC&Rs.
The HOA then filed a petition pursuant to Civil Code § 4275 seeking authorization to reduce the required 67% percentage and adopt the amendment with only 62% of the owners voting limiting short-terms rentals. The trial court granted the petition in favor of the HOA and the disgruntled owners’ appeal.
Finding no abuse of discretion, the Court of Appeal affirmed the Superior Court decision. The Court of Appeal stated the following:
Before a court approves the HOA petition under CC § 4275(c), the HOA must show (a) reasonable notice of the court hearing, (b) balloting conducted appropriately under the by-laws and other applicable law, (c) eligible voters diligently pursued, (d) a majority of voters approved the amendment, (e) the amendment was reasonable and (f) the petition was not otherwise improper.
In this case, the HOA proved all of the elements aforementioned and the amendment to the CC&Rs was adopted with 62% vote, which was less than the required super majority of 67%.
Comment: This is a 93-unit condo complex just west of Indio, and fairly close to the polo grounds where they hold Stagecoach and Coachella festivals. The homeowners must be concerned that party-goers would be renting units to attend these festivals, as a lot of money was spent on both sides in litigating this case.
About the Author
Scott Souders is a real estate attorney who has practiced real estate law in excess of 42 years in Southern California. The Real Estate Law Update cites cases or statutes which are summarized and should not be relied upon without fully reading the cases or statute in the advance sheets and shepardizing the same and consulting with your own attorney.