HOAs with significant populations of renters may encounter problems that do not arise in developments that consist of primarily owner-occupied homes and condominiums. Those problems typically include higher amounts of assessment delinquencies, more rules violations, lower maintenance standards, more insurance claims, etc. HOAs seeking to avoid such problems often amend their governing documents (i.e., amend their CC&Rs) to impose reasonable rental restrictions within their developments. California courts have recognized a HOA’s authority to take such action as well as its general power to regulate rentals:

“Reasonable restrictions on alienation of condominiums are entirely consistent with Civil Code section 711 in which the California law on unlawful restraints on alienation has its origins. The day has long since passed when the rule in California was that all restraints on alienation were unlawful under the statute; it is now the settled law in this jurisdiction that only unreasonable restraints on alienation are invalid. (Laguna Royale Owners Assn. v. Darger (1981) 119 Cal.App.3d 670, 682.)

“The power to regulate pertains to a wide spectrum of activities, such as the volume of playing music, hours of social gatherings, use of patio furniture and barbecues, and rental of units.” (Nahrstedt v. Lakeside Village Condominium Assn. (1994) 8 Cal.4th 361, FN 6.)

“Here we hold, among other things, that homeowners associations may adopt reasonable rules and impose fees on members relating to short-term rentals of condominium units.” (Watts v. Oak Shores Community Assn. (2015) 235 Cal.App.4th 466, 468.)

Statutory Limitations on Rental Prohibitions within HOAs
The policy of the California Legislature in seeking to address the state’s housing and homelessness crisis has resulted in several changes to the law that significantly limit the degree to which an HOA may restrict the rights of its members to rent out their homes. For information addressing those limitations and the only rental prohibitions that may be lawfully enforced, see “Limitations on Rental Prohibitions.”

Disclosure of Rental Prohibition to Prospective Purchaser
If a provision of an association’s governing documents “prohibits the rental or leasing of any of the separate interests in the common interest development,” the owner of a property has a duty to disclose to its prospective purchaser the existence of the rental prohibition and provide a statement describing the prohibition. (Civ. Code § 4525(a)(9).)

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