Court Finds Short Term Rentals Are Not a Business, And Awards Over $260,000 in Attorney Fees

This case involved a dispute between the owner of one unit in a four unit condominium complex (hereinafter “Plaintiff”), and his Homeowners Association (“Association”), together with two of the other three unit owners (hereinafter collectively “Defendants”). The dispute pertained to the right of the two owner defendants to use their respective units for short-term vacation rentals (hereinafter “STVR(s)”).

Plaintiff contended that a provision in Association’s CC&Rs (Section 3.1) that requires each of the units in the complex to be used “as a single family residence and for no other purpose or purposes” means that the units had to be used for residential use by owners, their guests, and their tenants, and not for “transient vacation lodgers.” Plaintiff further contended that use of the units as STVRs involved a “commercial” enterprise that was prohibited by the CC&Rs.

The trial court ruled that STVRs are not a “business” that was prohibited by Section 3.1 of the CC&Rs and that, while the use of a unit as a STVR would provide rental income to the owner, the unit still remained a “single family residence.” Thus, the trial court ruled in favor of Defendants.

In a post-trial motion, Defendants then sought an award of attorneys’ fees in the amount of $313,721 and $6,156.95 in costs based on their contention that said amounts were reasonable in light of the actions taken by Plaintiff in connection with the lawsuit, which included: