Court Upholds HOA’s Leasing Ban- But Voids HOA’s Unequal Special Assessment

This case involved a dispute between a homeowner’s association (“Association”), the original Declarant that established the Association, and multiple property owners (“Owners”) who were challenging Association’s amendments to the community’s declarations and a $695,000 special assessment levied disproportionately against their properties. Owners contended that the amendments were unenforceable.

The trial court sided with Owners by invalidating the amendments in question and a special assessment, and awarded Owners attorney’s fees. On appeal, the appellate court partially reversed that decision, upholding some amendments while invalidating others, and remanding the case for further proceedings.

The key issues in the appeal were:

1. Whether the 2022 amendments to the declarations adopted in 2022, including restrictions on leasing, revival of voting power for the Declarant, and a new special assessment formula, were enforceable against Owners.
2. Whether the trial court erred in granting summary judgment in favor of Owners and dismissing the Declarants’ counter-claims.
3. Whether the attorney’s fee award to Owners was appropriate.

The appellate court ruled: (1) Association’s restrictions on short-term rentals and business-use leasing on residential lots were consistent with: