HOA Prohibition on Short-Term Rentals was “Unreasonable, Invalid, and Unenforceable”

This case involved a dispute between a homeowners’ association (“Association”), and various owners (“Owners”) of properties within the community, over Owners’ right to rent their properties on a short-term basis.

Association’s restrictive covenants, recorded in 1992, prohibited “commercial, business, or trade venture, manufacturing establishment, factory, apartment house, multi-unit dwelling or house or building to be used for a sanatorium or hospital of any kind, or at any time, use or suffer to be used, any house or building erected thereon for any such purpose.” The restrictive covenants also stated that “[n]o office serving the public may be maintained within the Subdivision” and expressly prohibited “noxious, obnoxious, noisy, unsightly, or otherwise offensive objects or activities.” The restrictive covenants were amended in 2005. The amendment was intended to clarify and enforce rental policies, requiring rentals to be for a period of at least 90 days unless they were part of an owner-occupied lot.

Owners purchased lots in the community with the understanding, based on their review of the governing documents, that short-term rentals were allowed. In 2019, Owners and others who were not parties to this action, began renting their properties. The rentals caused increased noise, litter, and traffic in the community. To address the issue, Association passed another amendment to the restrictions that was intended to: