Does Short Term Rental Violate HOA Rules?

This case involved a dispute between the owner of two townhomes (“Owner”) located within a townhome community governed by a community association (“Association”) over Owner’s right to rent its units “for short term hotel, vacation rental, and/or transient use.” Association contended that Owner’s short-term rentals of the units was in violation of Association’s CC&Rs requirements that the units be used for single-family residential use.

After Association made multiple demands on Owner to cease and desist from renting the units for short term hotel, vacation rental, and/or transient use, Owner filed an action against Association seeking a declaration that the CC&Rs did not restrict the duration of owner or tenant periods of occupancy. In response, Association filed a counterclaim against Owner for breach of the CC&Rs and nuisance, and injunctive relief to enjoin Owner from continuing with the short-term rentals.

Several months after the lawsuit was filed, Association’s board of directors adopted rules which barred short-term rentals. Owner then amended his action for declaratory relief to seek further declarations that: (i) the rules adopted by Association were void and unenforceable to the extent they sought to regulate anything beyond the Common Area facilities; and (ii) the rules that sought to regulate the duration of occupancy or leasing were void because they exceeded the scope of the powers granted to Association by the CC&Rs, and/or they conflicted with the broad grant of leasing rights contained in the CC&Rs.

The trial court granted summary judgment in favor of: