HOA’s can create rules to limit vacation rentals–Real Estate Case of the Month

By Jennifer Felten

Oak Shores Community Association v. Robert C. Burlison, Jr.

In this case a couple of owners in a homeowners association challenged some rules imposed by the association relative to limitations on short term leasing. This particular homeowners association, named Oak Shores Community Association, consists of 851 parcels of land. Six hundred sixty parcels are developed with single-family homes. Only about 20 percent, 125 to 150, of the homes are occupied by full-time residents. Approximately 66 absentee homeowners rent their homes to short-term vacation renters.

The plaintiffs in this case were absentee owners who rent their homes to short-term vacation renters. They challenged the several rules imposed by the Association relative to rentals, in particular, a rule that mandated a minimum rental period of seven days and an annual fee of $235 charged to owners who rent their properties.

The Association supported the need for these rules as fees based upon their records which indicated that short-term renters cause problems and cost the association money because they impact parking, they lack awareness of the Association rules, they tend to by noisier than owners and they tend to use and abuse the facilities. According to a study commissioned by the association, each rental actually costs the Association $898.59 per year in additional costs because of these issues.

The trial court found for the Association against the plaintiffs, finding that the Association’s rules and regulations were reasonable and in compliance with California law. The appellate court affirmed, and explained in detail the rights of an association to impose reasonable rules and fees on their owners. The court also awarded attorney’s fees and costs to the Association for having to defend the action, such that these owners now owe the association over $1,000,000 in attorney’s fees. Thus, this is a cautionary tale for owners that they should truly consider the merits of their case before they initiate litigation against their homeowners association.

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Jennifer Felten, Esq., Partnerfelton, LLP, www.hhlawgroup.com, 699 Hampshire Road, Suite 105, Westlake Village, CA 91361, (805) 265-1031, [email protected].  Ms. Felten specializes in representing both individuals and legal entities, providing representation and guidance on a variety of real estate related matters.

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