In Brown v. Montage at Mission Hills, Inc, an August 2021 California Fourth District Court of Appeals case, Brown had been renting out her condominium for “short-term” rentals (i.e., rentals for less than a month) for over sixteen years after her purchase. The Homeowners Association (HOA) later amended its governing documents to prohibit rentals for less than a month. Brown sued the HOA seeking a declaration that the amended governing documents limiting short term rentals did not apply to her since California Civil Code section 4740(a) provides that an owner of a property in a common interest development “shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of” the owner’s property unless that document or amendment “was effective prior to the date the owner acquired title” to the property. The trial court held that she was not exempt.
The Court of Appeals reversed and found that Brown was exempt from the new prohibition. It based its decision on interpretation of Section 4740(a). Thus, if you own a home, townhouse, or condominium in a common interest development that now seeks to limit short-term rentals by changing its governing documents those changes will not apply to your ability to rent your property. However, should you sell, the new owners will be subject to such newly adopted restrictions.
Before you commence short-term rentals it is imperative that you have your real estate attorney review your common interest development documents and help you prepare an enforceable lease that incorporates any of the restrictions in the governing documents applicable to your property.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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