CC&Rs Can Prohibit Vacation Rentals

February 4th, 2018

CC&Rs Can Prohibit Vacation Rentals

   Question: We live in the Desert Mountain community in North Scottsdale. Our understanding is that the community amended the CC&Rs to prohibit vacation rentals. We only live in our Desert Mountain home a few months of the year. We have rented out this home for a week or two throughout the year to friends and neighbors from Chicago. Can our HOA enforce these Desert Mountain CC&Rs? Isn’t there a statute in Arizona against CC&Rs prohibiting vacation rentals?

   Answer: There is no statute in Arizona that prohibits private regulation by CC&Rs of vacation rentals. One Arizona statute, however, prohibits public regulation by a city or town of vacation rentals less than 30 days. ARS § 9-500.39. Therefore, your Desert Mountain CC&Rs as private regulation can be enforced to prohibit the vacation rentals that you have been making to your Chicago neighbors and friends.

   Note: In the five-year period from 2010 to 2015, vacation rentals used by travelers in the United States increased from 11% to 33% of all travel lodging. It is estimated that in 2018 vacation rentals will account for over 50% of all travel lodging in the United States. Not only has usage of vacation rentals by travelers in the United States increased tremendously, there has also been a tremendous increase in income to vacation rental homeowners and to vacation rental companies such as Airbnb and VRBO. For example, in 2016 Airbnb had over $50 million in gross income in Arizona from 329,000 travelers.

In light of the amount of money spent, and the increased usage of vacation rentals, there will probably be new legislation in Arizona within the next few years in favor of vacation rental business opportunities and against private regulation. As such, civil litigation in favor of the private regulation of vacation rentals should be tempered by the fact that the law could soon change.

For example, in a 2015 Idaho Supreme Court decision, the court ruled that an HOA could enforce an amendment to its CC&Rs prohibiting a homeowner from using his home for a vacation rental (Adams v. Kimberley One Townhouse Owner’s Ass’n). The efforts this HOA made in obtaining a ruling in their favor were swiftly muted by a new Idaho statute, passed in the state legislature’s very next legislative session. This new Idaho statute prohibits amendments to HOA CC&Rs that limit rental time periods, like short-term vacation rentals, without the express consent from all homeowners.

Published in Homeowners Associations