In Watts v Oak Shores Community Association (2015) 235 Cal.App.4th 466, the Court said an HOA may impose reasonable regulations and charge reasonable fees that are related to short term rentals that are not imposed or charged other owners of longer term rentals.
Facts: Oak Shores has about 660 single family residences and 200 undeveloped lots in its HOA. Only 20% of the developed units are occupied by owner occupants. About 10% are rented out to short term vacation renters. The HOA requires a minimum 7 day rental, charges all owners who rent out their properties an annual fee, and limits the number or boats and watercraft allowed to be brought into the HOA by renters. Watts challenged the rules. The HOA presented testimony from experts that short term renters cause more problems than owner occupants or long term tenants, make greater use of HOA facilities and services, and place increased demand on HOA facilities and administrative staff. Experts also testified that the fees charged by the HOA were reasonable.
The Decision: The trial court found that the HOA rules are reasonable, comply with HOA governing documents and satisfy the Civil Code requirements. The Appellate Court affirmed the decision. Courts will apply a judicial deference standard to HOA decisions. The means that generally,
The Implication: The judicial deference standard means that courts will uphold decisions made by the governing board of an owners association so long as they represent good faith efforts to further the purposes of the common interest development, are consistent with the development’s governing documents, and comply with the public policy. As the Court of Appeal said, “[c]ommon interest developments are best operated by the board of directors, not the courts.”