Investing in a property governed by a homeowners association (HOA) can be a smart move. HOAs help preserve property value by imposing standards on home maintenance and limiting disruptive activities.
For those hoping to rent their properties to others, homes in HOA neighborhoods can be attractive because of the amenities that the HOA provides. Unfortunately, HOAs sometimes seek to limit the economic activities of property owners within their communities. For example, some HOAs may attempt to impose rules that limit the use of local homes for rental purposes.
Can an HOA implement and enforce rules that prevent owners from converting properties to short-term rentals?
There are limitations on HOA rules
Generally speaking, HOAs can enact many different types of rules that restrict the use of properties within the community. That being said, they must ensure that the rules they establish align with California state law and prior judicial precedent.
For example, the state limits how strictly HOAs can control rental housing. HOAs can establish rules that prevent a large percentage of owners from converting their homes to rental units. However, the lowest percentage currently allowable is 25%. Any attempts to limit home rentals that are stricter than that may not actually be enforceable.
Similarly, the law only allows for HOAs to limit truly short-term rental arrangements. HOAs can prohibit local property owners from renting their homes for less than 31 days. However, they cannot insist on a minimum three- or six-month lease.
Finally, property owners generally do not have to worry about the enforcement of rules implemented after they acquire the property. For the HOA to enforce restrictions on property owners, the owners have to be aware of and agree to the terms established by the HOA. Restrictions enacted after an investor acquires a property may lead to legal controversy in some cases.
Real estate investors considering renting out homes in an HOA community may need help reviewing restrictions on their use of the property. Ensuring that rental practices do not violate HOA policies can help protect aspiring landlords from legal conflict and costly enforcement efforts initiated by the local HOA.
