HOA Rental Restrictions In California

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Board members should understand the permitted HOA rental restrictions in California. There are penalties for violating the rental laws set forth by the California Legislature regarding homeowners associations.

Are There HOA Rental Restrictions in California?

In California, some laws limit the extent to which a homeowners association can prohibit or restrict rentals within the community. The goal of these laws is to protect the rights of homeowners while simultaneously keeping HOAs in check.

It is not uncommon for HOAs to have rental restrictions. Homeowners often rent out their units or properties to earn extra income, mainly if they’re located in high-tourist areas. However, many renters within a community can have negative effects.

For one thing, long-term residents feel concerned about the increased security issues of transient renters. Associations also have more difficulty enforcing the rules. Beyond that, HOAs also face higher maintenance costs and administrative expenses because rentals need more supervision.

Can HOA Restrict Rentals in California?

Whether or not an HOA can restrict rentals in California depends on state laws. The California Legislature has enacted legislation limiting the power of HOAs when it comes to rental rules.

Here are the homeowners association rental restrictions California communities must know.

No Broad Rental Prohibitions

According to Civil Code Section 4741, an HOA’s governing documents or amendment can’t prohibit, effectively prohibit, or unreasonably restrict the rental or leasing of a unit or property. This includes accessory dwelling units (ADUs) and junior accessory dwelling units (JADUs).

Individual Room Rentals in Owner-Occupied Units

An HOA can’t prohibit owners from renting out a part of their unit or property, such as an individual room, if the owner occupies the unit or property during the rental period. The other condition is that the rental period is more than 30 days. This is according to Civil Code Section 4739.

Rental Caps Not Below Than 25%

According to Civil Code Section 4741, an HOA can place a cap or limitation on the number of rentals that can exist at any one time within the community to 25% or more. This means that rental caps can’t be lower than 25%. If an HOA has a rental cap below 25%, it must amend its governing documents to increase the cap to at least that percentage. The same applies to an HOA that does not have a rental cap and wishes to enforce one.

Short-Term Rental Prohibitions Allowed

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California HOA short-term rental restrictions are quite common. Short-term rentals are defined as rentals for a period of 30 days or less.

Civil Code Section 4741 permits an HOA to enforce a rule prohibiting short-term or transient rentals. This is to protect the property values of an HOA, as short-term rentals tend to have a more significant impact.

New Rules Apply to Future Owners

According to Civil Code Section 4740, an HOA’s rental restrictions apply to all future owners. For instance, if an HOA previously did not have a rental cap and only recently enacted one, that rental cap only applies to future owners after the cap was created.

Complying With California HOA Rental Law

Homeowners associations must comply with the HOA rental restrictions in California. According to Civil Code Section 4741, HOAs must amend their governing documents to eliminate any provisions that contradict California’s laws. The deadline was set for July 1, 2022.

Amending governing documents, though, takes quite a lot of effort. It usually requires approval from the membership since it would involve changing the CC&Rs. In such situations, Civil Code Section 4741 gives HOA boards the power to amend and restate the CC&Rs without seeking approval from the membership. Instead, they can use the same process required to amend operating rules.

This exception only applies to this particular circumstance. Board members should still follow due process, including seeking membership approval for any other amendments to the CC&Rs. This expedited process was provided so board members could comply with the law before the due date.

Keep in mind that noncompliance does come with penalties. If an HOA willfully violates Civil Code Section 4741, it is liable for actual damages. The HOA must pay a civil penalty of $1,000.

Adopting California HOA Rental Restrictions

While it is common for HOAs to have existing rental restrictions, some communities have yet to regulate rentals. An HOA must comply with California laws if it wishes to adopt new rental restrictions. Additionally, the HOA must do so using the amendment process for the CC&Rs. This typically requires a vote of approval from the membership.

New HOA rental restrictions in California become effective when they are recorded. They also only affect future owners. Of course, some regulations may not require a vote from the membership to approve. However, it is on a case-by-case basis, so board members should seek legal advice to make sure.

Disclosure of Restriction

According to Civil Code Section 4525, if an association’s governing documents include restrictions on occupancy, residency, or use of a property based on age, owners must notify prospective buyers of these restrictions as soon as possible before transferring the title.

Coastal Associations

Coastal condominium associations looking to impose stricter limits on short-term rentals must account for California Coastal Commission regulations.

The Mandalay Shores Association implemented a rule requiring rentals to last at least 30 days. However, the Coastal Commission ordered the association to stop enforcing the rule. It argued that it constituted a “development” that altered the density and intensity of coastal area usage, requiring a coastal permit. 

While the trial court ruled that the 30-day minimum did not qualify as a “development,” the court of appeal overturned the decision. According to the decision, regulating or banning short-term rentals is a matter for the city and the Coastal Commission, not a homeowners association (Greenfield v. Mandalay Shores).

Due to this case, coastal associations should consult legal counsel when addressing short-term rental issues.

Rental Restrictions HOA California: Homeowner/Landlord Duties

While HOA rental restrictions in California help protect the rights of homeowners, that doesn’t mean they are not without responsibility. California law also stipulates some obligations that homeowners have toward their HOAs.

Owner-Occupied or Renter-Occupied

According to Civil Code Section 4041, members must give the HOA information concerning their preferred and alternative contact methods. Additionally, each member must also let the HOA know whether their property is owner-occupied or renter-occupied. This informs the HOA which properties are being rented out. Members must do this on an annual basis, too.

Tenant’s Name and Contact Details

Moreover, Civil Code Section 4740 requires owners to provide the HOA with the tenant’s name and contact information before they lease their units or properties.

Signed Lease Agreement for Lease Period Verification

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Many homeowners associations don’t allow short-term rentals. The only way for an HOA to confirm whether or not a rental complies with this rule is to examine the lease agreement, which contains the lease period. As such, an HOA can ask for a copy of the signed lease agreement to confirm compliance with a short-term rental restriction.

Landlords and homeowners can redact personal and financial information before submitting the signed lease agreement to the HOA. This protects the tenant’s financial and personal details from third parties.

Lease Addendums

Homeowners associations can adopt lease addendums or supplement lease agreements that allocate rent to the HOA if the landlord or homeowner defaults on their dues. If an owner becomes delinquent, their rental income (or a portion of it) will go to the association to satisfy the debt.

When leasing a unit, both the owner and tenant must sign the association’s lease addendum. The addendum requires the lease to cover the entire unit. Assignments or subleases are strictly prohibited. Additionally, the lease term must be at least 30 days.

Tenants must comply with the association’s governing documents and disciplinary rules. The owner must assign unit rental income to the association if they fall behind on payments. Finally, tenants must pay the owner’s dues if the owner becomes delinquent.

Penalties for Noncompliance With HOA Rental Restrictions in California

Homeowners associations must comply with California’s laws on rental restrictions. On the other hand, homeowners also face potential consequences if they violate their HOA’s rental rules, assuming they are lawful.

An HOA can enforce its rental restrictions in several ways. More often than not, those violating these rules must pay a monetary fine. They may also lose their rental privileges or other such rights. However, it is vital to refer to the HOA’s governing documents to understand what authorities the association has when it comes to enforcement.

When it Comes Down to It

The HOA rental restrictions in California are clear and reasonable. Board members must ensure that their governing documents comply with the rental laws. Meanwhile, homeowners must understand that rental restrictions support HOAs in the long run. They exist to maintain curb appeal, community standards, and property values.

Personalized Property Management offers expert HOA management services around Southern California. Call us at 760-325-9500 or fill out this form for more information!

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