Hoa rules vs CCRs-rental cap- Davis Stirling

Wondering if we have any Davis Sterling experts? My HOA currently does not have any rent restrictions. We're thinking about putting a cap of 25%. And my HOA management company the saying we can do it in the rules with board vote and not via CCR's or bylaws that require 75% or 50% approval

The management company is incorrect.
Also note, the new law prohibits restrictions below 25%

Additionally, the restriction (if none currently exists) would only apply to new owners - not current ones. See the Davis-Stirling reference.

It must be in the CC&Rs. Otherwise, they are not enforceable if challenged in court.

See:

New California Law has huge impact on HOA Rental Restrictions 2021 news article

California HOA Rental Restrictions-What You Need to Know from a law firm

RENT RESTRICTIONS & PROHIBITIONS From davis stirling site

MC is saying in rules & regulations. Pending lawyer letter from them as confirmation

Don't know about California but when we re-wrote our governing docs we added the stipulation that a home must be owner occupied for one year before it can be rented out.

Our older than dirt CCRs state 75% is required.

Our older than dirt CCRs state 75% is required.

Our older than dirt CCRs state 75% is required.

Good luck in enforcing. The HOA doesn't own the homes nor does it involve itself in leases. So don't know if you can legally enforce rental restrictions except in very few states if that.

I think the OP should keep in mind the difficulty of administering a 25% cap. This comes up at this forum a lot.

Let's assume the HOA properly passes an amendment or possibly a rule that permits the HOA to lawfully apply a 25% cap to rentals.

The first thing that should happen is that everyone with renters at the moment must be grandfathered in. What percentage of the units are now rentals? If the number is over 25%, will the HOA try to get the number down via natural attrition of landlords?

Once the number is one unit below 25%, the HOA contacts the first person with a unit on the HOA's "Rental Waiting List." The person says, "Oh. I am living in the unit at the moment. May I have six months to move and then get my unit rented?" If the HOA says, sure, no problem, then this is depriving someone else of six months of rental income. If the HOA says, "No, that's not fair. The HOA will proceed to the next person on the waiting list but subsequently keep you at the top of the waiting list."

I think it's a bloody nightmare to administer.

Now I am piggybacking. I realize the California legislature in particular has thought a lot about this. This is because of the housing shortage in California. In particular, rentals may especially be in short supply. But since first reading this thread, I too have been thinking what AdamL1 says above.

The courts do not like HOAs/COAs adding restrictions to how a lot or unit is used. Even if, say, an amendment is lawfully passed, in the courts amendments are more likely to be successfully challenged than what was in the original governing documents.

I suspect adding any kind of rental restriction still tends to be a minefield, even with California's new legislation.

It's a shame. CathyA3 and others here have pointed out what happens when more than half of units are rentals. But there's always another side here. Like landlord rights. Rights under the covenants. Et cetera.

Good grief, JohnC. The CC&rs determine what % is needed for amendment or addition or deletion.

Augie wrote:" I suspect adding any kind of rental restriction still tends to be a minefield, even with California's new legislation." Instead of "even with," it's "because" of new legislation.

I agree with JohnC46 that, even in California, the wording of the covenants can make it quite difficult to pass an amendment that will survive a court challenge. That the required number of owners approved the amendment, and through a proper vote, may very well not matter.

Davis-Stirling.com does have a lot to say on this. California legislators do want there to be more rentals.

Just saying that by my reading, what JohnC46 and AdamL1 are saying is not small potatoes.

In our community all rentals have to be approved. Our condo sub-associations have an 18 month period after purchase where they cannot be rented. They can catch it that way.

Sounds like they want the Association to pay for a legal opinion.

Is it the MC's attorney or one the Association chose?

yep, as discussed often here. There's a hierarchy....rules cannot conflict with CCR's. a Rule's authority must be cited to specific section of the CCR's.

Not sure who and why all these board members seem to think they can just write rules to suit whatever they are feeling.

It also comes down to what type of refinance/mortgage options your HOA wants to be able to have. FHA and other government type loans do have a built in rental restriction. Which is filled out in a PUD form. Something you may want to get familiar with BEFORE deciding on any of this. It's not the look of the land as much as how much/loan options banks will give you with a large rental percentage.