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Real Estate Q & A: Can an HOA prohibit a short-term vacation rental?

Posted by   /  November 14, 2017  /  No Comments

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Adam D. Martinez | Chairman of Real Estate Litigation Department

Question:  I am in the process of purchasing a vacation home in Scottsdale, Arizona. When I am not personally using it, I plan to offer it as a short-term vacation rental. I just received the CC&Rs from the title company and one provision causes me concern. It says that the home may only be used as “a single-family residence.” Does this mean that the home may not be used as a “vacation” residence by someone other than the owner?

Answer:  Probably not. Under Arizona law, towns, cities, and counties generally cannot prohibit an owner from entering into short-term rental agreements for their homes (rental agreements of less than 30 days) (A.R.S. § 11-269.17 and A.R.S. § 9-500.39). This law does not apply to condominium or homeowner’s associations (HOAs). Therefore, HOAs can still prohibit an owner from using a home as a short-term vacation rental, but only if its CC&Rs clearly and specifically state the restriction. Otherwise, short term-rentals will be permitted.

Here, requiring the home to be used as a “single-family residence” should not prohibit use as a short-term vacation rental because the CC&Rs do not clearly define “single-family residence” to prohibit any length of rental use. As the Arizona Court of Appeals has said, “what constitutes a one-family or two-family dwelling is not determined by how many families pass through the residence…” In other words, as long as the vacation home is only use for lodging, i.e. “residing in” and the tenants do not conduct any business activities from the residence during their use, there should not be a violation of the CC&Rs.

Adam Martinez is the Chairman of the Real Estate Litigation Department at Rose Law Group pc., and can be reached at amartinez@roselawgroup.com.

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