October 4, 2021

SBEMP Partner Shaun Murphy Secures Legal Precedent Preventing Post-Purchase Short Term Rental Bans by HOAs

By Bob Marra

Many owners of homes who want to rent their properties on a short-term basis within homeowner associations (HOAs) in California got a huge boost from a recent decision by the California Court of Appeal in a case regarding the emerging trend of HOAs changing their governing documents to prohibit short-term renting.

The decision, published as Brown v. Montage at Mission Hills, 2021 Cal.App. LEXIS 694 (Aug. 20, 2021), will have statewide impacts on the short-term vacation rental industry in common interest developments (CIDs) more commonly known as HOAs.

Shaun M. Murphy, a partner at Palm Springs-based SBEMP Attorneys, LLP, successfully represented plaintiff Nancie Brown in the Court of Appeal.

Common interest developments are a form of real estate ownership in which each owner has an exclusive interest in their residence (home, condo, or lot) and a shared interest in common-area property. They are governed by a set of documents that establish the rules that regulate the operation of the development, including parking, landscaping, common areas, guests and rentals, among other things. There are more than 50,000 CIDs throughout California within which there are millions of homes.

The popularity of Airbnb, VRBO and other home rental companies has significantly expanded the short-term vacation rental industry in recent years. Subsequently, many homeowner associations – citing violations of noise, parking and other rules – responded by changing their rules to prohibit short-term rentals in their communities.

In Brown v. Montage at Mission Hills, the plaintiff, Nancie Brown, owned a residence in the Montage at Mission Hills community in Cathedral City, California. Brown purchased her property in 2002, and over the next 15 years consistently rented it as a short-term vacation rental. In 2018, Montage amended its governing documents to prohibit members from renting or leasing their properties for periods of less than 30 days. Montage applied the new rules to Brown, so she filed suit to enforce her rights.

“In Brown v. Montage, the Court of Appeal concluded that homeowners that have been impacted by changes to rental provisions may now rent their properties on a short-term basis if the rules in place at the time they purchased the property allowed it,” said Shaun Murphy. “They also may be able to recover lost revenue during the time when they were prohibited from renting.”

SBEMP Attorneys has been at the forefront of short term rental litigation in California. The firm is now actively representing individual homeowners, and groups of homeowners in the same HOAs, to enforce their rights and to seek damages for lost revenue. Shaun Murphy can be reached at (760) 413-9550 or [email protected]

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