CC&Rs Can Be Amended to Prohibit Short-Term Rentals

Question: We have CC&Rs for our community of 123 homes in North Phoenix. In the last 2 years, several of the homes in our community have been sold to short-term rental owners (“STRs”). These STRs have become nightmares with parking problems, loud parties, etc. Any amendments to our CC&Rs require approval by 51% of the homeowners, and we have support from more than 51% of the homeowners. Can we amend our CC&Rs now to prohibit STRs? If so, will the existing STRs be “grandfathered” to continue to be able to do short-term rentals?

Answer: First, on April 29, 2021, a unanimous Arizona Court of Appeals upheld an amendment to the CC&Rs of the 2,400-home Desert Mountain community that prohibited STRs. 1 CA-CV 20-0129. In addition, Superior Courts in Arizona have consistently allowed amendments to CC&Rs prohibiting STRs (after a recent Arizona law restricted cities and towns from regulating STRs. A.R.S. § 9-500.39). Second, after the CC&Rs are amended to prohibit STRs, there is no “grandfathered” applicability to allow STRs.