Question: We own a home in the Arrowhead community in Peoria. For two years we have done VRBO/Airbnb short-term rentals of this home for small weddings and birthday parties. Last Saturday afternoon we rented the home for an eight-year-old’s birthday party. Although our rental agreement said no more than 10-12 guests, the mother invited 30 guests who also brought grandparents and other family members. All of the parking on the street was full, and several neighbors complained to our HOA community manager. We now have a letter from the HOA’s community manager stating that we are being fined because the CC&Rs prohibit any short-term rentals less than six months in the community. Numerous homes in our community have short-term rentals, including a home owned by a member of our HOA board of directors.
If there have been other short-term rentals in our community for years, how can we now be prohibited from doing short-term rentals? Also, isn’t there an Arizona law that allows short-term rentals?
Answer: The general rule is that a specific CC&R, e.g., no basketball goals in the front yard, may be considered abandoned or waived if there has been no enforcement of frequent violations of that specific CC&R, unless there is a non-waiver clause in the CC&Rs. Many CC&Rs have a non-waiver clause that states that, even if a specific CC&R has not been enforced in the past, future enforcement of that specific CC&R will be allowed. Therefore, even if there has been a frequent violation of a specific CC&R such as no short-term rentals, but there is a non-waiver clause in your CC&Rs, that CC&R can still be enforced against the current and future violations.
In a 2010 Court of Appeals decision (241 P.3d 897) involving CC&Rs with a specific CC&R prohibiting the construction of private roads in the community, but also with a non-waiver clause, the Court of Appeals ruled that this specific CC&R was enforceable now, even though there had been prior violations of this CC&R by the construction of two private roads in the community.
The Court of Appeals also said that none of the CC&Rs will be enforced if there has been an abandonment of all of the CC&Rs, in other words, the CC&Rs have been “so thoroughly disregarded as to… destroy the effectiveness of the restrictions and to defeat the purposes for which they were imposed.” For example, if there are 60 pages of CC&Rs that have never been enforced in the past 25 years, all of the CC&Rs now are unenforceable.
Note: Although there is a recent Arizona law against cities and towns by public regulation prohibiting short-term rentals, there is no Arizona law against HOAs, by private regulation in CC&Rs, prohibiting short-term rentals.