Simple Deed Restrictions Can Limit Short-Term Rentals

Question: Our Gilbert community of 60 homes was built by the developer in 1969. We are having problems with a short-term rental in our community. In this short-term rental the tenants are moving in and out almost every day, parking in the wrong areas, and trashing our swimming pool. A group of our neighbors wanted to amend our CC&Rs to prohibit short-term rentals of less than 30 days. We learned, however, that there have never been any CC&Rs for our community. Our understanding now is that 51% of the 60 homes in our community would be able to sign new CC&Rs that would ban short-term rentals of less than 30 days. Is that correct?

Answer: No. If there are no CC&Rs now for your Gilbert community, there could be new CC&Rs drafted and recorded to ban short-term rentals of less than 30 days. These new CC&Rs could also provide for no overnight parking in the streets, designated paint colors of the homes, and other common provisions in CC&Rs. Only those homeowners who sign these CC&Rs, however, would be bound by these new CC&Rs. For example, if 20 of the 60 homeowners in your Gilbert community sign these new CC&Rs, these 20 homeowners would be bound by the CC&Rs, but the remaining 40 homeowners would not.

After more than 50 years with no CC&Rs in your community, getting even 20 homeowners to agree to new CC&Rs could be very difficult. Therefore, my suggestion is that, rather than trying to get even 20 homeowners to agree to new CC&Rs, try to get as many homeowners as possible to sign a simple deed restriction that prohibits short-term rentals of less than 30 days. Although the one homeowner now doing short-term rentals would undoubtedly not agree to this simple deed restriction, you may be able to get most of the other 59 homeowners to sign before a notary public this simple deed restriction that would then be recorded. After recording, any homeowner who signed this simple deed restriction would be prohibited from doing short-term rentals less than 30 days.

Note: A deed restriction is only binding on the homeowners who sign the deed restriction after recording. A deed restriction is binding on any buyer of a home subject to the deed restriction. On the other hand, most CC&Rs are recorded originally by the developer of a subdivision.