Six-Month Lease with Right to Cancel After One Week is a Short-Term Rental

Question: Our Chandler HOA has a CC&R that prohibits short-term rentals of a home for less than six months. The six-month lease that our lawyer drafted included a provision that allowed the tenant to cancel the lease and move out with one week’s notice. Our tenant signed this six-month lease, and at the same time gave us the one-week notice to move out. After our tenant moved out one week later, a neighbor complained to the HOA that this six-month lease was actually a short-term rental of one week. The HOA agreed with the neighbor, and fined us $500 per the HOA fine schedule for violating the CC&R that prohibits short-term rentals. Do we have to pay this $500 fine?

Answer: Probably. If it walks like a duck, and talks like a duck, it’s a duck! Although titled as a six-month lease, in actuality it was a one-week lease. In addition, most CC&Rs have a provision that requires the homeowner to submit any lease to the HOA for review and approval. Your six-month lease with a one-week cancellation would probably not have been approved after review by any HOA.

Note: CC&Rs generally can be amended by a certain percentage of the homeowners, e.g., 75% of homeowners. Therefore, you could attempt to get an amendment to the CC&Rs in your Chandler community to allow at least a few homes, e.g., 10% of homes, to be short-term rentals.