Gross v. The Shores at Rainbow Lake Comm. Ass'n, No. 1 CA-CV 23-0394 (App. Div. I, October 10, 2024) (J. Thumma)

AMENDMENT TO CC&R's OF HOA ONLY ENFORCEABLE IF “REASONABLE AND FORESEEABLE”

Defendant The Shores Lake Community Association [HOA] amended its Covenants, Conditions and Restrictions [CCR's] to “prohibit: (1) leases lasting less than 30 days and (2) more than four unrelated individuals leasing property in the community.” Plaintiffs, homeowners engaged in short-term rental within the HOA, sued to have these amendments invalidated. On cross-motions for summary judgment, the trial court granted the plaintiffs summary judgment as to amendment 1 and granted the defendant summary judgment as to 2. The Arizona Court of Appeals affirmed.

Kalway v. Calabria Ranch HOA, LLC, 252 Ariz. 532, 537 ¶ 10 (2022) is the controlling case establishing a CC&R amendment is a valid and enforceable contract provision, provided it is reasonable and foreseeable.  The CC&Rs here make no mention of a set term or time period limitation on homes put out to rent. The 30-day amendment creates an “entirely new and different restriction on the Owner's use of their property in a manner that was unforeseeable.”  It is unenforceable.  The second amendment, however, is reasonable and foreseeable in light of the fact the CC&Rs already limits use of property to “Single Family Residential use.”  Adding the restriction that no more than 4 people in the house can be unrelated simply further clarifies the meaning of “Single Family.”