Can Homeowner Associations Ban Short-Term Rentals in Arizona?

By September 3, 2020 Real Estate
Can Homeowner Associations Ban Short-Term Rentals in Arizona?

The battle over short-term rental services has been raging in Arizona over the past few years. For a little while state law was in place that forbade municipalities—counties and cities or towns—from banning short-term rental services. The idea was that people with extra space or who were away from home might be able to make a bit of extra money by renting out rooms or their homes for brief spans of time, which would be a boon for the local economy. But the reality became a bit more monolithic, as large companies—some based outside the country—began to swoop in and purchase buildings and tracts of land in areas that are popular with tourists, cutting local people out of both the property economy and the purported benefits under which the ban was sold. Moreover, neighborhoods began to complain that homes were being turned into short-term party houses, basically acting as unregulated hotels. So changes were made in the law permitting municipalities some amount of control over the situation.

But there was always one local-level point of control over this regime—one that remains in full effect: homeowners associations (HOAs).

Homeowners associations are a contentious subject in property law in and of themselves—if you want a chuckle, see a recent commercial spoofing them by depicting a boardmember cutting down a property owner’s mailbox with a chainsaw because it is just slightly taller than permitted in the rules. Many people find them stifling. But many others believe (with reason) that they serve to preserve property values by maintaining the overall aesthetic and behavioral standards of neighborhoods that fall under their purview.

How, you may wonder, can a neighborhood-level authority have more control over short-term rentals than a county or city? The answer lies in how HOAs are formulated and maintained: their governing contracts—and the land restrictions that come with them—fall under contract law. Any property under their control must sign a contract that restricts its owner to abiding by the HOA rules—which can be altered by the board or unanimous decision of the property owners (depending on how the individual HOA is set up).

Of course, for the HOA to limit short-term rentals, the rule changes would have to be made first. But, compared to the challenges that counties and cities have faced in regulating short-term rentals, that is practically the easiest thing in the world.

If you’re dealing in short-term rentals or wrangling with an HOA in Mesa or anywhere else in the state of Arizona, call us to consult with an experienced attorney with strong scruples. At Provident Law, our real estate attorneys represent parties on either side of real estate and financing transactions, including landlords, tenants, buyers, sellers, lenders, borrowers, trustees, guarantors, shareholders, partners, and others. We structure, negotiate and document a variety of real estate and financing transactions, such as leases, purchase and sale agreements, loans and development agreements for a variety of commercial and residential projects. We also help to settle all forms of boundary disputes. Contact us for more details.

Christopher J. Charles is the founder and Managing Partner of Provident Law ®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS ® (the “AAR”). Mr. Charles holds the AV ® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions.

Christopher is a licensed Real Estate Instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. He can be reached at Chris@ProvidentLawyers.com or at 480-388-3343.