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REAL ESTATE
AHWATUKEE FOOTHILLS NEWS | APRIL 20, 2022
HOAs may lose control over short-term rentals BY BEN GOTTLIEB AFN Guest Writer
M
ost homeowner associations are governed by what is called the covenants, conditions, and restrictions (CC&Rs), which govern the rights and obligations of the properties encumbered by it. Most CC&Rs have general-amendment provisions that allow for amendment of the declaration if a sufficient number of votes from the community are garnered – usually a majority, two-thirds, or three-fourths vote is required. For the past several years, this procedure has been used by HOAs to pass amendments that prohibit short-term rentals. In doing so, HOAs have been able to – without much difficultly or 4082 sqft 5 bedrooms, 4 baths
legal challenge – exploit the law in Arizona that prevents towns and cities from passing local laws to prohibit short-term rentals. All of that could potentially change going forward. In March 2022, the Arizona Supreme Court issued an opinion, Kalway v. Calabria Ranch HOA, LLC, which decided the validity of a legal amendment to the CC&Rs that encumbered properties within an HOA in Pinal County. The Kalway Court ultimately found several provisions of the amended CC&Rs invalid as a matter of law. Al-
though not a short-term rental case, Kalway is likely to be used as legal precedent supporting future challenges to the validity of amendments by those who oppose short-term rentals.
The Kalway Court held that an HOA cannot create new affirmative obligations where the original declaration did not provide notice to the homeowners that they might be subject to such obligations. Kalway reinforced that a court should construe the notice requirement narrowly. The key takeaway: the opinion lends support to more successful challenges in the future by homeowners who opposed a passed amendment because there was not specific enough notice in the original declaration. And that includes a challenge to a passed amendment pro-
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