Court sides with HOA in case against Short Term Rentals

Case of the Month:  Almanor Lakeside Villas Owners Association v. Carson

Almanor Lakeside Villa Owners Association (“HOA”) filed a lawsuit in Santa Clara County Superior Court against property owners, James and Kimberly Carson (“Carsons”), after they rented out their properties as short term vacation rentals. The subdivision in question was originally designed with several lots zoned as commercial property, due to the preexisting hunting and fishing lodge on the premises, so the Carsons believed it unlawful and unfair for the HOA to implement such restrictions on their commercially zoned properties, and sought to invalidate the Covenants, Conditions, and Restrictions (“CC&Rs”) as enforced by the HOA by filing a cross-complaint arguing their properties were exempt.

At the time the Carsons purchased their properties, the CC&Rs stipulated that certain properties must conform to a minimum 30-day rental period, and prohibited transient or hotel usage. The rules were not usually upheld until 2009 when a new board began administering the HOA.  The previous board had allowed the behavior and due to the zoning of the property, the Carsons believed they were exempt from this restriction in the CC&Rs.  Based thereon the Carsons filed a cross-complaint against the HOA.

The trial court concluded that the 30-day minimum rental restriction clause imposed by the CC&Rs conflicted with the clause allowing the Carsons to use their lots for commercial purposes, lodging inclusive, but further noted the HOA maintained the right to impose reasonable use restrictions on the Carsons lots.  In ruling for the HOA relative to the Carsons cross-complaint, the trial court reduced the $19,979.97 in damages claimed by the HOA to $6,620.00.  But, the trial court held that the HOA was the prevailing party to the suit; thereby awarding HOA attorney’s fees of $101,803.15 payable by the Carsons, as prevailing parties may win legal fees if a contract and law permits.

The Carsons appealed, and the Court of Appeals upheld the lower court’s rulings in favor of the HOA .  As such, the Carsons will now also be saddled with paying for the HOA’s costs and attorney’s fees for the appeal.

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Jennifer Felten

Jennifer Felten, Esq., Relaw Ms. Felten specializes in representing both individuals and legal entities, providing representation and guidance on a variety of real estate related matters.  Relaw APC 699 Hampshire Road, Suite 105 Westlake Village, CA  91361 US Phone: (805) 265-1031 or email her at: jennifer@relawapc.com

Upcoming Speaking Events for Ms. Felten:

June 12, 2016 – The Escrow Institute of California – Conference

June 14, 2016 – North San Diego County Escrow Association – Dinner Meeting

June 15, 2016 – Alameda County Escrow Association – Dinner Meeting

For inquiries or questions about any of these events, please email info@relawapc.com.

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