Watts v. Oak Shores Community Association
235 Cal.App.4th 466 (2015)
Facts: Association has a rule stating that the minimum rental period is seven days, and imposed fees to owners that rent their homes. Homeowners brought an action challenging the regulations and fees adopted by the Association. The Association cross-complained for attorney fees and declaratory relief. The Superior Court found for the Association on the complaint and cross-complaint, and granted the Association an injunction ordering the homeowners to abide by the rules and regulations, which the homeowners appealed.
Applicable Law: Judicial Deference Rule / Business Judgment Rule
“Generally, courts will uphold decisions made by the governing board of an owners association so long as they represent good faith efforts to further the purposes of the common interest development, are consistent with the development’s governing documents, and comply with the public policy.” Lamden v. La Jolla Shores Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249.
Result: The Association properly complied with the CC&Rs in imposing fees for costs associated with short-term rentals. Judgment in favor of the Association was affirmed, and the Association was awarded its fees and costs.
Rule: Associations may adopt reasonable rules and impose fees on their members relating to short term rentals of condominium units.