Last week, in Greenfield v. Mandalay Shores Community Association, a California Court of Appeal ruled that the California Coastal Act prohibits a homeowner's association from banning resident's use of their homes as short term rentals, or STRs. 2018 DJDAR 2879 (March 27, 2018). While I'd normally be thrilled to see a California court protect the right of homeowners to use their property as an STR, the opinion perfectly encapsulates just how upside-down property rights are in California.
In its opinion, the court said "[t]he decision to ban or regulate STRs must be made by the City and Coastal Commission, not a homeowner's association." It relied on a section of the Coastal Act that requires a Coastal Development Permit whenever an owner makes a "change in intensity" of access to water. Because banning STRs would decrease the ability of visitors to access the beach, the court held that the decision belongs to the Coastal Commission. It's an expansive interpretation that has no limiting principle, and almost certainly not what the Legislature intended when it originally passed the Coastal Act. But leaving aside the question of whether the Coastal Commission can regulate STRs, it's worth considering whether they should.
Government regulation of property uses was originally intended to avoid flatly incompatible uses from creating difficult-to-resolve conflicts -- it is understandable that some communities sought to group industrial uses in areas of towns away from residential uses. Because incompatible uses raised health and safety concerns, government action could be justified.
However, in the post-war period, homeowner's associations, or HOAs, sprang out of a demand for planned communities that could offer agreed-upon amenities -- including restrictions on appearance and uses. These communities attracted people who wanted a similar lifestyle, and often included strict rules, such as prohibitions on clotheslines or requirements for particular landscaping. There is almost unlimited variation on the type of scope of rules in these types of communities.
Over the last few years, STRs have become tremendously popular. Websites such as Airbnb and VRBO allow homeowners to connect with individuals who want a place to stay -- for a single night, a few days, or longer. It's an example of the innovative new markets that the internet makes possible just by creating new avenues for communication among private citizens. It gives homeowners an easy way to turn otherwise-vacant vacation or part-time homes into a rental property and provides vacationers with a wealth of new options that would have been unimaginable just a few years ago.
Of course, this new use has led to disagreements within communities. Some owners have seen former single-family neighborhoods transition into vacation destinations. Temporary tenants may be respectful of normal quiet hours on weeknights. To be sure, not everyone wants to live in a community where they have a new neighbor every night. But other owners may welcome the extra dollars that increased tourism brings to for the community. There are competing interests at play that aren't always easily resolved.
But that is precisely the type of decision that is best left to private agreement, not government coercion. To rely on the California Coastal Commission to craft a policy for the entire coastline of California is to imagine that each community wants the same outcome. It's unlikely that a state-wide policy on STRs would lead to the best policy for the most amount of people. It's also another example of a small group of appointed government officials making hugely impactful decisions for the entire state, with little hope of adequate representation or recourse.
Homeowner's associations, on the other hand, can restrict only people who have agreed to be bound by that organization bu buying a house or condominium subject to an HOA agreement. They generally have bylaws, elections and meetings, and informed and active homeowners can have a lot of sway to make or change HOA policy.
The question of how to deal with emerging new land uses like STRs is not an easy one. Communities will find themselves divided over the best resolution, whether encouraging, moderating, or banning these types of uses. But it is exactly the type of decision that is best solved at the smallest possible level, allowing for the most diversity of reasonable outcomes that best suit the community affected. Under the Court of Appeal's decision, we're far more likely to get a state-wide policy that leaves many communities unsatisfied with the final outcome.