One of the issues that many Associations are facing with increasing frequency, is the complaint that too many people are living in a particular unit. This often comes with complaints about noise, as well as the hot button: parking. The question is, what can an HOA do when it receives such a complaint?
Long ago, the California Supreme Court invalidated a numerical occupancy limitation which invaded the constitutional right of privacy of the owner and tenants. Similarly, a California Appellate court has held that an occupancy restriction limiting the number of persons over 18 who could live in non-owner occupied residences in particular areas of the city violated the equal protection clause because the ordinance irrationally distinguished between owner and non-owner occupied residences. Although these cases dealt with zoning ordinances and not covenants, similar reasoning applies to covenants that unreasonably discriminate against tenants.
In Colony Hill v. Ghamaty, the court recognized that use and occupancy restrictions are an inherent part of any common interest development and are crucial to the stable, planned environment of any shared ownership arrangements. Unless a homeowner association’s practice with regard to the occupancy and use of its members’ units violates federal and state anti-discrimination limitations, the association is given a great deal of latitude in regulating the use of residential units in its development. For example, in Colony Hill, the covenants and restrictions prohibited any use of the residential units for purposes other than single-family dwelling. The homeowner’s association successfully defended its enforcement of the restrictions when one of its homeowners engaged in serial rentals of rooms in his unit to multiple renters. In upholding the restrictions, the court held that the association’s use restrictions were not unreasonable, and therefore were enforceable.
Colony Hill was decided based upon the definition of the word “family”. The Colony Hill definition of “family” did not contain any numerical limitations. Rather, a “family” was defined as any “unrelated persons who jointly occupy and have equal access to all areas of a dwelling unit and who function together as an integrated economic unit.” In ruling in favor of the association, the court held that promoting family style living was a stated goal that could be achieved by redefining “family” to specify “a concept substantially related to the legitimate aim of maintaining a family style of living.” This was achieved by defining “family” to include unrelated individuals who “function together as an integrated economic unit.” While the court ultimately found that the renters in Colony Hill did not constitute an “integrated economic unit,” their determination required a discussion of the unique factual circumstances of the case. Therefore, in order to determine whether renters in an HOA are in violation of the single “family” residence provisions of the CC&Rs, an investigation is required into the particular facts of each specific case in order to determine if the occupants of the residence are either related, or maintain a common household.
Because an Association has the obligation to enforce its CC&Rs, it must determine whether enforcement action against any Owner accused of leasing their residence is warranted and appropriate. In California, making such a determination requires evidence that the occupants of the residence are not functioning as a “common household.” It is not clear what exactly the term means, and how the association would establish that fact. In Colony Hill, this was accomplished by introducing evidence that the residents each entered into separate leases and had different lease terms. However, an association typically has limited investigative ability prior to filing a lawsuit. In such cases, the local city may provide some limited assistance. Often times a city will investigate complaints regarding rental units. However, generally a city will only cite owners who are renting to more than five people who are not related or operating as a common household. The five person threshold is based on what the building code defines as a boarding house. If the city determines that a residence is being used as a boarding house, they will require the owner to obtain the proper permits, provide on-site parking, and come into compliance with any other requirements the city has on boarding houses. It is often impossible for the owner to comply with all the requirements, and in such cases the city code enforcement may prove to be an effective alternative to attempting to enforce the associations’ CC&Rs.
One additional tool that can help in providing the Board with information in such cases is if the association has a enacted a rule which requires all owners to provide the association with any leases relating to residences within the association, and that all leases require the tenant to acknowledge that all tenants are jointly and severally liable for any violations of the CC&Rs. This may have the effect of dissuading individuals who are not acting as part of a common household from entering into such leases as they will be responsible for the acts of their housemates. In addition, it will provide the association with an additional ground to sanction the owner if they fail to comply with the rule; violation of the rule would be easier to establish since all that would be required is that the owner failed to provide copies of the leases.
While there is no easy answer to the issue of occupancy restrictions, associations should know what tools they have available to provide as much information as possible in order to allow the Board to make an educated decision on enforcement of the CC&Rs.