Arizona Judge Upholds Restrictions
on Rentals
By
Jonathan Olcott, Olcott & Shore, PLLC.
www.olcottlaw.com
as
published in the Arizona Journal of Real Estate & Business
Many in
the industry conclude without further thought that in a
homeowner’s association, all members must be treated the
same. While it is true that Hispanics must be treated as
equally as Caucasians, and Jewish people must be treated the
same as Christians, the same does not hold true for all
classifications in the community. RV owners are not treated
the same as those who drive automobiles. Farmers are often
singled out for special treatment, because they typically are
not allowed to grow crops in their front yards. In a recent
Arizona lawsuit, a judge held that landlords can be treated
differently than owners who occupy their units.
Discrimination does not mean that all people must be treated
the same. The legal definition of discrimination is:
Similarly situated people must be treated the same. The HOA
may not have disparate treatment for those who are similarly
situated. Rules and covenants can grant disparate treatment
to different classes of people, so long as there is a rational
basis for finding that the two classes are not similarly
situated.
In the
Towne Meadows Homeowner’s Association, the association had a
rule that prohibited golfing in the common areas. Volleyball
was allowed. This is not discrimination against golfers.
That is so, because golfers are not similarly situated as
volleyball players in terms of maintaining the safety of
common areas. Although it is blatant disparate treatment in
the use of the common areas, it is not discriminatory in the
legal use of that word.
The Towne
Meadows Homeowner’s Association also had a rule that required
all landlords to hire a professional landscaping company. The
association also required landlords to provide a copy of the
contract to the Board of Directors. In a recent case, a
landlord challenged the rule. The landlord claimed that the
rule was arbitrary, capricious and discriminatory. The
association argued that the rule was reasonably related to the
legitimate purpose of promoting proper landscape maintenance.
The association had experienced excessive landscape violations
at the rental units. The association properly deliberated on
how to resolve the problem. The property manager was spending
substantial time addressing those complaints, thereby raising
the cost of the management services. The association argued
that the rule was not discriminatory, because the landlords
are not similarly situated as owner occupied units. The
association presented evidence that there were more landscape
violations at the rental units than at the owner occupied
units.
The
Arizona Superior Court agreed. The judge upheld the rule.
The judge recognized that the rule was not arbitrary,
capricious or discriminatory when applying the legal meaning
of the word “discriminatory.”
This
decision may be of importance in Arizona. Courts in many
other states have directly addressed whether a community
association may treat rentals differently than owner occupied
units.
[1]
The author
acknowledges that association property managers often feel
that they are the defacto landlords. Landlords have confided
in the author that they like to rent units in community
associations, because the association community property
manager serves to monitor the tenant and the landlord’s
property manager. This is a burden placed on the association
property manager that the entire community must bear. We are
all frustrated at times with a perceived lower level of care
on rental units when compared to owner occupied units.
The
opinion in Towne Meadows vs. Klingler will not solve all of
these problems. The case was only a Superior Court case.
Only reported decisions of the Arizona Court of Appeals have
binding effect on the trial courts in Arizona. However, it is
good news that at least one judge has been persuaded to follow
the legal opinions of rental restrictions as laid down in
Florida, Ohio and Illinois. Many Arizonans feel that in this
state, it is some sort of fundamental right to do as one
pleases with property. At least one judge has upheld the
right of a community to make certain that rental units are
properly maintained without an undue burden on the association
property manager.
Jonathan
Olcott is with Olcott & Shore, Arizona’s Community Association
Law Firm with offices in Phoenix, Goodyear, Oro Valley and
Tucson. He handled the case for Towne Meadows with Maura
Abernethy, Esq.
(Please note the date on this and all
articles. The law changes and this information may not
be correct.)