Retroactive restraints on leasing in homeowners associations

The courts continue to divide over the question of whether it is fair to allow homeowners associations to impose retroactive restraints on leasing on existing owners who purchased with no notice of the restriction. While most states allow this, a few do not, and the Restatement (Third) of Property (Servitudes) §6.10(2), §6.10 cmt. g, takes the position that such major changes in property rights can only be accomplished prospectively unless there is a unanimous vote to alter those rights.

The Idaho Supreme Court recently adopted what appears to be the majority approach, authorizing a homeowners association to retroactively prohibit existing owners from agreeing to short term rentals of less than six months. Adams v. Kimberley One Townhouse Owner's Ass'n, 352 P.3d 492 (Idaho 2015). In contrast, the Supreme Court of Washington refused to allow retroactive restraints on short term rentals in Wilkinson v. Chiwawa Commties. Ass'n, 327 P.3d 614 (Wash. 2014), requiring unanimous approval for such a change to be applied to existing owners.


The Wilkinson court began by rejecting the traditional rule that strictly construed covenants in favor of the free use of land, 327 P.3d at 619, noting that when homeowners are jointly restricted by covenants, the goal of interpretation is to "give effect to those purposes intended by the covenants.", Id. Because the declaration clearly allowed rentals, and had no durational limits on them, and because it clearly prohibited a variety of other uses, the implication was that rentals, of any duration, would be allowed and that such rentals would not constitute a prohibited "commercial' use. The prohibition on rentals was unrelated to any existing restriction and thus constituted a new restriction that was inconsistent wiht the general plan of development and could not be enforced against dissenting homeowners without their consent.