Reported / Citable
Background
Indian Wells generally treated short-term rentals as a nuisance and required residential rentals to last at least 29 nights. Ordinance No. 732 created an opt-out: members of a common-interest development could vote to allow shorter rentals in their community, subject to conditions. Matthew and Rebecca Parsons owned property in such a development and sought an unrestricted short-term-rental permit.
After the city denied the permit, the Parsons obtained a writ requiring issuance. The trial court reasoned that the opt-out conflicted with the Davis-Stirling Common Interest Development Act, particularly Civil Code section 4740’s protection for owners who acquired property before a later rental restriction, and that the city had impermissibly delegated legislative power to private homeowners. It also awarded attorney fees to the Parsons.
The Court’s Holding
The Fourth District reversed. A community vote under the ordinance does not amend the development’s covenants, conditions, and restrictions or other governing documents. Because section 4740 regulates later-adopted restrictions in those private governing documents, it did not preempt the city’s separate land-use ordinance or its opt-out mechanism.
The city also did not surrender its legislative role. It made the basic policy judgment itself by declaring short-term rentals a nuisance and adopting a generally applicable minimum stay. Allowing each qualifying community to waive that protection within defined limits was a permissible local choice, not an unconstitutional transfer of lawmaking authority. The ordinance’s minimum-size and contiguity requirements were rational, and the city had not acted arbitrarily or targeted only the Parsons. The fee award fell with the judgment.
Key Takeaways
- Davis-Stirling protections governing amendments to association documents do not automatically preempt municipal short-term-rental rules.
- A city may establish the governing policy and allow affected communities a bounded local option without unlawfully delegating legislative power.
- Courts distinguish between a private covenant amendment and a vote that activates an option created by public ordinance.
- Local eligibility lines such as parcel-count and contiguity requirements generally survive when supported by a rational planning purpose.
Why It Matters
The ruling strengthens local governments’ ability to design neighborhood-specific short-term-rental programs while preserving a citywide baseline. Cities should place the core policy and limiting standards in the ordinance itself; associations and owners should separately analyze municipal law and their private governing documents.
For property owners, grandfathering under Davis-Stirling is not necessarily a shield against later municipal regulation. Before buying, leasing, or litigating over a short-term-rental property, counsel should confirm both layers of authority and identify which body actually adopted the restriction.