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By: Jeffrey R. Cluett
The California Court of Appeal overturned a denial of a preliminary injunction of a homeowners’ association resolution banning short term rentals (“STR”). It found that appellants made a prima facie case that the ban violated the California Coastal Act, which requires a permit for any “development” that changes “the intensity of use or access to land in a coastal area.” Greenfield v. Mandalay Shores Cmty. Ass’n (2018) 2018 Cal.App.LEXIS 258, **1-2.
Mandalay Shores is a development in the Oxnard Coastal Zone. Id., *2. For decades, non-residents have rented homes there on a short-term basis. Id. In June 2016, Mandalay Shores Community Association (“Association”) adopted a resolution banning STRs for less than 30 days. Id. at *3. In August 2016, the Coastal Commission advised the Association that the ban was a “development” under the Coastal Act requiring a coastal development permit. Thereafter, the Greenfields, who own a residence at Mandalay Shores, sued for declaratory and injunctive relief. Id. at *4. The trial court denied the Greenfields’ ex parte application for a temporary restraining order and motion for preliminary injunction, finding that the STR ban was not a “development” within the California Coastal Act. Id. at *5.
The Court of Appeal disagreed. It noted that the California Coastal Act intends to “[m]aximize public access to and along the coast and maximize public recreational opportunities to the coastal zone consistent with sound resources conservation principles and constitutionally protected right of property owners.” Id. (citation omitted). “Development” includes any change in the density or intensity of use of the land. Id. The courts interpret “development” expansively to respect the Coastal Act’s mandate that it be liberally construed. Id. at **5-6. Accordingly, courts have held that closing and locking a gate that is usually open to the public is a “development,” as is posting “no trespassing” signs on a parcel used to access the beach. Id. at 6.
The court found that the Greenfields made a prima facie showing to issue a preliminary injunction staying enforcement of the STR ban until trial. Id. at *8. The court therefore ordered the trial court to enter a new order granting appellant’s motion for a preliminary injunction. Id. The key takeaway for Associations with homes with beach access, therefore, is that changing regulations concerning who can rent those homes may fall afoul of the California Coastal Act.
This case is set for a Status Conference on May 21, 2018, where it will presumably be set for trial; the November 6, 2017 trial had been vacated pending appeal. At trial, the case will turn on whether the STR ban is a “development” that would result in “a change in intensity of use or access.”
Despite the Court of Appeals ruling, the Association could yet prevail. With the ban, residents and long-term renters would have beach access. Therefore, that precluding short-term renters from renting may not be a “development” that “results in a change in the intensity of use or access to land in a coastal area” because residents and long-term renters would have beach access. The question, therefore, is whether the California Coastal Act allows an Association to determine which people may have beach access. Because this is a different situation from posting “no trespassing” signs or closing and locking a gate, which seeks to bar all beach access, the court may come to a different conclusion.
If you have any questions or would like more information, please contact Jeff Cluett at [email protected].