City of Scottsdale, Chris Combs and various sources, January 2023
Question: I am an elderly lady that is exhausted by all of the STRs having parties on our street in Old Town Scottsdale. In the spring I want to sell my home and move to San Diego to live with my daughter and her family. Will I have to disclose the STR parties on our street?
Answer from Attorney Chris Combs: “Probably. First, if it is a material and adverse fact, should it be disclosed? Second, if it is not a material and adverse fact, why not disclose it? Third, if you were a buyer of your home, would you want to know about STRs having loud parties on your street? These three questions are my standard answers to all disclosure questions from sellers and real estate brokers. They usually already know the answers, namely, disclosure of all “problems” with the home or in the neighborhood is required.”
As short-term rentals have increased so have the complaints. This has forced the cities to implement restrictions and registration requirements in an attempt to stop the short-term rentals from becoming party houses and a blight on residential neighborhoods. The Scottsdale Police Department now has a unit just to handle short-term rental complaints.
What can the neighboring owners do if short-term rentals are a nuisance? Around the Valley, many groups are looking for ways to curb short-term rentals because of parties, gun fights, and general nuisances of trash and parking. It has led some HOAs, particularly in the West Valley, to look at how they may be addressed within CC&Rs. If there is an HOA the HOA CC&Rs may be able to be changed. CC&Rs are an agreement between homeowners and the association as to various community aspects. As originally written, those agreements can regulate everything from paint colors for a home and holiday decorations to landscaping and upkeep.
A new Arizona Supreme Court opinion could limit homeowners association restrictions on such things as short-term rentals in different areas, according to some local legal experts. The opinion, filed March 22, was issued by Superior Court Judge Janet C. Bostick of Pima County, who wrote that the tools used to amend rules of covenants, conditions and restrictions — or CC&Rs — of an HOA could be limited depending on the circumstances.
The opinion was part of an Arizona Supreme Court case Maarten Kalway v. Calabria Ranch HOA and several others. “Simply stated, the gist of paragraph 17 (from Judge Bostick’s opinion) is that the scope of the topics that can be used to amend CC&Rs may be limited in some circumstances depending on what is contained and foreseeable from the original (rules),” said Julie Pace, a Paradise Valley councilor and attorney.
That means an HOA may or may not be able to amend its CC&Rs to prohibit short-term rentals or any other item, depending on how the documents originally were written and presented to homeowners.
“There could be more legal challenges to prohibiting short-term rentals and it will depend on the original CC&Rs whether a short term rental restriction or prohibition will be upheld since the new Supreme Court case potentially narrows amendments to CC&Rs,” Pace said. In an effort to pacify short term rental owners from taking legal action some HOA’s are grandfathering in existing short term rentals. The restriction would not go into effect until the property sells.
But what if the property is not in an HOA? Some cities are putting in licensing and other requirements. For example Scottsdale Short-term/vacation rental owners must obtain and maintain an annual city license for each Scottsdale property. The annual license fee is $250 per property; funds received will go 100 percent to cover costs associated with licensing vacation and short-term rentals. This license is in addition to the county and state requirements. Short-term/vacation rental owners must obtain and maintain an annual city license for each Scottsdale property. The annual license fee is $250 per property; funds received will go 100 percent to cover costs associated with licensing vacation and short-term rentals. This license is in addition to the county and state requirements. New short-term/vacation rental properties must also comply with ordinance requirements and be licensed before being offered for rent in Scottsdale.
As restrictions increase and owners and property managers are required to deal with unruly short term rental guests it may result in some owners selling their properties. Owners who get too many complaints will be kicked off the main advertising websites of Air BnB and VRBO. This will force owners who were counting on thousands of dollars of rental income to sell. For neighbors fed up with the constant parties, trash, traffic, gun fights and noise it can’t happen too soon.
Note: The city’s license described here applies only to rentals of less than 30 days. Owners that rent for 30 days or longer do not need to obtain a City of Scottsdale license through this process.