CC&R Amendment – Idaho Supreme Court Favors HOA Over Homeowner

Idaho’s law has changed significantly since this blog post was first published. Please see [Idaho Legislature Acts on Rental Restrictions]  for more information.

In June 2015, the Idaho Supreme Court handed down its decision in Adams v. Kimberley One Townhouse. The question before the court was whether the homeowner’s association (“HOA”) validly adopted CC&R amendment prohibiting renting of homes on a short-term basis. This was in response to a single homeowner’s practice of renting out his home to third parties as a vacation rental.

The Court decided that the CC&R amendment was validly adopted by the HOA, which had followed the CC&R provisions allowing amendment of the CC&Rs by a two-thirds majority vote.

On the surface, the decision is not particularly surprising. However, a closer reading of the decision reveals that the Court departed from the tradition of interpreting CC&Rs strictly against the HOA and in favor of the free use of land by the homeowners.

The Court states in the Adams decision that it follows the traditional rule that “because restrictions on the free use of property are at odds with the common law right to use land for all lawful purposes, the Court will enforce such restrictions only when clearly expressed,” and “all doubts in that regard should be ‘resolved in favor of the free use of land.'” However, the Court’s result departs from that rule.

The CC&Rs at hand clearly anticipated that homes might be occupied by renters, but did not restrict rentals in any way. Like most CC&Rs, these permitted the HOA members to vote amend them.  The “amendment” adopted by the HOA did not amend any existing rental restriction, but instead added rental restrictions to the CC&Rs for the first time. This presented the Court with a question – does the right to amend the CC&Rs include the right to add to the CC&Rs new restrictions not previously addressed by those CC&Rs?

In resolving that question, the Court analyzed two differing lines of decisions from other states and rejected the line, followed by Washington in its 2014 Wilkinson v. Chiwawa Communities Association, holding that the right to amend CC&Rs does not include the right to add new restrictions. Instead, the Court chose to interpret the right to amend CC&Rs as including the right to add new restrictions as to issues on which the CC&Rs were previously silent.

The Adams decision ultimately favors the authority of the HOA and the power of the group of homeowners to impose use restrictions over the rights of individual homeowners to use their property freely. Idaho homeowners now have a bit less certainty as to the uses that will be permitted or prohibited in their HOAs in the future – if the CC&Rs contain a general right to amend the CC&Rs by a vote of the membership, rights not addressed in the CC&Rs may be impacted by future amendments.