Facts: An Association’s Board of Directors submitted a CC&R amendment to a vote of the members containing the following two rental restrictions: 1) Owners could not lease their units for less than 30 days; and 2) the Association could evict a tenant who was in breach of the governing documents. The amendments did not receive the required 67 percent affirmative votes (only 59% of the owners voted yes), so the Association filed 
a Superior Court petition seeking approval of the amendments.
One homeowner objected to the petition, arguing that the amendments were not reasonable and the Association violated Civil Code section 1363.03(g) by failing to publicize the results of the election in a communication directed to all members.
Issues: Were the two rental restrictions reasonable? Should the Association’s failure to strictly comply with section 1363.03(g) result in the denial of their petition seeking approval of the amendments?
Rulings of the Court: In Mission Shores Association v. Pheil, (September 5, 2008), the California Court of Appeal ruled in favor of the Association, holding that the two rental restrictions were reasonable, and the Association’s failure to strictly comply with section 1363.03(g) was too trivial to warrant denying the petition.
Reasoning of the Court. The court explained that the 30 day minimum lease term requirement was reasonable because the provision applied to all owners, did not violate public policy, and any enforcement burden was outweighed by the amendment’s “beneficial value in preserving the residential character of the development.”
Furthermore, the eviction provision was reasonable because tenants should be bound by the CC&Rs to the same extent as owners, and if an owner refuses to take effective measures to assure his or her tenant complies with the CC&Rs, the Association needs a means of assuring such compliance. Significantly, however, the court explicitly cautioned that Associations should carefully “consider the risks involved” before actually evicting a tenant because “an association may be liable for wrongful eviction given the fact that the association does not have possession of the property, and thus, is not the rightful party to bring the action.”
Finally, the court ruled that the Association’s failure to strictly comply with the notice requirements in section 1363.03(g) was excusable because the election results were reported to Association members at the board meeting immediately after the ballots were counted, and were recorded in the board meeting minutes which were available to all members. Therefore, the Association’s failure to give the additional notice required by section 1363.03(g) was “trivial” and would not preclude approval of the Association’s petition.
Comments: The Mission Shores case is important because it shows that reasonable rental restrictions in the governing documents are enforceable, and affirmed the right of Associations to take appropriate actions against tenants who violate the governing documents. However, Associations should not read Mission Shores as a green light to begin evicting errant tenants from their homes, as there is substantial liability exposure to Associations for wrongful eviction. There are other effective (and less risky) methods for dealing with problem tenants, and Boards should contact legal counsel for advice on the best way to handle each particular situation.