Room Rental Business
Owners cannot use the broad definition of "family" as an excuse to engage in room rental commercial activity. Colony Hill is a planned development near San Diego where defendant Masood Ghamaty bought a four-bedroom, three-bath house. Ghamaty moved into the house and, at various times, rented the remaining rooms to six people for periods ranging from two months to two years. Owners voiced concerns to the board about parking issues, renters, and a loud party at Ghamaty's home. They complained that Ghamaty ran a commercial enterprise prohibited by the CC&Rs. The board met with Ghamaty and demanded that he immediately return the property to a private single-family dwelling status. Ghamaty denied violating the CC&Rs, arguing that he considered the renters his family. The association filed suit.
At trial, Ghamaty relied on the San Diego Municipal Code's definition of "family" as "unrelated persons who jointly occupy and have equal access to all areas of a dwelling unit and who function together as an integrated economic unit." The court found that "family" could not reasonably be interpreted to include Ghamaty and his renters. Ghamaty provided no evidence that he had any prior relationship with five of the renters or that any of the renters had any previous relationship with each other. He produced no evidence that he shared meals with or had any relationship with the renters.
Ghamaty argued that the permanent injunction issued by the trial court violated his right to privacy under the California Constitution, i.e., "the State may not utilize its power to interfere with a person's choice of cohabitants." The court noted that the Constitution restricts the State, not private developers. Moreover, a prior Supreme Court decision made it clear that CC&Rs can limit activities in the confines of the home itself. The court ruled that Ghamaty was engaged in commercial activity prohibited by the CC&Rs, and the injunction was rationally related to the association's right to maintain its family character by prohibiting uses other than single-family dwelling purposes. (See Colony Hill v. Ghamaty)
Family Defined. Older documents sometimes include restrictions limiting occupancy to persons related by blood, adoption, or marriage. Such restrictions are no longer enforceable. (City of Chula Vista v. Pagard (1981) 115 Cal.App.3d 785) Many municipalities broadly define "family" to include unrelated persons. For example, San Diego defines a family as: "Two or more persons related through blood, marriage or legal adoption... or unrelated persons who jointly occupy and have equal access to all areas of a dwelling unit and who function together as an integrated economic unit.' (San Diego Mun. Code, § 113.0103) In addition, a number of California cases have struck down attempts to limit the number of unrelated people who can live together in one household. [See City of Santa Barbara v. Adamson (1980) 27 Cal.3d 123] If limitations on occupancy are based on the number of occupants rather than the definition of family, they are generally enforceable. [City of Edmonds v. Oxford House, Inc. (1995) 514 US 725]
Recommendation: The January 1, 2021, addition of Civil Code § 4741 to the Davis-Stirling Act may have impacted the ruling in this case by contemplating owner-occupied rentals in subsection (e). Boards of directors should consult legal counsel when drafting rental and leasing provisions.
Occupancy Restrictions
Restricting density is important because overcrowding strains an association's parking, drives up utility costs, overloads recreational facilities, disrupts residents' quiet enjoyment, and depresses property values. An association has the authority to impose reasonable restrictions upon the occupancy of condominium units. (Ritchey v. Villa Nueva) Restrictions can be imposed, provided they are not discriminatory.
Discrimination. The Federal Fair Housing Act prohibits occupancy restrictions that discriminate based on race, color, religion, national origin, sex, familial status, or handicap. In particular, occupancy restrictions cannot be an excuse to discriminate against families with children. The Department of Housing and Urban Development (HUD) has stated that, in appropriate circumstances, owners and managers may develop and implement reasonable occupancy requirements based on factors such as the number and size of sleeping areas or bedrooms and the overall size of the dwelling unit. (Fair Housing Occupancy Standards)
Two Plus One Formula. While opposed to discrimination, California's Civil Rights Department has allowed restrictions using a "two-plus-one" formula, i.e., two persons per bedroom plus one additional person for the household. For example, a 1-bedroom unit could accommodate 3 people, a 2-bedroom unit could accommodate 5 people, and so on. The formula is based on a 1998 adoption of the "Keating Memo" by the U.S. Department of Housing and Urban Development. It creates a presumption that 2 + 1 is reasonable, but is subject to rebuttal based on factors such as:
- the size of each bedroom,
- the size and configuration of the residence,
- other physical limitations, such as the capacity of the building systems,
- the age of the children, and state and local laws
Other Formulas. The Uniform Housing Code and California's Health & Safety Code restrict the number of persons in a unit using a formula based on bedroom square footage. In addition, many cities and counties will issue their housing occupancy standards.
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