In California, where many individuals own and/or live in planned unit developments, significant disputes have arisen in regard to the authority of the owners association to impose rules and regulations. The California Supreme Court has ruled that, in general, the courts will apply judicial deference in upholding decisions made by an owners association so long as the association’s decisions represent good faith efforts to further the purposes of the common interest development, are consistent with the development’s governing documents and comply with public policy [Lamden v. La Jolla Shores Clubdominium Homeowners Association (1999) 21 Cal.4th 249 (“Lamden”); see also, Nahrstedt v. Lakeside Village Community Condominium Association (1994) 8 Cal.4th 361]
One issue that has arisen is whether the holding in Lamden limits judicial deference to ordinary maintenance decisions. Some have argued, citing Affan Portofino Cove Homeowners Association (2010) 189 Cal.App.4th 930, a sewer line dispute, that the “Lamden” judicial deference standard only applies to ordinary maintenance decisions. Others have argued that the Lamden holding applies to most any decision by the owners association citing Dolan–King v. Rancho Santa Fe Assn. (2000) 81 Cal.App.4th 965, 979 (where the court gave deference to an association board's decision denying an owner's application for a room addition on aesthetic grounds).
This question appears to have been answered, in favor of owners associations, in Watts v. Oak Shores Community Association (2015) WL1321669 (“Watts”). In the Watts case, three owners in a large single-family residential common interest development known as Oak Shores challenged the owners association’s rules and regulations concerning short term rentals and the imposition of a wide range of fees. Oak Shores consists of 851 parcels of land. 660 parcels are developed with single family homes. Approximately 66 absentee homeowners rent their homes to short term vacation renters. The three owners challenged a rule stating that the minimum rental period is 7 days, challenged another rule which imposed an annual fee of $325 on owners who rent their