Does Your HOA Allow Airbnb? What Arizona STR Operators Need to Know

One of the most common misconceptions among Arizona short-term rental operators is this: because Arizona law prevents cities from banning STRs outright, HOA restrictions don't apply.

That's incorrect — and it's a misconception that can be very expensive.

Arizona's Preemption Law Does Not Override HOAs

Arizona is a strong preemption state. Under A.R.S. § 9-500.39, cities are prohibited from banning short-term rentals outright in residential zones. This is often cited as blanket protection for STR operators in Arizona.

What this law does not do is override private HOA covenants — the CC&Rs that govern planned communities. HOA restrictions represent a separate legal layer that exists entirely outside of city and state STR regulation. You can hold a valid TPT license, a valid city STR license, and $500,000 in liability insurance, and still be in violation of your HOA's governing documents.

The Kalway Decision — What It Means for STR Operators

In 2022, the Arizona Supreme Court decided Kalway v. Calabria Ranch HOA, a case with significant implications for short-term rental operators in HOA communities.

The Court held that non-unanimous amendments to CC&Rs must be reasonable and foreseeable in light of the original CC&R provisions at the time current owners purchased their properties. In plain terms: an HOA cannot adopt new STR restrictions through a majority vote if STR use was not contemplated or restricted in the original CC&Rs when you bought your home.

If your HOA amended its CC&Rs after you purchased your property to add STR restrictions, and that amendment was not unanimous, it may not be enforceable against you under Kalway. However — and this is important — it will bind future buyers who purchase after the amendment was recorded.

The Court of Appeals extended this reasoning in 2024 in Gross v. The Shores at Rainbow Lake, invalidating a 30-day minimum lease amendment within a community's CC&Rs because it prohibited what was previously allowed.

What This Means Practically

Before operating an STR in any HOA community, verify the HOA status of the property and review the current CC&R language — specifically any provisions addressing rental activity, minimum lease terms, or transient occupancy.

If your HOA has amended its CC&Rs since you purchased the property to restrict STR use, the date of that amendment relative to your purchase date matters. A real estate attorney familiar with Arizona HOA law can advise you on whether the Kalway standard applies to your situation.

Getting a city STR license does not protect you from CC&R enforcement. Both layers must be satisfied independently.

Due Diligence Before Onboarding Any New Property

This is one of the first checks Barrett Advisories runs when onboarding a new property into a managed portfolio. HOA compliance review — verifying status and reviewing current CC&R language — is a standard part of our new property checklist.

If you're adding properties to your portfolio and aren't sure whether an HOA issue exists, that's a conversation worth having before your first booking goes live. Schedule a free consultation at barrettadvisories.com.