October 17, 2021

Volume XI, Number 290

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Is A Restriction Tantamount To A Prohibition?

The Davis-Stirling Common Interest Development Act, Cal. Civ. Code § 4000 et seq., regulates condominium developments and other common interest developments (CIDs) in California.    Section 4740(a) states that an owner of a property in a CID shall not be subject to a provision in its regulations “that prohibits the rental or leasing of any of the separate interests in that common interest development” unless that provision “was effective prior to the date the owner acquired title to their separate interest".   

When Ms. Brown bought a condominium unit in 2002, the development's documents did not ban short-term rentals.  Some 16 years later, the development amended its governing documents to prohibit its members, including Ms. Brown, from renting their units for periods shorter than 30 days.  Ms. Brown, who had for years been renting out her condominium for short periods, was vexed and sued.  The development countered that the amendment was not a "prohibition" but a "restriction".  The trial court agreed with the development, but the Court of Appeal did not.   The Court of Appeal found the statutory language to be ambiguous and so it turned to legislative intent as found in the legislative history.  Brown v. Montage at Mission Hills, Inc., 2021 Cal. App. LEXIS 694.   While I don't usually write about the regulation of CIDs, the ambiguity identified in the case may be relevant in drafting contracts and governance documents.

Etymologically, the connotations of the two words are not too far apart.  "Restrict" is derived from the Latin restrictus which is the singular perfect past passive participle of the verb restringere, meaning to bind or tie fast.  "Prohibit" is derived from the Latin verb prohibere which means to hold back or restrain.  

For the plural of "condominium",  see this post.

© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 236
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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