Overview

California homeowners frequently ask whether their HOA can prevent them from renting out their home, their ADU, or both. And before just a few years ago, the answer to that question was yes. But amendments to the Davis-Stirling Act changed that, and now the answers to those questions are primarily located in Civil Code 4740 and Civil Code 4741, the two Davis Stirling Act statutes that regulate rental restrictions in California HOAs. Civil Code 4740 provides powerful grandfathering protections for existing owners, while Civil Code 4741 defines what modern HOAs can and cannot do when regulating rentals.

Together, these statutes stop HOAs from imposing blanket rental bans, overly restrictive caps, improper ADU limits, and short term rental definitions that conflict with California law. That, however, hasn’t prevented a lot of HOAs from attempting to enforce outdated provisions of the governing documents or from trying to enforce illegal rental restrictions that conflict with these statutes. This Fact Sheet explains your rights, your HOA’s limits, and what steps to take if your HOA attempts to restrict rentals of your home or ADU in violation of the law.

Key Points

The following key points explain what your HOA may and may not do when regulating rentals, how the statutes interact, and what steps you can take if your HOA violates your rights.

• Civil Code 4740 is your grandfathering shield. This statute protects homeowners who acquired title before the HOA imposed a rental restriction. Any new rental restriction adopted after you purchased your home does not apply to you no matter what your governing document may now say. In other words, retroactive rental bans and retroactive rental caps are void as applied to existing owners.
• Civil Code 4741 is the “what’s legal today” rulebook for rental restrictions. Civil Code 4741 governs modern rental caps, ADU rules, minimum lease terms, and the penalties that apply when an HOA violates your rental rights. [As an FYI, Civil Code 4741(h) reinforces the same grandfathering protection that appears in 4740.]
• HOAs cannot impose a ban on “all rentals.” Any provision in the governing documents that prohibits, has the effect of prohibiting, or unreasonably restricts rentals is void under Civil Code 4741.
• HOAs cannot ban rentals of ADUs or JADUs. You may rent out your ADU/JADU regardless of rental caps. In other words, ADUs and JADUs do not count as separate interests for purposes of rental caps. If the 25%, you may still rent your ADU.
• HOAs must allow at least 25% of the homes to be rented. This rental cap portion of the law causes a lot of people problems because of way it’s worded, but I think the best way to look at is in one of two ways: what the HOA must allow versus what the HOA may restrict. Because the wording of this portion of the statute is so confusing so many people, I’ve included some examples in my response to one of the FAQs below.
• HOAs cannot enforce older rental restrictions that conflict with 4740 or 4741. Despite a requirement that they do so, many HOAs did not update their governing documents after these statutes went into effect. But that doesn’t matter. Statutes override CC&Rs and Rules. A pre-2021 rental ban or cap that conflicts with the statute is unenforceable.
• HOAs cannot classify rentals of 31 days or more as short-term rentals. HOAs may restrict true short-term rentals (STRs)—i.e., rentals of 30-days or less—but they cannot extend that restriction to rentals of 31 days or more. [Most STRS (like the ones you see posted on sites like VRBO or Airbnb) are typically for time periods of 2 weeks or less. And HOAs can absolutely prohibit those (unless a member is grandfathered, as discussed above). This statute is aimed at preventing an HOA from classifying anything over 30 days as an STR.]
• The law doesn’t require you to provide your HOA with information about your tenants. Unless your HOA’s governing documents explicitly state otherwise, you’re under no obligation to provide your HOA with information about your tenants, a copy of the lease, or with any other “acknowledgments” they may wish to receive (such as an acknowledgement that you provided the tenant with a copy of the governing documents).
• HOAs that violate Civil Code 4741 owe statutory penalties and actual damages. When an HOA unlawfully prevents you from renting out your home or ADU, you are entitled not only to your actual damages and up to $1,000 in statutory penalties, but also your attorneys’ fees and costs. Your actual damages could be substantial. For example, let’s assume that the fair market rental value of your home is $4,000. And let’s assume that your HOA unlawfully restricts you from renting out your home, forcing you to file a lawsuit. And finally, let’s say that it takes two full years before obtain a favorable verdict. Your actual damages in that scenario would be $96,000 ($4,000 per month in lost rent x 24 months).
• If your HOA violates your rental rights, you have several options. Here are a few:
  • Ask the HOA to identify the exact Rule or CC&R provision it is relying on and to confirm whether they’re in compliance with Civil Code 4740 and Civil Code 4741.
  • If you’re grandfathered under the statutes, make the board aware of that fact.
  • Evaluate whether the HOA’s restriction conflicts with Civil Code 4741 by considering all of following questions with respect to the restriction:
  • Does it function as a complete rental ban?
  • Does it attempt to impose a cap below 25% (i.e., are they attempting to ban rentals in more than 75% of the homes in the association)?
  • Does it attempt to prohibit renting your ADU or JADU?Does it attempt to count your ADU or JADU toward a valid cap?
  • Does it improperly prohibit rentals longer than 30 days?
  • Consider whether IDR is worth pursuing.
  • Evaluate ADR requirements under Civil Code 5930. ADR is required when seeking solely declaratory, injunctive, or writ relief, or when seeking such relief in conjunction with monetary damages of less than $12,500. But even when ADR isn’t technically required, it’s almost always a good idea to participate.

When you understand how Civil Code 4740 and 4741 actually work, rental threats from your HOA stop being intimidating and start becoming solvable problems. Instead of accepting “no” at face value, you can test every rental restriction against the statutes, call out illegal caps and bans, and force your HOA to either follow the law or face the financial consequences of getting it wrong.

FAQs

About MBK Chapman Fact Sheets

Homeowners searching for answers online will often come across articles that appear authoritative, but are actually written as search-engine marketing content rather than by an experienced HOA lawyer. These pieces tend to prioritize keyword density over clarity, accuracy, or legal context, which often leaves homeowners more confused than informed.

At MBK Chapman, our Fact Sheets are part of our HOA Law Library and are written by Michael Kushner, an HOA lawyer with decades of hands-on experience representing California homeowners. In fact, Michael Kushner is the HOA lawyer who pioneered the systems and strategies used by some of California’s most successful homeowner-side HOA law firms.

Each Fact Sheet is deliberately concise, statute-based, and designed as a quick-reference guide to help homeowners understand key HOA laws and enforcement rules at a glance.

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