In California, and quite a few other states, both municipalities and community groups have been wrestling with concerns about short-term -- often "vacation" -- rentals. Many have desired to adopt ordinances that seek greater control over the presence of these businesses in what would otherwise be typically non-commercial (read "quiet") residential neighborhoods.
A recent California Appellate case (Harrison v. City of Rancho Mirage, Fourth Appellate District, Filed 12/18/15) will no doubt be of interest to individuals and jurisdictions who are concerned about such matters.
In July of 2014, the City of Rancho Mirage adopted Ordinance Number 1084 which amended a municipal code section that was "intended to mitigate the secondary negative effects of the use of privately owned residential dwellings as vacation rentals." The amended section changed the minimum age of a "responsible person" from twenty-one years to thirty. Hence, the amended code defined "Responsible person" as "an occupant of a vacation rental unit who is at least thirty (30) years of age who shall be legally responsible for ensuring that all occupants of the vacation rental unit and/or their guests comply with all applicable laws, rules, and regulations pertaining to the use and occupancy of the subject vacation rental unit." Further, "Ordinance 1084 also provided that prior to occupancy of a vacation rental, the owner must require the responsible person to execute a formal acknowledgement that he or she is legally responsible for compliance by all occupants with all applicable rules, laws, and regulations."
Brian Harrison, who owned a condominium in Rancho Mirage, filed a complaint on September 2, 2014, the day after the amended ordinance became effective. Harrison contended that the ordinance was a violation of the Unruh Act, California's landmark anti-discrimination legislation. He relied upon Civil Code Sections 51 and 51.2 which provide that a business cannot discriminate on the basis of age for the sale or rental of housing. "Ordinance 1084 clearly violated the Unruh Act by requiring that a person who was under the age of 30 years find a person to sign a lease on a short-term vacation rental agreement in order to rent a vacation home in Rancho Mirage." Harrison relied on an earlier case (Marina Point v. Wolfson) which clearly established that the Unruh Act applied to "all business establishments of every kind whatsoever."
Harrison argued that "the Rancho Mirage amended short-term vacation rental ordinance requires each vacation rental owner to risk a lawsuit every time a potential renter is turned down because of age." In addition to costs, he sought an injunction enjoining the City from enforcing any restrictions pursuant to age under Ordinance 1084. He also sought a declaration that the Ordinance was preempted by California law.
On October 17, 2014, the City filed a demurrer -- essentially a motion to dismiss. "It contended that as a matter of law the Unruh Act did not apply, and Harrison failed to state sufficient facts to support his cause of action. The City insisted that the Unruh Act did not apply to municipal legislation."
The trial court issued a tentative ruling on November 18, 2014. Following earlier cases (Burnett v. San Francisco Police Department, and Qualified Patients Association v. City of Anaheim) it found that "the Unruh Act does not apply to a city when it is engaged in its legislative function. Therefore the Unruh Act does not apply to the City's adoption of Ordinance 1084." In short, the Unruh act applies to business establishments, and cities are not business establishments.
The Rancho Mirage motion was granted. Naturally, Harrison appealed.
The Appellate Court agreed with the trial court. "Nothing in the [Unruh] Act precludes legislative bodies from enacting ordinances which make age distinctions among adults." Moreover, it noted that Harrison's fear that he and others would be sued for age discrimination was misplaced. Civil Code Section 51 (c) provides that a private party could not sue a business establishment that is following the law.
The city prevailed and the trial court's granting of a demurrer was upheld. The ordinance stands.
Will other cities seek to model legislation along the lines used by Rancho Mirage? We'll just have to wait and see.
Bob Hunt is a director of the California Association of Realtors®. He is the author of Real Estate the Ethical Way. His email address is firstname.lastname@example.org.