FACTS:                    

The CC&Rs prohibit short term rentals in the subdivision. The seller, however, disclosed to the buyer in an email that the CC&Rs’ restriction on rentals is illegal under Arizona Law.  The listing agent is concerned that this disclosure is potentially inaccurate. 

ISSUE:                      

Is the listing agent obligated to correct or clarify the seller’s disclosure?  

ANSWER:                

See discussion. 

DISCUSSION:         

Generally speaking, CC&Rs constitute a contract by and between the owners within the subdivision to conduct themselves in a way consistent with the provisions of the CC&Rs.  As such, the prohibition on short-term rentals in CC&Rs is likely enforceable.  The seller may be confused with A.R.S. § 9-500.39, which prohibits municipalities from restricting short-term rentals.  That statute does not apply to private homeowners’ associations.  

Because the listing agent’s disclosure obligations run parallel with the seller’s, the listing agent should first consult with the seller as to the potentially inaccurate information.  Second, the listing agent should ensure that the appropriate disclosure is made in writing.