Can a Virginia HOA put a cap on how many homes in the neighborhood can be rented out?

Plain-English summary

Delegate Byron asked the AG whether a Virginia homeowners' association can use a recorded covenant to put a ceiling on how many homes inside the association can be rented out. The AG concluded that yes, it can, provided the rental cap is properly drafted, properly adopted, properly enforced, authorized as to purpose, and not in conflict with the association's declarations, bylaws, or rules and regulations.

The reasoning starts from the contractual nature of the HOA relationship. Owners in an HOA are bound by the association's governing documents, which function as a contract among all the owners. The Virginia Property Owners' Association Act sets some statutory floors but does not address rental property specifically, so it leaves broad latitude for HOAs to design their own rules.

To fill the gap, the AG looked to condominium law. The Virginia Supreme Court has held that a condominium restriction "reasonably related to a legitimate purpose" can be enforced if it serves that purpose and is reasonably applied, and that amendments to condominium rules are measured by reasonableness. The court has said an association cannot act outside the scope of its authority or promulgate arbitrary and capricious rules bearing no relation to the purposes of the condominium. The AG concluded Virginia courts likely would apply similar principles to HOAs.

On the substance: restricting rentals serves recognized interests, including preserving a sense of community and protecting property values. Whether a particular cap is reasonable is highly context-specific. The AG noted it can matter whether the restriction was in the original covenants or imposed by amendment, and how draconian the cap is.

Currency note

This opinion was issued in 2011. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Virginia Property Owners' Association Act has been amended several times since 2011, and the Act (formerly in Title 55) has since been recodified into Title 55.1 of the Code. Virginia HOA law on rental restrictions is an actively litigated area. Anyone evaluating a rental cap today should look at current Title 55.1 statutes and any newer Virginia Supreme Court case law on the reasonableness inquiry.

Common questions

Does this mean a Virginia HOA can ban rentals altogether?
The opinion stops short of saying so. It says reasonable restrictions are likely enforceable and notes that how "draconian" the restriction is matters to the reasonableness inquiry. A complete ban on rentals adopted by amendment would face a stiffer reasonableness challenge than a cap or a registration requirement.

Does it matter whether the rental cap was in the original covenants or added later?
According to the opinion, yes, that's one of the factors a court would consider. The AG listed whether the restriction "was contained in the original restrictions or was the subject of an amendment to existing restrictions" as part of the context-specific reasonableness inquiry.

Did the AG identify any Virginia case directly on point?
No. The AG noted the precise issue had not been the subject of any published Virginia decisions and relied on Condominium Act case law by analogy.

Is an HOA's authority unlimited?
No. Drawing on the Condominium Act case law, the AG said courts must ask whether the association has acted within the scope of its authority under the statute and its own master deed and bylaws, and whether it has abused its discretion by promulgating arbitrary and capricious rules bearing no relation to the purposes of the community. A rental restriction that has no relation to a legitimate purpose, or that conflicts with the association's own governing documents, would not be enforceable.

Background and statutory framework

The HOA relationship in Virginia is fundamentally contractual. The recorded declaration, bylaws, and rules and regulations together form a contract that all owners agreed to be bound by when they took title.

• Virginia Property Owners' Association Act. The opinion notes the Act does not contain any provisions relating to rental property and generally allows broad latitude for associations to govern themselves through their declarations and bylaws.
• Virginia Condominium Act. This was the source of the analogous case law the AG used to predict how Virginia courts would treat HOA rental restrictions.
• Va. Code § 2.2-505. Authorizes the AG to issue official advisory opinions.

Reasonableness as the test: under the Condominium Act case law, a condominium restriction "reasonably related to a legitimate purpose" is enforceable, and amendments are measured by reasonableness. The AG read this as the likely test for HOA rental caps too.

Limits on association power: An association cannot act outside the scope of its statutory authority or its own master deed and bylaws, and cannot adopt rules that are arbitrary and capricious or that have no relation to the purposes of the community.

Citations

• Va. Code § 2.2-505
• Virginia Property Owners' Association Act
• Virginia Condominium Act

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2011/10-078-Byron.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

January 24, 2011

The Honorable Kathy J. Byron
Member, House of Delegates
523 Leesville Road
Lynchburg, Virginia 24502

Dear Delegate Byron:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether a homeowners' association, by duly recorded covenant, may limit the number of housing units within the association that may be offered for rent by the owner to tenants.

Response

It is my opinion that if properly written, adopted and enforced, and authorized as to purpose and not in conflict with an association's declarations, bylaws or rules and regulations, a homeowners' association may covenant to limit the number of housing units within the association that may be offered for rent by the owner to tenants.

Applicable Law and Discussion

The relationship between a homeowners' association and a homeowner covered by its restrictions is contractual in nature. In addition to principles of contract, the Virginia Property Owners' Association Act ("the Act") provides further restrictions on homeowners' associations in Virginia. The Act does not contain any provisions relating to rental property. In general, the Act allows broad latitude for contracting parties and homeowners' associations to devise rules and restrictions governing the use of property.

Although the precise issue you raise has not been the subject of any published decisions in Virginia, in analyzing an analogous statute, the Condominium Act, the Virginia Supreme Court has held that "[a] condominium restriction or limitation, reasonably related to a legitimate purpose, does not inherently violate a fundamental right and may be enforced if it serves a legitimate purpose and is reasonably applied." The Court further held

that amendments to condominium restrictions, rules, and regulations should be measured by a standard of reasonableness, and that courts should refuse to enforce regulations that are found to be unreasonable. In doing so, inquiry must be made whether an association has acted within the scope of its authority as defined under the Condominium Act and by its own master deed and bylaws, and whether it has abused its discretion by promulgating arbitrary and capricious rules and regulations bearing no relation to the purposes of the condominium.

The Court likely would apply similar principles in adjudicating amendments, restrictions, rules and regulations in cases involving homeowners' associations.

Restricting the rental of homes serves a number of legitimate interests, including preserving a sense of community and protecting property values. Virginia courts likely would uphold reasonable restrictions on the rental of homes by a homeowners' association, provided that such restrictions serve a legitimate purpose, comply with the association's own declarations, bylaws and rules and regulations, and comply with applicable laws in the way they are enforced. Whether a restriction is reasonable would be highly context specific, and may depend upon whether it was contained in the original restrictions or was the subject of an amendment to existing restrictions, and how draconian the rental restrictions are.

Conclusion

Accordingly, it is my opinion that if properly written, adopted and enforced, and authorized as to purpose and not in conflict with an association's declarations, bylaws or rules and regulations, a homeowners' association may covenant to limit the number of housing units within the association that may be offered for rent by the owner to tenants.

With kindest regards, I am

Very truly yours,

Kenneth T. Cuccinelli, II
Attorney General