A TREND TOWARD RESTRICTING home buyers from renting out their property in the Phoenix market appears to have gained some traction with a favorable court ruling. On Jan. 3, a Maricopa County judge ruled that a rental restriction imposed on members of the Scottsdale Country Club Village Association was legal.
It's a significant ruling that could strengthen the resolve of some developers and HOAs to shut out investors looking for rental units, says Scott Carpenter, a Tempe, Ariz., attorney who drafted the association's covenants.
The motivation for the restrictions is based on widely held beliefs that renters don't take care of the property as well as owners do and that too many rental units reduce property values in the neighborhood.
Still, Carpenter says that with investors purchasing at least 20 percent of the houses in the Phoenix market, he wonders why a builder would want to exclude such a large number of potential sales.
“It's a curious behavior for a home builder to turn away a willing buyer,” he says.
Some real estate professionals think that it's out of line to tell home buyers they can't rent out their house.
“I think this is infringing on property rights to the nth degree,” says Jay Butler, director of the Arizona Real Estate Center at Arizona State University East in Mesa. “This one is probably going a bit too far.”
Even if more developers and HOAs opt to include the restrictions, enforcement would be difficult, Butler says.
“I don't see how home builders will go around monitoring these homes,” he says. “It's probably a good marketing tool that scared off some amateurs, but a lot of professionals would be interested in challenging it.”
Learn more about markets featured in this article: Phoenix, AZ.