Zoning & Land Use  ·  October 5, 2026

Section 4740 Reaches HOA Documents, Not City Ordinances

A homeowner in a California common interest development who bought before a rental ban went in has a statute on their side. Civil Code section 4740 says they are not subject to a governing-document provision prohibiting rentals unless that provision was already effective when they took title. In 2021 the Fourth District, Division Two read that protection broadly in Brown v. Montage at Mission Hills, Inc. (2021) 68 Cal.App.5th 124, exempting an owner from "any kind of rental prohibition or restriction" adopted after she acquired her property.

On August 31, 2026, the same division told a trial court that it had read Brown too far. The protection runs against the association's documents. It does not run against the city's zoning code.

The case is Parsons v. City of Indian Wells (Aug. 31, 2026, E082591), certified for publication, and it is worth attention beyond the desert resort cities, because the reading the trial court gave Brown is the reading Brown's broadest sentences invite.

What did the City of Indian Wells actually do?

Two ordinances, doing opposite things, which is why the case is confusing on first read.

Indian Wells had spent roughly a decade regulating short-term rentals: a temporary moratorium in 2014, then Ordinance No. 689 in 2015 grandfathering existing operators at a seven-night minimum if they applied within 30 days and imposing a 29-night minimum on later applicants. The effective ban now sits in IWMC section 5.20.140, as amended by Ordinance No. 710 — a 29-night minimum stay on residential rentals citywide. The Parsons did not challenge that provision.

What they challenged was the relief valve. Ordinance No. 732 added IWMC section 5.20.210, which lets the members of a common interest development vote to opt their community out of the citywide minimum and operate short-term rentals on a shorter minimum proposed by their own board.

So the opt-out is permissive. It does not ban anything. It is the route out of a ban that lives somewhere else in the code.

Why did the trial court strike it down?

The Parsons, who own property in a CID in the city, were denied a short-term rental permit and filed a petition for traditional writ of mandate. Their lead theory was preemption: an opt-out vote under section 5.20.210 is in substance an amendment to the CID's governing documents, so it collides with section 4740 and with the Davis-Stirling amendment provisions at Civil Code sections 4270 and 4275. They added that handing the decision to a private vote was an unconstitutional delegation of the City's legislative power.

The Riverside County Superior Court (Judge Eric A. Keen) agreed on those two theories, held IWMC section 5.20.210 invalid, issued a writ directing the City to grant an unrestricted permit, and later awarded the Parsons their attorney fees. It did not give them everything. It sustained the City's demurrer without leave to amend to the Parsons' eighth cause of action for illegal spot zoning, and it ruled that Ordinance No. 732 was not enacted in an arbitrary and capricious manner.

Both sides noticed appeals. The Parsons, as a later modification order records, "elected not to pursue their cross-appeal," which left the spot-zoning and arbitrary-and-capricious rulings uncontested on appeal.

The Court of Appeal reversed on both of the City's issues. On the third, the opinion's roadmap says the court "conclude[s] the trial court correctly ruled the City did not act arbitrarily" or capriciously — but with the cross-appeal abandoned nobody briefed that point to the Court of Appeal, so it is worth less as authority than the two issues the court actually decided. The disposition is short: "The judgment and postjudgment order on attorney fees are reversed. The City of Indian Wells shall recover its costs on appeal."

What does section 4740 actually say?

The text is narrower than its reputation. Section 4740, subdivision (a):

"An owner of a separate interest in a common interest development shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in that common interest development to a renter, lessee, or tenant unless that governing document, or amendment thereto, was effective prior to the date the owner acquired title to their separate interest."

Three limiting words carry the case. Provision. Governing document. Prohibits.

"Governing documents" is a defined term: the declaration "and any other documents, such as bylaws, operating rules, articles of incorporation, or articles of association, which govern the operation of the common interest development or association." (Civ. Code, § 4150.) A municipal code is not on that list and is not an instrument of the association at all.

Section 4740 also sits in Chapter 5, Article 1 of the Act, which by its own terms "includes provisions that limit the authority of an association or the governing documents to regulate the use of a member's separate interest." (§ 4700.) The chapter is aimed at associations.

And subdivision (d) says the section does not "revise, alter, or otherwise affect the voting process by which a common interest development adopts or amends its governing documents."

Two further subdivisions matter in practice and are easy to walk past. Subdivision (c) conditions the owner's own exercise of the right: before renting or leasing, the owner must give the association verification of the date the owner acquired title, and the name and contact information of the prospective tenant or lessee or their representative. Subdivision (b) preserves the right across certain transfers — those exempt from reassessment under Revenue and Taxation Code sections 62 or 480.3, and those exempt from the Real Estate Transfer Disclosure Statement requirement under Civil Code section 1102.2, subdivisions (b) (probate transfers only), (e), (f) or (g), per section 1102.6 — which is the provision that matters when a unit passes by inheritance, or into or out of a trust.

How did the court limit the Brown decision?

This is the part worth reading in the original, because the court is disciplining its own language.

In Brown, an owner bought in 2002 when the CID's documents allowed short-term rentals, rented for 15 years, and then watched the CID amend its documents in 2018 to bar rentals under 30 days. Division Two held section 4740 exempted her. Along the way it wrote that the statute's goal "is to exempt CID property owners from any kind of rental prohibition or restriction that did not exist when the owner acquired title to the property" (Brown, at p. 132), and that "section 4740 exempts [the plaintiff] from any regulation, whatever its label, that restricts her rights to rent her property if the regulation did not exist at the time she acquired title to the property and she does not agree to the regulation" (id. at p. 134).

"Any kind." "Any regulation, whatever its label." The first sentence ties the exemption only to a regulation that did not exist when the owner took title. The second adds that she did not agree to it — a reference to the consent exception that AB 3182 removed from section 4740 effective January 1, 2021, so do not read that half forward into current law. But neither sentence says anything about who adopted the regulation, and read cold the second one sweeps in a zoning ordinance. The trial court read it cold.

The Court of Appeal's answer:

"But the trial court read this court's somewhat broad language out of its proper context. . . . [O]ur use of the term 'regulation' necessarily referred to a CID's governing documents or internal operating rules, and not to generally applicable zoning ordinances."

And, flatly:

"We had no occasion whatsoever in Brown to decide whether section 4740 applies to limitations on STR's found in municipal law or otherwise not contained in a CID's governing documents."

The court anchored that to the ordinary rule that an opinion is not authority for a proposition it did not consider, citing Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1158, and Bailey v. San Francisco Dist. Attorney's Office (2024) 16 Cal.5th 611, 631, footnote 6.

The operative holding then follows in a paragraph:

"Ordinance No. 732 does not require or even encourage a CID to amend its governing documents. The generally applicable, minimum stay limitation on rentals throughout the City is found elsewhere in IWMC section 5.20.140, as amended by Ordinance No. 710, and the Parsons do not challenge the legality of that provision. The opt-out provision merely provides that members of a CID may vote to exempt themselves from that general limitation. A successful opt-out vote does not result in an amendment of the CID's governing documents that has the effect of prohibiting or restricting rentals, so section 4740 is simply not implicated."

Because no amendment to the declaration is involved, the Davis-Stirling amendment machinery is not triggered either — neither section 4270, which sets the approval, certification and recording steps for amending a declaration, nor section 4275, which — where the declaration requires more than 50 percent of the votes to amend — lets the association or any member petition the superior court to reduce the percentage of affirmative votes the amendment would otherwise need.

On delegation, the court held the City "adopted a generally applicable policy on the question of STR's by declaring them to be a public nuisance and imposing a minimum stay requirement for residential rentals, but properly delegated to CID members the ability to decide for themselves whether to waive that protection." That is a waiver of a protection the City conferred, not a grant of legislative power to private parties.

What did the September 22, 2026 modification add?

The opinion has been modified twice, and the second time is the one that matters. A first order on September 3, 2026 added footnote 4, renumbered the remaining footnotes and changed one word on page 37. Then the Parsons petitioned for rehearing on September 14, 2026, arguing that an opt-out vote does produce documents — minutes, notices of the result sent to members — that fall within the wide definition of documents governing the operation of a CID.

On September 22 the court denied rehearing, modified footnote 4, renumbered the footnotes again, and added a new footnote 13, which answers the rehearing argument on an assumption rather than a denial:

"Even assuming the Parsons are correct that the creation of incidental documents following a vote pursuant to IWMC section 5.20.210 will have the effect of amending a CID's governing documents, the vote still does not trigger section 4740 because it will not 'prohibit[] the rental or leasing of any of the separate interests in that common interest development to a renter, lessee, or tenant . . . .' (Italics added.)"

A successful vote permits rentals. An unsuccessful vote changes nothing, because the ban lives in Ordinance No. 710. Either way nothing is prohibited by the vote itself.

Footnote 13 is an alternative ground, not the holding, and it rests on a premise the court assumed rather than accepted. Lead with the holding in the Discussion — a successful opt-out vote does not amend the governing documents, so section 4740 is not implicated — and put footnote 13 behind it, where it is useful precisely because it survives even if the first ground is contested. Both modification orders state that the modification "does not change the judgment," so under California Rules of Court, rule 8.264(c)(2), neither extended the finality date.

Where does this leave a CID owner who wants to rent?

The practical map after Parsons has three layers, and section 4740 only reaches one of them.

Your association's documents. Section 4740 is live here. If the association adopted the rental prohibition after you took title, you are not subject to it. Section 4741, added by the same 2020 bill — Assembly Bill No. 3182 (2019–2020 Reg. Sess.), Stats. 2020, ch. 198 — goes further against associations: subdivision (a) reaches any governing-document provision that "prohibits, has the effect of prohibiting, or unreasonably restricts" rentals, and subdivision (b) bars restricting rentals to less than 25 percent of the separate interests.

But short-term rentals are carved out of section 4741. Subdivision (c) is explicit: the section "does not prohibit a common interest development from adopting and enforcing a provision in a governing document that prohibits transient or short-term rental of a separate property interest for a period of 30 days or less." So an association may ban rentals of 30 days or less in its own documents. Whether a particular owner is subject to that ban is then a section 4740 question about timing of title, which is exactly what Brown decided.

Your city's code. Section 4740 does nothing here, and Parsons is now published authority saying so. A municipal minimum-stay requirement, a permit cap, or a zoning prohibition is challenged on land use grounds — vested rights, nonconforming use, the ordinance's own terms, state housing law where it applies — not under Davis-Stirling. If the property is in the coastal zone, add the Coastal Act. Kracke v. City of Santa Barbara (2021) 63 Cal.App.5th 1089 held that a city's ban on short-term rentals in the coastal zone is "development" under the Coastal Act, so the city needed Coastal Commission approval — a coastal development permit, an amendment to its certified local coastal program, or a waiver — before enforcing it. That is a separate question from anything in this opinion and from anything in Davis-Stirling.

The opt-out mechanism itself, where a city has one. Indian Wells's version turns on a vote of the members. If your community has that route, the fight is usually about notice, eligibility and the count, under the association's own balloting rules and the City's ordinance — not about preemption.

What is still unsettled?

Several things, and one of them is whether this opinion survives in its current form.

Parsons became final in the Court of Appeal on September 30, 2026, neither modification order having changed the judgment. A petition for review in the Supreme Court is due within 10 days after finality under rule 8.500(e)(1). That lands on Saturday, October 10, 2026, and so runs to Monday, October 12 (rule 1.10(a), (b)). That time cannot be extended — rule 8.500(e)(2) says so in terms, although the Chief Justice may relieve a party from a failure to file a timely petition while the court's own time to order review has not expired. Separately, if no petition for review is filed, the Supreme Court may order review on its own motion within 30 days after finality and may extend that to no later than 90 days after finality, which here is December 29, 2026 (rule 8.512(c)(1)). If a petition is filed, the court's own-motion window runs instead under rule 8.512(c)(2) and (b)(1), from the filing date. As of October 5, 2026 we are aware of no petition, though we were not able to reach the appellate docket to confirm it. If review were granted, the opinion would have "no binding or precedential effect" and could be "cited for potentially persuasive value only," unless the Supreme Court ordered otherwise — and any citation would have to note the grant of review (rule 8.1115(e)(1), (3)).

The opinion also does not decide what happens after an opt-out vote succeeds and the association then writes the shorter minimum into its own rules. Our reading — analysis, not a holding — is that such a rule is a provision in a governing document, so an owner who took title before its adoption would have a section 4740 argument of the kind Brown accepted. Two cautions before anyone builds on it. Footnote 13 turns on the word "prohibits," and a rule an association adopts in order to permit stays shorter than the City otherwise allows may be characterized as permissive rather than prohibitory; Parsons did not decide which characterization controls. And winning the point may not help. An owner exempted from the association's shorter minimum is not thereby exempted from the citywide 29-night minimum in IWMC section 5.20.140, which the opt-out relieves only through the community's own adopted rule. Nothing in Parsons forecloses the argument, and nothing in it endorses the argument either. The court held only that the municipal opt-out is not itself such a provision.

Nor does it address an ordinance drafted the other direction — one that requires a CID to amend its declaration, or conditions a city permit on a particular covenant. The court's reasoning rests on the fact that Ordinance No. 732 "does not require or even encourage" an amendment. A differently drafted ordinance would present a different case.

And the delegation holding is fact-bound. The City first adopted a citywide policy and then let affected owners waive it for themselves. An ordinance that hands private parties the power to impose a restriction on unwilling neighbors is not what Parsons approved.

Our zoning disputes page describes how we handle ordinance and permit fights; our article on SB 79 litigation covers the other place where a state housing statute and a local ordinance are currently colliding; and our article on reviving a lapsed CC&R in Los Angeles County covers the Davis-Stirling side of the same problem, where an association's documents have expired rather than been amended.

This article states the law as of October 5, 2026, and the decision discussed is not yet beyond the time for a petition for review.

Frequently asked questions

This article is general information about California law, not legal advice, and reading it does not create an attorney-client relationship. Statutes and case law change, and how they apply depends on the specific facts. Attorney advertising. Prior results do not guarantee similar outcomes. Robert B. Mobasseri, State Bar No. 193193, ROMO Law Group, Encino, California.