Leslie Reynolds v. Parkwood Terrace Owners Association and ACT Management (Hennepin County District Court, 2011), is an important case because it is one of the first times a Minnesota court has addressed the extent to which a homeowners association can restrict the renting of units without running afoul of the Minnesota Common Interest Ownership Act (MCIOA). Plaintiff was an investor who had purchased several units for the sole purpose of renting them out. Plaintiff claimed the Association’s criminal background check and owner-residency requirements were invalid under MCIOA and that the Association was discriminating against him and his renters.

Alan King represented the Association and ACT Management and brought a motion for summary judgment, in which he argued that the Association’s requirements were valid and enforceable under the law. The district court granted Alan’s motion, which resulted in a dismissal of all claims against both of Alan’s clients. The court’s decision is important because it represents the first time a Minnesota court has construed the power granted to homeowners associations to make rules regulating the “health, safety, and welfare” of unit occupants, Minn. Stat. 515B.3-102 (2010).

Townhome and condominium boards are frequently faced with complications that can ensue when many of their units become rentals. Homeowner pride and the sense of community can both become diminished. The district court’s decision upholds the power of associations to require criminal background checks and one-year occupancy before units are rented out.