In 2018, the homeowners of Camelback Country Estates, a 35-home community in Paradise Valley, sent a formal notice to a Nevada LLC that had bought a home in their neighborhood. The house was being advertised online at roughly $2,000 a night, and weekend crowds had grown large enough that neighbors started keeping track. The HOA gave the owner, Forty Sixth Place LLC, 30 days to stop. When the rentals continued, the association sued. In 2019, a Maricopa County Superior Court judge ruled in the HOA's favor.
That outcome should not have been possible. Arizona had passed a law three years earlier that stripped cities and towns of the power to ban short-term rentals. Investors read that law, understandably, as a green light. The Camelback Country Estates case is the clearest evidence in Paradise Valley that a green light from the state and a green light from your specific property are two different things, and only one of them shows up when you're scrolling comps.
The statute everyone cites, and what it never touched
The law in question is A.R.S. § 9-500.39, passed in 2016 as Senate Bill 1350. It prevents Arizona municipalities from prohibiting short-term rentals based purely on their classification or use. Paradise Valley cannot pass an ordinance that says "no Airbnbs in town." That much is settled and unlikely to change.
What the statute never claimed to touch is private governance. Homeowners associations operate under Covenants, Conditions, and Restrictions recorded against the land, and those documents sit outside the state preemption entirely. The attorney who represented Camelback Country Estates made this argument directly to the court: the CC&Rs said no transient tenants, and a house filling up with strangers every weekend fit that description regardless of what the state legislature had done for cities and towns. The court agreed.
So the honest framing for a buyer isn't "are short-term rentals legal in Paradise Valley." It's "does this specific parcel's recorded paperwork allow one," and that question has nothing to do with the state legislature.
Three separate systems, and only one of them is public record you'll actually read
A buyer evaluating a Paradise Valley property for short-term rental income is really clearing three independent hurdles, each controlled by a different party with different tools.
| Layer | Who controls it | What it requires or allows | What it cannot do |
|---|---|---|---|
| State law (A.R.S. § 9-500.39) | Arizona Legislature | Bars the Town from banning STRs outright based on classification | Has no authority over private CC&Rs |
| Town ordinance (Town Code Article 10-14) | Town of Paradise Valley | Requires a registered permit, a TPT license, transient (bed) tax collection, a 24/7 local contact, minimum $1,000,000 liability coverage, and guest sex-offender background checks | Can't exceed what state preemption allows it to regulate |
| HOA CC&Rs | The homeowners association, subject to a 2022 Arizona Supreme Court test | Can prohibit short-term rentals entirely within the community | Amendments must have been "reasonable and foreseeable" to the owner at time of purchase, or a court may refuse to enforce them |
The first two layers are things any agent can pull up and explain in an afternoon. The third layer is the one that actually decides whether the investment works, and it lives in a document that varies house to house, block to block, sometimes lot to lot within the same subdivision.
Why a 2022 Supreme Court ruling makes the CC&R question harder, not easier
Three years after the Camelback Country Estates case, the Arizona Supreme Court decided Kalway v. Calabria Ranch HOA, a case that had nothing to do with short-term rentals on its face but reshaped how every CC&R amendment in the state gets evaluated. The court ruled that an HOA cannot create new obligations on existing owners unless those obligations were reasonably foreseeable when the owner originally bought in. Attorneys who track this area, including Paradise Valley councilor and real estate attorney Julie Pace, have said publicly that the ruling casts real doubt on newer CC&R amendments that ban short-term rentals, particularly in communities where the original governing documents were written before Airbnb existed and said nothing about transient use.
That cuts two ways for a buyer, and both directions matter. If an HOA's rental restriction was already in the CC&Rs when the current owner bought, or if short-term rentals have been a known, publicized issue in that community for years, a court is far more likely to treat a restriction as foreseeable and enforceable. Given how much attention short-term rentals have drawn in Paradise Valley since at least 2019, and given how routine and well documented the topic now is, an association strengthening its stance today is on much firmer footing than one trying to retroactively surprise a long-time owner. The practical result is that older, ambiguous CC&R language is the riskiest thing a buyer can rely on, while a clear, recently updated restriction is the hardest one to challenge.
The Town's own paperwork is not a formality either
Even on a property with no HOA at all, which describes a meaningful share of Paradise Valley's larger lots, the Town's own ordinance is its own gate. Article 10-14 of the Town Code requires an owner to register the property, obtain a permit, and hold a valid transaction privilege tax license before ever listing a night. Every short-term rental owner in Paradise Valley must carry a minimum of $1,000,000 in liability coverage, either directly or through the booking platform's policy. The ordinance requires a designated local contact reachable 24 hours a day, a landline in the home, and a written statement provided to every guest covering parking, trash, noise, and fire evacuation. Owners are also required to run background checks confirming no registered sex offenders are among the renters, and the Town publishes the owner's name, phone number, and property address as part of the permit record. Noise violations are enforced against a defined curfew, generally 10 p.m. to 7 a.m., extended to 6 a.m. in summer under certain circumstances.
None of this is discretionary, and none of it disqualifies a property on its own. It does mean the operating cost and administrative load of a compliant Paradise Valley short-term rental is higher than a quick online search suggests, and that math belongs in any investor's underwriting before the CC&R question even comes up.
The rules are still moving in 2026
The legal ground under all of this shifted again earlier this year. House Bill 2429, introduced in the Arizona Legislature in January 2026, set out to carve narrow exceptions into the 2016 preemption law. As introduced, it would let cities and towns set statewide overnight occupancy formulas, extend the enforcement lookback window on repeat violations from 12 months to 24, and allow license suspension after a single serious health or safety violation. Earlier drafts also included permit caps and minimum spacing requirements between short-term rental properties, though those provisions were stripped out before the bill cleared committee. The House passed the amended bill 36-19-4 on March 10, 2026, and sent it to the Senate. A buyer weighing a purchase now should confirm the bill's final status directly, since a spring House vote is not the end of a legislative session and the version that eventually becomes law, if any, may look different again.
Separately, in reporting from late 2025, the League of Arizona Cities and Towns said it planned to push for legislation in the 2026 session that would let member towns cap the number of short-term rental licenses they issue, and Paradise Valley officials indicated the Town would support that approach. Whether that specific push succeeded is worth confirming with the Town directly rather than assuming either outcome. The larger point holds regardless: the permit environment in Paradise Valley has changed more than once in the past few years and should be treated as a snapshot rather than a fixed rule.
What to actually check before you write an offer
If short-term rental income is part of your reason for buying in Paradise Valley, the diligence list looks different from a standard purchase.
- Pull the full recorded CC&Rs and every amendment, not just the summary an HOA hands out at closing, and compare the amendment dates against the property's ownership history.
- Ask whether the community has any recorded history of enforcement action or litigation involving short-term rentals, the way Camelback Country Estates does.
- Confirm whether the property currently holds an active Town of Paradise Valley short-term rental permit, and if not, budget the time and paperwork to obtain one, including the $1,000,000 liability policy.
- Register for the state TPT license and confirm the transient tax obligation with the Town before your first booking, not after.
- Check the current status of HB 2429 and any Town Council discussion of permit caps directly with the Legislature and the Town if your investment plan depends on entering the market in the near term.
None of these steps show up in a listing description, and most of them cannot be answered from outside the property's own paperwork.
Frequently Asked Questions
If a Paradise Valley home already has an active short-term rental permit, does that guarantee I can keep renting it? A Town permit confirms the property currently meets the ordinance's requirements. It says nothing about whether the HOA's CC&Rs allow the use, and a permit does not override a valid recorded restriction.
What's the practical difference between the Town's rules and my HOA's rules? The Town's ordinance is public regulation that applies uniformly and cannot ban the use outright. An HOA's CC&Rs are a private contract that can prohibit short-term rentals entirely within that community, subject to the foreseeability standard set out in Kalway v. Calabria Ranch.
Is Paradise Valley about to ban short-term rentals? State law still prevents an outright ban. What's moving is the Town's ability to regulate around the edges, through occupancy limits, longer enforcement windows, and possibly license caps, depending on how HB 2429 and any follow-on legislation are ultimately resolved in Phoenix. Confirm current status before assuming either direction.
Short-term rental income can work in Paradise Valley, but the property that makes it work looks different from the one a headline about Arizona's investor-friendly law would suggest. If you're weighing a purchase with rental income in mind, Heyman Luxury can walk the CC&Rs and permit history with you before you write an offer, not after. Schedule a private consultation to talk through a specific address.
