In 2022 and 2023, the Kropfl family operated their condominium property on Serena Drive in Palm Desert’s Monterey Country Club as a short-term rental.
The family purchased the unit in 2021. It was marketed as a three-bedroom home with an interior atrium by the previous owner, the Compass real estate agent who handled the transaction, the homeowners’ association’s sales and leasing office, Zillow, Redfin and, well, everyone. The family’s plan was to generate enough income to support Keith Kropfl’s approaching retirement.
In January 2024, Carrie Kropfl was surprised when the city of Palm Desert denied the STR-permit-renewal—because the city now considered the property to be a two-bedroom unit, not three.
“I was contacted with an informal email, by the way,” Carrie Kropfl said during a recent interview. “No due process, no formal letter, nothing—just, ‘You don’t have a three-bedroom. You have a two-bedroom, and we’re lowering your occupancy from six to four. And if you don’t make the change immediately on the Airbnb and VRBO websites, we will not renew your license. We were not informed of our rights. We weren’t really told why, so I started reaching out.”
She began checking with her STR-operating neighbors and found that many had received similar notifications.
“I finally demanded due process,” Kropfl said, “and once I made that demand, the city (shared) the process of appealing this decision, but it took a good three days before I got that information. At that point, it was just me on my own, and I had 10 days to respond, so I had to move quickly, or I would lose my opportunity altogether.”
Kropfl joined forces with other STR operators, hiring the same attorney they’d used about a year before when the city told them Monterey Country Club was no longer allowing STRs. They prevailed in that matter—but this time, the attorney urged them not to fight this permit refusal, since it was based on a re-evaluation of certain floor plans that seemed to incorrectly identify an atrium-adjacent living space as a third bedroom, which put it in conflict with California state building standards. According to those regulations, atrium-adjacent spaces with no direct egress available via a door or window to the outside of the property could not be utilized legally as a bedroom.
The attorney suggested the STR operators propose a compromise to the city: They could instead utilize the living-room area as a bedroom for STR purposes. The city denied the request at a hearing in early May, primarily on the grounds that if the city agreed to this group’s request, they would have to accept similar requests from all city condo owners seeking STR permits.
Kropfl kept fighting. She was turned down by the Palm Desert Building Board of Appeals in late May. At the June 27 Palm Desert City Council meeting, Kropfl again presented her case, and was denied in a 4-1 vote. (Gina Nestande, a real estate agent, voted in favor of Kropfl.) The councilmembers’ main stated concern was the ability of people using that now-illegal bedroom to escape during a fire or other disaster. Palm Desert Mayor Karina Quintanilla said: “Safety is non-negotiable. I think that’s one thing we can all agree on.”
Kropfl and her neighbors realized this change could have effects beyond STR rentals. There were questions as to whether they had paid too much for their properties—and are paying too much in property taxes.
They also realized it was not just Monterey Country Club that was affected; Kropfl said thousands of condominium owners across multiple Coachella Valley communities would be impacted by the ruling.
“I just started requesting records,” Kropfl said; she now has many of those records posted on her website, palmdesertfraud.com. “I’d uncover another thing, and request another record, and uncover another thing, and request another record. I started posting to the Monterey homeowners’ Facebook page, and educating people that this is not a short-term rental issue. … I learned that there were over 1,000 units built (in MCC alone) that had atriums and that would be affected.” At least 10 other condo communities had been developed by the Sunrise Company—builders and managers of the MCC community—between 1973 and 2018 across multiple Coachella Valley cities.
So now what? The owners are considering everything from class-action lawsuits against Sunrise Company, the city and others, to appeals with the state of California and, to lower their taxes, Riverside County.
Additionally, the Palm Desert City Council’s expression of safety concerns may have placed the city in the position of needing to notify potentially thousands of city residents that they are living in unsafe housing conditions, as determined by the council.
The Independent emailed Quintanilla and requested an interview to discuss how the city plans to deal with the challenge; we did not receive a response as of our press deadline. We also emailed and tried to call Paul Herrera, the government affairs director at the California Desert Association of Realtors; he has not responded.
Meanwhile, Carrie Kropfl is unwilling to let this matter rest.
“We overpaid for our home by 20-30%,” Kropfl said. “I overpaid by more than $150,000 for my home. I would have never bought it for the price I paid, because when you run the numbers for (operating) an STR here … it doesn’t make any financial sense. I’m having anxiety over it. I’m not sleeping, and it’s definitely caused a lot of stress, emotionally and financially. I lost both my parents a year ago, six weeks apart, and I was their primary caretaker, so I’m still in repair from that. It’s just been a lot to carry on my shoulders. But I want to fight the good fight.”
Kropfl continues to post updates on social media platforms like Facebook and Nextdoor, and she said she is buoyed by the increasing number of views and followers that her palmdesertfraud.com website is garnering.
“I’ve had 1,200 hits to the website (as of early July), and I have 60-plus subscribers now,” she said. “My (posts on) Nextdoor get upwards of 5,000 views. I’ve been doing Facebook posts strictly on the Monterey (Country Club) Facebook page, but other people within other communities are also doing posts on their Facebook pages.”
The Independent asked Kropfl if, as word of this dispute gets more widely disseminated, she’s hopeful that class-action lawsuit options are becoming more viable.
“Yes,” she said. “Power in numbers.”
Edited on July 22 to correct the City Council vote tally, and fix a typo regarding the number of units affected.
Palm Desert requires a STR for rentals of less than 27 days. However Monterey CC HOA regs and rules prohibit rentals of less than 30 days. So it’s a bogus issue. Owners can’t do STR even if the 3BR was legal. I reside at Monterey CC
The owners failed to do their due diligence, or ask the agent and borkerage for more clarification with why the assessor records didn’t align with listing data before making an offer. Hence, leaving that feeling of overpaying post escrow. Just because the last owner got away with it, doesn’t mean you will too. What if she bought a house as a three bedroom with added SqFt, but the country assessor records show only two bedrooms and 550 less SqFt? Where did that extra bedroom and SfFt come from? Who did the work? Why were permits not issued and the property re-assessed?
This story’s owner on the surface reads as she blames the agent and brokerage. Her due diligence is post escrow. She might be able to file a complaint with CAR ethics committee and CDAR against the agent as well as brokerage. Fiduciary responsibilities may have been neglected.
Am I understanding this correctly? Houses were being sold and a room with no egress window or door were being labeled as bedrooms?
Sounds like they should be going after the realtors, not the city. But also, cry me a river that you are going to make less on a home you rent out.
C’mon, people, let’s apply some critical thinking here. This is a state law matter, not local. The reason for this is health and safety, meaning where’s the fire egress (as mentioned)? That is the code matter involved (Sec R310.1). It has been that way for as long as I can remember, and I have been involved in construction and real estate development since June, 1975 (my clear recollection on this code section only goes back about 30 years). The address below takes you to a City of Riverside handout (I used this in lieu of just copying and pasting the CRC relevant section because it has a very clear and concise explanation). Without an appropriate fire exit, it is a den/office. Brokers sometimes will not list the extra bedroom as such if it does not have a closet.
https://www.riversideca.gov/cedd/sites/riversideca.gov.cedd/files/pdf/building/forms/Inspections_page_handouts/CALIFORNIA%20RESIDENTIAL%20CODE%20-%20RESIDENTIAL%20EGRESS%20WINDOWS%20EMERGENCY%20ESCAPE%20AND%20RESCUE%20OPENINGS.pdf
In addition, there is not a CID board that would not prevail with restriction on STR with a 30-days minimum if it was in the CCRs when she purchased the unit, or if a majority voted to place it in the CCRs, post facto, so I’m sure she “won” on some technicality, meaning the board, current or previous iteration, did not handle it properly.
Her HO insurance will crack down, as well. She has to disclose it is a business and it is not her primary, even secondary, residence, and that she is in compliance with state and local code (she is not). She’s opened a can of worms with short-sighted thinking and investing without research. And who the hell overpays for an investment? People who blame others for their own shortcomings.
She has recourse with her broker, but the city and state laws are clear. I would not want to be the buying agent right about now. Both the broker, agent, and buyer have failed. Possibly the prior owner, too.
Any attorney taking fees to fight the AHJs (city and state) on this matter is stealing from the client, and the original lawyer is correct in his/her actions.
I’d also be curious to see the contract, if any, the owner has with the sales and rental office operated by MCC. I’d be surprised if it did not have an exclusion stating that all information within was provided by owner and MCC does not confirm the accuracy of it. I am also curious if this house had a closet built with that particular model for that room.
The state passes the residential code, and cities and counties enforce it. Local AHJ hands are tied.
Once the atrium is converted, there is no access in case of fire to what is considered a public way. This would then require a redesignation of the bedroom to a den or some non-other habitable sleeping area. It is definitely a life and safety concern. Money should never ever be the deciding factor when it comes to life safety. I failed to notice if a permit was issued and approved for the atrium remodel in this article.
I had the earnest discussion with a RE agent, that once the atrium was roofed, the room off it was no longer a bed room, and the unit should be priced as a 2 bed with den.
But I think current code would require a permanent ladder on to the roof out of the atrium and one off into the clear, but these, for there intended use, would be grandfathered in.
It’s not just local or state law. It’s code/law in most states/areas that any bedroom has to have the egress window, etc. I’m not a real estate person and I knew that!
I feel bad that she feels she overpaid but she didn’t do her due diligence.