The title companies don't want to insure Tax Sales, because the former owner can come back and say that they did not have notice, or proper notice and overturn the tax sale years after the tax sale happened. 

@Cullen EckertYour legal reference while being a nice try is really invalid because the court overturned it because governing docs did not include it whereas if it is a deed restriction that is completely different from that caseIt doesn’t mean you will win or lose but be prepared for a hefty legal fight that could cost you tens of thousands to defend and the HOA going to make your life.

I had seen elsewhere that Arizona had put out some legislation making it illegal for cities to ban STRs but has that been changed/overturned? 

I think the suit would be for specific performance not to overturn the sale. 

During the process I recently learned that the title company working on my case is having a hard time insuring the title deed due to the new ruling which overturns the current foreclosure tax law leaving open the opportunity for the tax lien decision to be legally voided even after a year.  

Unfortunately, breed bans are difficult to overturn unless you mane it personal... maybe get a couple "bombproof" dogs from the local breed rescue for a meet and greet?

For sale By owner.ARV=210K Comps 1) 189k within 6 months 2x(2/1) 2)203k within 1 year 2x(2/1) 3)239 within 6 months 2x(2/2)Rental income would be about 2600 a month but being conservative I assumed 2400.Expenses 2016 taxes =4583Insurance = 150 a month so 1800 a year for closing.Cap ex= 2400 for one month overturn Repair costs = 15K for new ac and roof.

@Russell Brazil yes I have won one specific performance suit.. but vastly different set of circumstances.the seller was losing the property and needed 40k to cure the tax ( property tax) default or they were going to lose it .In Oregon its the only state I personally know were property lost for non payment of property tax's escheats to the state.. no public auction no overage no right of redemption other than the county commissioners can over turn it down the road.. that all said there was no time to do a formal escrow so I did a Purchase and sale contract.. gave the seller 5k of non refundable EM and handed it to her.. 

If you are unable to find an issue there, then check the Rules & RegulationsIf the paragraph disallowing this type of rental is in the first three documents I mentioned above, then this is the type of thing that you can petition your neighbors to overturn. 

The realtors mounted a campaign, vigorously opposed by the state bar, to overturn that decision by amending Arizona’s constitution.