Casa Realty Group LLC

Can an HOA restrict short-term rentals?

September 7, 2023


Short-term rentals can be beneficial to both homeowners and the guests who rent out the homes. Visitors have the opportunity to have a more authentic experience and live like a local, and owners earn some extra revenue.

But short-term renters don’t always receive a warm welcome in HOAs, especially if the majority of owners do not want temporary guests coming in and out of the community.

To avoid problems associated with short-term renters, some HOAs have completely banned owners from advertising and renting out their homes to travelers. But is that really allowed? And more importantly, should they do this? Read on to find the answers.

   

Table of contents

   

What is a short-term rental?

What constitutes as a short-term rental may vary, but many HOAs agree that any dwelling being rented for 30 or fewer consecutive days fits that definition. Short-term rentals are quite common in condo developments because these buildings are often close to main attractions, restaurants and transit. But single-family developments have their fair share of short-term rentals (STRs) too. 

    

Why do some HOAs choose to ban short-term rentals?

Some associations have banned short-term rentals because there are a lot of potential problems that can occur when strangers are allowed to rent out a home for a weekend.    

Short-term renters have no ownership interest in the development, and many don’t know or don’t care about the rules that members are obligated to follow. There may also be an increased risk of premises liability claims.

Furthermore, some owners simply feel less safe having new people in the community every weekend.  

Most renters are careful and considerate, but there is a small minority of people who will use the home as a party base. Music and shouting continue late into the night, and neighbors quickly become agitated by the disturbance.   

Guests are also more likely to take full advantage of facilities like outdoor pools, and they may take up space that should be for owners to enjoy.

Finally, from a practical standpoint, short-term renters often intensify the neighborhood’s parking problems. Even if they don’t mean to, they may clog visitor parking.

   

Yes, HOAs can ban short-term rentals…but

In most cases, HOAs can ban short-term rentals, but the ban has to be included in the CC&Rs, not the bylaws or rules. Furthermore, a few states have created limitations on SRT bans, so it is important for HOAs to take note of any laws that may require them to revise current SRT stipulations. 

If there is no short-term rental ban in place, the HOA will need the approval of the owners since the CC&Rs will need to be amended. If members are not in support of such a rule, then a blanket STR ban may not be a possibility.

HOAs may also consider placing limitations on short-term rentals. For example, owners must register guests with the association each time a new visitor is expected to rent out the home. Or, short-term rentals must be at least 31 days long. This way, the association still has some control over STRs, but owners that want to participate aren’t so restricted.

   

State laws about short-term rentals

Below are a couple of examples of states that have passed STR laws applicable to HOAs.

   

California

California associations have been required to amend their governing documents to conform to the following rental caps and lease terms:

  • Restrictions capping the number of rentals to less than 25% are no longer permitted. Caps can be 25%, 30%, etc.
  • Owners can create valid rental agreements lasting 31 days or longer. They are not required to rent out units for a minimum of six months or one year.  
  • Accessory dwelling units (ADUs) and junior accessory dwelling units (JADUs) are not considered separate interests if the owner lives in one of the units. That means if an owner is living in their home, and wants to rent out a vacant dwelling on their property, this would not count toward the rental cap. Similarly, the owner could legally rent out the ADU to someone for a weekend

   

Florida

In Florida, it used to be that a declaration or other governing document of a homeowners association that has more than 15 parcel owners, or an amendment to a declaration or other governing document that contains a prohibition or regulation as to rental agreements, only applied to owners who bought the property after the effective date of the governing document or amendment, or to owners who voted for the governing document or amendment. However, laws have changed:

  • If the amendment is to prohibit or regulate rental agreements for a term of less than 6 months and/or prohibits the rental of a parcel for more than 3 times in a calendar year, then the amendments will apply to all owners
  • However, the restrictions will not apply to rental restrictions that were in place prior to July 1, 2021. Documents or amendments that were recorded prior to that date, which contained prohibitions or regulations as to rental agreements, remain binding to all owners, regardless of the nature of those prohibitions or regulations

   

Strategies for enforcing short-term rental bans

If your association currently prohibits short-term rentals, there are some things that the board must do in order for the ban to be effective.

   

Create a policy

Even if your STR ban is straightforward, the HOA must have a policy stating what constitutes as a short-term rental, why the ban is in place, who is responsible for enforcing it, and what could happen if the ban is ignored. Most of the time, violations will result in hefty fines to deter future violations.

When considering violations, make sure there are separate categories for listing versus renting properties.

Take every step possible to ensure all owners are aware of the rules and have a copy, either physical or digital, of the policy.

   

Enforcing STR rules 

To enforce the rules regarding short-term rentals, the board and management must work together to ensure no one breaks them. That might include checking STR websites to ensure you don’t see your property there, monitoring the parking lot for unregistered guest vehicles, and following up on complaints from other owners.

Make sure to have an investigation/violation process in place so that the association doesn’t end up falsely accusing an owner of doing something that they haven’t done. Instead, send a notice to the owner informing them that you have received a report. Give the owner the opportunity to share their side of the story, but be clear about what could happen if the HOA receives another complaint about the same issue.

If STR rules are not enforced, owners will ignore them. Boards must be vigilant and consistent when it comes to rule enforcement.

   

Strategies for managing short-term rentals

If your association does allow short-term rentals in some capacity, it is still important to create regulations to keep them under control.

   

Create a policy

A community that allows short-term rentals will likely need a more detailed policy than a community with a more stringent ban. That’s because there are more variables and unique circumstances to consider. Policies will vary from association to association, but many will include the following details:

  • Whether owners must provide rental information to management, including start and end dates, as well as tenant details
  • A reasonable annual short-term rental fee to cover any added costs
  • Short-term rental agreements that outline the rules applicable to renters
  • Information about fines against property owners who violate the policy
  • Maximum occupancy limits

The policy should also emphasize that tenants’ behavior is the responsibility of the owners. Any violations committed by tenants will be passed on to owners.

   

Contracts

Create a short-term rental agreement or contract that each renter will be expected to sign. You can decide if the owner or management will distribute and collect contracts. Owners will need direction regarding what is expected of them, and the renter, when signing the contract. The association should maintain a record of each contract.

   

Adopt a short-term rental system

There are online platforms that will help associations manage short-term rentals. Condo Control has a great system that is both user-friendly and efficient. Not only can you create detailed visitor profiles, but this tool helps remove the mystery around who is visiting your community. You can send rules and instructions directly to renters so that they know what is expected of them even before they arrive.

   

Apply penalties when necessary

If an owner clearly is not following the policy, the association will need to address this issue. For instance, if a group of 20 shows up for a weekend and the guests damage part of a common area, then the owner may be issued a fine or asked to pay for the repair.

This is where having a detailed policy comes in handy. The owners and the association should already be aware of the consequences of breaking the rules.  

      

Conclusion

HOAs can ban short-term rentals, but they must be clear about what a short-term rental is, and why the ban has been implemented. It must also be in the CC&Rs, not just the rules.

Associations need to be prepared to enforce STR rules, no matter what they are, in order for them to be effective. Otherwise, owners have no reason to follow them.



Source link

Posted in Property Management
Write a comment