If your association permits short-term rentals (e.g. Airbnb), clear guidelines will help your owners and protect the HOA.
Are Short Term Rentals Legal in Your HOA?
Most governing documents regulate the minimum length of time a residence may be rented; this is usually no less than 30 days. Yet, with the advent of Airbnb and similar sites, owners have discovered a new income stream through short term rentals of their homes, often at the expense of the entire community.
Before you decide to regulate short term rentals, get legal counsel. If your community is considering permitting or prohibiting short-term rentals, you must consult with the association’s legal counsel before taking any action. The governing documents of each community vary. Association’s legal counsel must advise the Board how to proceed. Do not try to do this alone.
Should Condo Associations Allow Short Term Rentals?
There is no one-size-fits-all prescription.
In some communities, short-term rentals are OK. The owners want to use their dormant property for short term rental and income, the governing documents permit short-term rentals, and the community is in agreement.
For other communities, short-term rentals mean noisy parties, damage to common area, and a general unease of having strangers in your community.
Local Regulations
Permits and Taxes: Contact the local government agency in your area that regulates or collects taxes on short-term rentals. Municipalities absolutely want payment of the transient occupancy tax, but not all municipalities currently require homeowners to acquire any sort of “permit” to run a short-term rental. This may be changing as more homeowner complaints flood City offices.
Allowing Short Term Rentals
If your governing documents permit short-term rentals, and your community wants short-term rentals, my suggestion is that that the Board, with the assistance of community input, establish a Short-Term Rental Policy, that includes the following, and whatever else serves the needs of your community. This document must go to legal counsel for review.
Rental Information
Owner provides the following information to management or Board representative:
- Rental Information: start and end dates.
- Contact Information: Name and Phone of person renting unit.
- Fee: a reasonable fee may be established by the Board to cover additional costs incurred by rental properties (make it reasonable).
Owners Must Know Before They Rent
- Short-Term Rental Agreement: the rental agreement shall include rules, as established by the Board/Community, i.e. noise hours, pool use, outdoor fires, alcohol in the common area, etc. Again, this is the type of information your attorney helps you determine is applicable, and legal, for your community.
- Fines: the Short-Term Rental Policy permits the board to assess significant fines against the homeowner for failure to comply with the Short-Term Rental Policy.
Insurance
Notify the association’s insurance broker. The community’s insurance rates may go up, and the board may want to pass that cost on to the investor owners. Your insurance agent may suggest, or require, that the investor owners carry additional insurance.
Prohbiting Short Term Rentals
If you live in a community with governing documents that prohibit short-term rentals, and you want to enforce that policy, I suggest the board and community volunteers draft a strong policy reiterating the prohibition of short term rentals, and outline how violations will be handled.
Examples of possible rules, and fine schedule, pertaining to short-term rental violations:
Units renting for less than (#) number of days are considered in violation of (CC&R reference #).
Renting or listing a unit to rent for less than (#) of days has the following fine schedule:
| Listing a unit or home (online or through an agent) | |
|---|---|
| First offense: | Warning |
| Second offense: | Up to $100; double each offense |
| Rental of a unit or home | |
|---|---|
| First offense: | Up to $500 fine |
|
Second offense: Note: Legal counsel is informed of the repeat violation; legal action may occur. |
Up to $1000 fine |
| Third offense: | Up to $2000 fine |
| Fourth offense: | Up to $4000 fine |
Violations of other community rules may also be subject to fines.
Even if proof of short term rental is not substantiated, but other rules violations transpire as a result of the unit owner’s guests, the following fines will apply:
| Violation of Community Rules | |
|---|---|
| Police called to residence: | Up to $500 fine; may double with each violation |
| Noise: | Up to $500 fine; may double with each violation |
| Trash in common area: | Up to $250 fine; may double with each violation |
| Damage to common area: | Up to $500 fine and cost of repairs; fine may double with each violation |
Talk to Your Members First
Make sure your community supports the board’s recommendation/decision by asking for their input before implementation of a short-term rental policy.
Send the Draft Policy for Review
After drafting your policy, send the policy to the association’s HOA attorney for review, and probably significant edits.
If you have implemented short-term rental policies in your community, you are invited to respond to this posting with your stories.
Victoria Cohen is principal of Victoria Cohen Consulting, Meeting Minutes Matter. She provides HOA meeting minutes & parliamentarian services. Victoria can be reached at victoriacohen2020@gmail.com.