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Short Term Rentals: How It Affects Homeowner Associations

What are "Short Term Rentals"?

Short-term rentals are homes that are rented out through companies such as Airbnb which alone is valued at about $24 billion. Other, smaller companies such as VRBO, Housetrip, and Roomorama play similar roles in providing homes to vacationers that from one night to just a few days or a week. These rentals can be great for vacation goers looking for a place to crash for a few nights, however, they can pose a nightmare for the local Home Owner's Association (HOA) the rental property is located.

So, the question is: What can the HOA do about these short-term rentals when they begin to pose a problem to the neighborhood in which they are located in?

HOA's Problems with Short-Term Rentals:

HOA's often have countless issues with the short-term rentals occurring in their neighborhoods. While it is worth noting that many short-term rentals operate without a hitch, some of them also do nothing but cause a disturbance to the others living in the area. Oftentimes, short-term rentals can come with excessive noise from partying, more traffic coming through the neighborhood than otherwise would, or even sometimes the trash that might get left on the property when the vacation-goers are through with their stay.

HOA's are primarily concerned with keeping other residents happy and providing them with a quality place to live. A disturbance to the local peace such as these short-term rentals can really cause a problem for HOA's in providing an ideal living environment for its residents. The question is: What can an HOA do to ensure that these short-term rentals are not causing problems in their neighborhood?

What Homeowner Associations Should Understand:

In most locations, including in many apartments, townhome units, or condo buildings, most Airbnb or other types of short-term rentals are allowed. In most cases, the only stipulation is that the person renting the unit owns the property. This can be allowed because most of these rentals are not considered formal leases or rentals but rather long as the homeowner is licensed its viewed more like a hotel or motel than a rental property.

The Wilkinson vs. Chiwawaw Communities Association was a landmark case taken up by the Supreme Court which determined how short-term rentals are handled. The supreme court ruled that despite the fact that receipts provided for the stay that does not change the property from a residential to a commercial property. They determined there were no "on-site" services provided during the guest's stay such as cleaning services or entertainment. Therefore this factor kept the property classified as a "residential" one. The ruling has left many HOAs across the country at a loss as to what they can do to limit or prevent short-term rentals from popping up in their community. The good news is that there may be some other options to pursue before giving up hope of not being able to keep short-term rentals from your community. 

Are There Ways to Control Short-Term Rentals in an HOA?

There are a few others ways that HOAs can see if they can eliminate short-term rental properties from their community. One way is to check the local laws within the city, township, municipality, zone, or area in which the community is located. Some local laws may be able to help HOAs crack down on the possible disturbance of short-term rentals in the area.

 If there are no laws to help the HOA outlaw short-term rentals in their community, another remedy may be to found in the ordinances of the city's vacation rental policies. For example, there are ordinances that prohibit vacation rentals within the city of Seal Beach, California. Other cities have also sought ordinance that limits the number of nights a residence can be rented out as a vacation rental. San Fransisco did with Proposition F that was seeking to limit the number of nights a rental could be sold out as a vacation home to 75 nights per year. Only after Airbnb spent $8 million in a lawsuit to stop the Proposition from taking place did it not pass. 

In a last ditch effort to stop the vacation rentals from happening in their community the HOAs can write it into their rules to limit or ban short-term vacation rentals in their community but it must be down lawfully. Know the laws in your city, township, county, zone, and state before trying to put such provisions in your HOA to avoid potential lawsuits that can arise if banning these rentals goes against local regulations.

 A Last Ditch Effort:

If there are no ways to ban the short-term rentals in your area, you could report violations for noise or disturbances to the local authorities. Often there is a fine for the person who owns the property for up to $5,000 for disruptive behavior on his/her property. 

Following these steps can help keep the HOA you live in peaceful and enjoyable as possible for the residents calling this area home.

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