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HOAs & Condos struggle with Short-Term Rentals. What is the Remedy?

HOAs & Condos struggle with Short-Term Rentals. What is the Remedy?

Posted By Robert C. Chilton || 14-Mar-2019

According to FloridaRentals.com, as reported by The Ledger, the Davenport/Four Corners area of Polk County is one of the top 10 vacation rental locations in Florida. This news will be received with trepidation by area HOAs, condominiums and other community associations.

It is not that HOAs and similar communities dislike tourists or visitors. Rather, problems arise because:

  1. Owners of vacation rentals generally live elsewhere;
  2. Landlords are incentivized to avoid maintenance costs in order to maximize profit;
  3. Short-term renters have little motivation to abide by covenants or pay attention to neighbor’s concerns; and
  4. The folks living next door to a popular VRBO/Airbnb/HomeAway rental may justly conclude that the neighborhood feels less like a close community and more like a collection of transient lodgings.

The solution to short-term rentals is easier if a community’s covenants, conditions and restrictions (CCRs) already prohibit them. Just hire a lawyer and enforce the rules. If the CCRs lack that provision, what is the remedy?

Three options are generally pursued, with varying degrees of success.

1. Amend the CCRs: The safest and surest approach to prohibit short-term rentals is to amend the CCRs to explicitly do so. Reasonable and clear restrictions on renting “whether contained in the original declaration or in subsequent…amendments, are reasonable indirect restraints on alienation” that do not violate public policy or owners’ constitutional rights. William P. Sklar & Jerry C. Edwards, Florida Community Associations vs. AIRBNB and VRBO in Florida, Fla. B.J., Feb. 2017, at 16, 16; Woodside Village Condo. Assn., Inc. v. Jahren, 806 So. 2d 452, 461-62 (Fla. 2002).

2. Enforce the “Residential Use” Restrictions: If a CCR amendment is not doable, some associations pursue the owner on a theory that short-term rentals violate restrictions requiring the property be used only for residential purposes and prohibiting business or commercial uses. This tactic has been rejected by the Courts. “[T]he nature of the property’s use is not transformed from residential to business simply because the owner earns income from rentals.” Santa Monica Beach Property Owners Assn., Inc. v. Acord, 219 So. 3d 111, 115 (Fla. 1st DCA 2017). In such cases, because CCRs are to be strictly construed in favor of the free and unrestricted use of real property, “the omission of an explicit prohibition on” short term rentals is “fatal”. Id. at 116. Note that the outcome changes if the owner is doing more than simply renting, such as operating a small inn or an adult congregate living facility. Id. at 115.

3. Reasonable Rules & Consistent Enforcement: If an amendment cannot be had and enforcing the “residential use” covenant will not succeed, what is an HOA or condominium to do? The solution is two-fold.

A. Tenant Disclosure Rule: First, community associations have a legitimate interest in knowing who is renting a parcel or unit. If owners were allowed to hide a renter’s identity, HOAs would be unable to enforce important statutory rights (i.e. right to intercept rent for unpaid assessments or enforce CCRs against a tenant). A rule requiring that owners submit the names of each renter, and certain information about each lease, is a legitimate exercise of an HOA’s authority. It is also difficult to follow if an owner is engaged in high-volume, short-term leasing. In my experience, owners either slow their rental activity or pay closer attention to ensure compliance with the rule. Either outcome is positive.

B. Consistent Enforcement: Along with the tenant disclosure rule, HOAs and condos should ensure that the CCRs are consistently enforced. If an owner is having to pay fines and incur remedial costs due to the violations of his short-term renters, he will be motivated to pay closer attention to prevent violations in the first place. He may also decide that rentals for longer durations are the better policy, as those tenants have an incentive to be good neighbors.

Short-term rentals, and the websites that enable them, are here to stay. HOAs, condominiums and other communities are not, however, without tools to address the problems that come in their wake. As always, the advice of counsel should be sought.

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