Do Your HOA Restrictions Adequately Protect Property Owners from Short-term Vacation Rentals?
By Tina Fischer |
With the increasing popularity of websites like VRBO.com and Airbnb, homeowners and condominium associations across the country are experiencing challenges in policing owners who violate association rules by renting out their properties for short-term occupants. In Florida, like many other popular resort destinations, the appeal of making additional cash through short-term rentals has encouraged many homeowners to advertise to potential U.S. and international vacationers despite the fact that short-term rentals are prohibited by the applicable deed restrictions or association rules. In many cases, owners advertise their houses as well as the association’s amenities, like beach access or pools, enticing potential vacationers and further negatively impacting other owners and residents. For many residents who live in those communities full-time, the steady stream of vacation revelers invading their community is unacceptable and creates a host of problems. At a minimum, frequent short-term rentals may increase wear and tear on Association property and increase overall operations costs for the community.
Generally, the covenants governing deed-restricted communities contain provisions prohibiting short-term rentals, and many associations may think this is sufficient to prevent this type of use. However, creative owners can often find loopholes that make it difficult for homeowner and condominium boards to enforce deed restrictions designed to otherwise limit such activities. For instance, some owners will ask their renters to sign a standard 1-year lease with an option to terminate upon written notice to the landlord. Upon signing the lease, the renter submits a written notice exercising the option to terminate the lease on a certain date (i.e., however long the guest intends to lease the property). The owner will then be able to produce a valid 1-year lease to the Association, which was terminated early.
Some associations are trying to combat the problem by actively monitoring websites, like AirBnB, for properties within their communities. But once the association discovers that one of the properties is being advertised for rent, what enforcement avenues does it have against a property owner for advertising his or her property? Likely none. Until the owner has actually leased the property, the association does not truly have a basis to pursue a remedy against the property owner for violation of the restrictions prohibiting short-term leasing. Furthermore, identification of violators generally happens once residents and/or management representatives actually encounter vacationers in and around the community. The unwary vacationers, who are arguably victims of the property owner’s failure to disclose prohibitive covenants, may then be denied access to amenities and other community facilities.
The bottom line is, vacation websites are an increasingly popular method procuring vacation accommodations, and Florida community associations would be well advised to review the covenants prohibiting short-term leases to identify potential issues in advance. For those communities with a higher likelihood of short term vacation rentals, boards may want to consider amending governing documents to specifically address vacation rentals by limiting the number of occupants permitted in a leased property without board approval, denying access to community amenities in certain situations, or requiring board approval for the form of leases to strictly limit options to terminate. Additional options include limiting the number of times a property can be rented out in a single year, even if the rentals are pursuant to one year leases that are terminated early. Amendments may also beef up enforcement provisions to further discourage property owners from violating the restrictions, by, including a right to seek an injunction against future short term leasing. Alternatively, if the Association is willing to permit short-term leases, requiring lessors to pay the association for tenants’ use of Association amenities is also an option to defray increased operations costs associated with tenant use of Association property.
Fletcher & Fischer, P.L. can assist Associations interested in reviewing their governing documents’ provisions related to short term leasing, and also in the preparation of any amendments required to address short term rentals
Tina Fischer represents developers and small and medium-sized businesses as outside corporate and real estate counsel. She also represents landlords and tenants in commercial lease transactions and provides assistance to clients with land acquisition and disposition, due diligence, environmental permitting, and negotiation of land use approvals, master development agreements, interlocal agreements and public/private partnership agreements.