Short Term Rentals in HOAs in the News. What’s Up?
Have you been reading the headlines on short term rentals?
Lawmakers want short-term rentals to pay transient occupancy tax. Homeowners who use Airbnb, VRBO and Homeaway may face new regulations in L.A. Ojai temporarily bans vacation rentals operating without a permit. Homes-as-lodging trend growing fast, but not without controversy.
I’ve been getting the calls. Questions like:
My HOA is voting to extend the minimum rental term – I have been renting out my unit for short term rentals for 20 years, can they do that? Am I exempt to the changes due to SB 150 in California?
We are updating our documents and half the board wants to lengthen the minimum lease term to 30 days and half want to keep the minimum rental period at 7 days, what do we do?
The DA in my county recently sent me a letter saying that if I did not pay over $10,000 in taxes and penalties for failure to pay the City on the vacation rental income from my Unit I would be subject to criminal prosecution. Can you help me?
We are thinking about offering vacation rentals in our association – we want to get on the bandwagon! Is that a good idea?
Should we survey owners before we put any short term rental restrictions in the documents? We have allowed short term rentals for years.
This is definitely a hot topic. Below are some bullet points I have to offer relating the above questions. I definitely need to do a more comprehensive piece on this in the future and am preparing some notes for an E-newsletter on the topic as soon as the series on Trust Building and Trust Keeping is finished. Be sure to sign up so you won’t miss any of the hottest news.
Bullet Points to Note
HOAs may propose an election on amendments to allow or prohibit short term rentals to the members but Boards cannot change the rental period in the Declaration without owner approval (unless there are uncommon provisions that can be interpreted differently). Amendments to prohibit short term rentals are not illegal. In fact, there are cases where judges have found them reasonable enough to approve a lower approval percentage (51% majority) when an HOA could not achieve the supermajority (like 75% or 67%) requirement in the Declaration.
However, boards may impose rules and regulations regarding short term rentals and charge fees for short term rental activities without member approval. See the recent case, Watts v. Oak Shores Community Association (2015) Cal.App.4th.
If the HOA is successful in getting the declaration amended properly and records the amendment to change the minimum rental period– it is enforceable against all owners.
SB 150 adopted in 2012 prevents HOAs from enforcing amendments prohibiting rentals against current owners unless they consent to the prohibition, but most would argue extending the minimum rental period does not constitute “prohibiting” rental of a unit.
Many cities and counties are aggressively attempting to regulate the short term rentals and get in on the profits by considering ordinances and permitting requirements.
In fact, the city of Ojai is following a plan to invite public comment at a meeting utilizing the assistance of a facilitator before passing permitting requirements. This is a good model for HOAs when considering changes because the short term rentals are controversial. On the one hand there is extra income to be had, but on the other, there was expert testimony in the Watts case indicating that short term rentals also can result in higher costs to an HOA and more nuisances.
Watch for more. Feel free to comment. This is certainly an interesting and hot topic in the HOA world, especially in places like California, Florida, big cities and the East Coast and any tourist destination cities.