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QUESTION:  Everyone loves the Superbowl... I DON'T!  I manage several condominiums and need a better way to discover and enforce short term rentals.  How do I do that?  I feel like I manage hotels rather than homes!

ANSWER:  Special events cause all sorts of interesting legal issues, including a spike in short-term rentals.  But, you don't need a special event to know that many associations constantly struggle with this problem.  They have a hard time catching (and enforcing) owners that do this.  Before figuring out how to "stop" short-term rentals, you have to make sure you can.  To answer that question you need to turn to the Association's Declaration of Covenants, Conditions and Restrictions ("Declaration").  County and city zoning ordinances can also help.

Legal Authority  

Some Declarations expressly prohibit "transient," "vacation," or "short term" rentals.  If this is the case, the answer is easy--the association can prohibit them.  If your Declaration is specific you are lucky.  Most Declarations are not so clear and simply limit rentals to "single-family use,"  which may not be enough.  See Horton v. Hartsook, 2009 WL 2244503 (App. 2009).  There is another option, however.  Associations may prohibit short-term rentals IF their Declarations say something like "any violation of federal, state, and local laws shall be deemed a violation of this Declaration" AND the rental violates a county or city zoning ordinance.  For example, Scottsdale prohibits rentals that are less than 30 days in "Single Family Residential" districts.  It does take a few minutes to locate the applicable zoning laws but it is worth it.  I've spent the time mulling through the ordinances and it benefits my clients tremendously.

Discovery 

Savvy investors love short-term rentals because they bring in big money.  I've seen the spread as little as $500/week to as much as $15,000/week.  Finding offenders in your community can be easier than you think.  First, ask them if you don't know.  Sometimes they readily admit they are renting.  Other times they deny it.  Second, there are several websites that make finding vacation rentals a cinch.  I use these all of the time when I have a difficult homeowner: www.vrbo.comwww.flipkey.comwww.rentbyowner.comwww.hotpads.com and www.vacationrentals.comare some of the most popular ones.   All you do is go to the website and type in the address.  If the home is listed for rent on the website, it will pop up.  Make sure to print the search results because the printouts are very important for us trial attorneys.   Third, if the first two don't work, hire a good private investigator.  In a recent case I had, a PI had all the evidence I needed to prove an owner was renting his home in violation of the Declaration within about two days.  They can be expensive but the cost may be passed on to the owner.

Enforcement Methods

1.  Fines.  Imposing monetary penalties may or may not stop the violation.  Before imposing the fine, make sure that the owner was provided notice of the violation and an opportunity to cure it.  Associations should review their fine policies to make sure the fine fits the crime. Owners are not going to care enough if they are fined $25/week fine for renting their unit if they are making $7,000/week.  Fines must be reasonable.  In this situation, a $250 to $500 per week fine (or more) may not be out of the question.

2.  Complain.  If fines do not work, the next person I would call is the county or city code enforcement division.  Admittedly, this is not an option unless the vacation rental violates some city or county ordinance.  The benefit to this option is that it doesn't cost the Association anything to complain.  The con is that the investigation moves at the city or county's pace and they make their own conclusions...eventually.

3.  Legal Demand Letter.  Our office has sent thousands of enforcement demand letters when owners do not respond favorably to the options above.  These letters are generally inexpensive and let the owner know that things are serious.  Many of the owners that receive these letters correct the error of their ways.

4.  Lawsuit.  Litigation is normally something you do only after all of the above options fail.  This is because it costs a lot and can take a while.  Most firms require you to work through the above steps first anyway.  The caveat to court is that it does come with some risks.  For example, the judge may interpret the documents differently or some new law may be created in the middle of your case that changes everything.  Lawsuits can cost anywhere from $500 to $60,000+ if they are contested.  As long as the Declaration and evidence are clear, the chances of an Association winning a lawsuit is generally good.  To "win" generally means the party gets what it wants--compliance. The winner is also awarded attorney fees and costs.

Other Considerations

When the Declaration is not clear, the Association should consider amending it.  Generally, amendments to the Declaration require around 67% of the total membership.  Anyone considering this option should consult with qualified legal counsel to ensure they do it right.


CREDITS: By HOA Institute | HOA Board of Director ResourcesHOA CC&Rs and RulesHOA Enforcement

To view original article, click here: http://www.hoainstitute.com/2015/01/short-term-rental-conundrum/


With more than 45 years experience in the Central Florida area, Hara Community 1st Advisors has the expertise needed to efficiently manage your Condominium or Homeowner’s Association while providing the highest level of service to Boards and Owners. Contact HMI’s Regional Director Rick Michaud, or visit HMI online to learn more about their variety of client-customized services for community association management today.

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