Most governing documents regulate the minimum length of time a residence may be rented; this is usually no less than 30 days. Yet, with the advent of Airbnb and similar sites, owners have discovered a new income stream through short term rental of their homes, often at the expense of the entire community.

Disclaimer: Get Legal Council. If your community is considering permitting or prohibiting short-term rentals, you must consult with the association’s legal counsel before taking any action. The governing documents of each community vary. Association’s legal counsel must advise the Board how to proceed. Do not try to do this alone.

 

To Permit or Not to Permit Short Term Rentals

For some communities, HOA short-term rentals are OK. The owners want to use their dormant property for short term rental and income, the governing documents permit short-term rentals, and the community is in agreement.

For other communities, short-term rentals mean noisy parties, damage to common area, and a general unease of having strangers in your community.

Local Regulations

Permits and Taxes: Contact the local government agency in your area that regulates or collects taxes on short-term rentals. Municipalities absolutely want payment of the transient occupancy tax, but not all municipalities currently require homeowners to acquire any sort of “permit” to run a short-term rental. This may be changing as more homeowner complaints flood City offices.

Allowing HOA Short Term Rentals

If your governing documents permit short-term rentals, and your community wants short-term rentals, my suggestion is that that the Board, with the assistance of community input, establish a Short-Term Rental Policy, that includes the following, and whatever else serves the needs of your community. This document must go to legal counsel for review.

Rental Information

Owner provides the following information to management or Board representative:

  • Lease details: start and end dates.
  • Contact Information: Name and Phone of person renting unit.
  • Fee: A reasonable fee may be established by the Board to cover additional costs incurred by rental properties (make it realistic)

Know Before You Rent:

  • Short-Term Rental Agreement: The rental agreement shall include rules, as established by the Board/Community, i.e. noise hours, pool use, outdoor fires, alcohol in the common area, etc. Again, this is the type of information your attorney helps you determine is applicable, and legal, for your community.
  • Fines: The Short-Term Rental Policy permits the board to assess significant fines against the homeowner for failure to comply with the Short-Term Rental Policy.

Insurance

Notify the association’s insurance broker. The community’s insurance rates may go up, and the board may want to pass that cost on to the investor owners. Your insurance agent may suggest, or require, that the investor owners carry additional insurance.

Prohibiting Short Term Rentals

If you live in a community with governing documents that prohibit short-term rentals, and you want to enforce that policy, I suggest the board and community volunteers draft a strong policy reiterating the prohibition of short term rentals, and outline how violations will be handled.

Examples of possible rules, and fine schedule, pertaining to short-term rental violations:

    1. Units renting for less than (number) of days are considered in violation of (CC&R number).
    2. Rental for less than (_) number of days has the following fine schedule:
Listing the home for rent
First offense: Warning
Second offense: up to $100; double each offense
Rental of Unit
First offense: up to $500 fine
Second offense: up to $1000 fine
NOTE: Legal counsel is informed of the repeat violation; legal action may occur.
Third offense: up to $2000 fine
Fourth offense: up to $4000 fine
Violation of Other Community rules
Police called to residence: up to $500 fine; may double with each violation
Noise: up to $500 fine; may double with each violation
Trash in Common Area: up to $250 fine; may double with each violation
Damage to Common Area: up to $500 fine and cost of repairs; fine may double each violation

Important: Make sure your community supports the board’s recommendation/decision by asking for their input before implementation a short-term rental policy.

Remember: After drafting your policy, send the policy to the association’s HOA attorney for review, and probably significant edits.

If you have implemented short-term rental policies in your community, you are invited to respond to this posting with your stories.

Victoria Cohen

Victoria Cohen

Victoria Cohen is an active member of Community Association Institute (CAI) at the local, state and national level. She served on CAI's Community Association Volunteer Committee (CAVC) for 5 years, serving as chair in 2012. Victoria served two years on the CAI Board of Trustees, 4 years on CAI's nominating committee, and two years on CAI's Government and Public Affairs Committee. Back home in California, Victoria has served as secretary for the San Diego Legislative Action Committee and currently sits on the CAI San Diego Chapter Board of Directors.To learn more about Victoria, visit www.linkedin.com/in/victoriacohen2020
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