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Want to Put Your Home on Airbnb? Read this first!

Author: Judyann M. Lee Date: 06/26/2017

Categories: Uncategorized

Are you thinking about offering your home as a short-term vacation rental?  Next to driving for Uber, short-term vacation rentals are the latest craze in side-hustles.  But before you clean out that extra bedroom and list your home on Airbnb or another on-line vacation rental website, you’d better make sure that you have the legal right to do it.   If you live in a condominium or a community with an HOA, the covenants, conditions and restrictions (CC&Rs) may prohibit it.  In addition, many counties and cities have legal restrictions on short-term home rentals. So you also need to check your local zoning laws and ordinances to see if there are any such prohibitions.

Community Associations and Short-Term Vacation Rentals

If you live in a condo or if your home is covered by an HOA, your association’s CC&Rs probably have language that restricts the use of homes to “residential use,” prohibits “transient tenants,” provides that leases must be a minimum of 6 months or 12 months, restricts “commercial use,” or states that no portion of the home other than the entire home may be rented.  However, just because the language in your CCRs appears to prohibit short-term vacation rentals, that may not actually be the case.  For example, if your association’s CC&Rs only have language that restricts the home to “residential use” and forbids “leases shorter than 6 months” but says nothing more about leases, then arguably a short-term vacation rental is not prohibited.  That is because a “rental” or “lease” involves the conveyance of real property to a tenant who has the exclusive right of possession.  In the case of short-term vacation rentals, the owner is usually granting a license to use their home (or a portion of it) to the renter for a short period of time without the exclusive right to possession. Whether or not your association’s CC&Rs prohibit short-term vacation rentals will depend on a careful analysis.

If, after a careful analysis of the CC&Rs, you determine that short-term vacation rentals are not prohibited by your association, you will still need to determine if such use is prohibited by state and local law.  Most CC&Rs require homeowners to comply with applicable laws or regulations. So if your local jurisdiction’s zoning regulations prohibit “hotel use” and define such use in a way that includes short-term vacation rentals, your association can still prohibit you from offering your home as a short-term vacation rental (and so can the local jurisdiction).

 

Why Does My Association Care If I Offer My Home as a Short-Term Vacation Rental?

There are many reasons why condo associations and HOAs don’t want homes in their communities to be used as short-term vacation rentals. The presence of short-term guests can compromise the security of the community. It’s difficult to enforce the rules and regulations of the community against vacation rental guests, and it causes additional burdens on parking and recreational facilities. Short-term rentals can even jeopardize a condominium’s FHA financing approval, making it impossible for a prospective buyer looking to purchase a unit in the condominium to receive FHA financing).  All of this can result in a decrease in property values.

How Can My Association Prevent Me From Using My Home as a Vacation Rental?

If its CC&Rs prohibit short-term vacation rentals, the association can enforce a violation of the CC&Rs through any authorized mechanism.  The association may be able to impose fines against the violator and/or initiate a court proceeding, such as a restraining order, to prevent you from continuing the violation.  If the Association’s CC&Rs do not prohibit short-term vacation rentals, it could seek to amend its CC&Rs to include such a prohibition. If passing an amendment to the CC&Rs is not possible, the association may be able to adopt rules to regulate short-term rentals.  Such regulations might require you to obtain additional liability insurance to protect the association against claims resulting from the rental activity. Other tactics might be to levy a fee to defray the additional wear and tear on the association’s facilities caused by renters, prohibit your renters from using certain facilities, and/or to require each renter to be registered with the association and abide by its governing documents.

Look before you leap onto the short-term vacation rental bandwagon. Your best course of action is to seek professional legal advice. Sometimes language in a local ordinance or in an association’s CC&Rs may appear to permit or prohibit short-term vacation rentals, but a legal analysis by an attorney may determine the exact opposite. If you have questions, please call me at 301-251-1180 x 308 or email me at jlee@mcmillanmetro.com.