Airbnb is creating a stir all over the world, it’s completely changed the tourism industry, and now it’s creating waves in the HOA community. According to Forbes, in 2018 it was worth $38 billion, and it exists in 81,000 cities across 191 countries, just for scale there are 195 countries in the whole world. So it’s huge. From a homeowner’s point of view, it’s great. They can rent out a room or your house and make money! However, for their neighbors, it can be a nightmare!
People spending their vacation in HOA don’t live there, they don’t care about maintaining HOA standards. They may make excessive noise, hog the barbecue or have loud parties. Other issues are always extra cars filling up parking spaces, and general unwelcome noise. All of these things generate complaints and create more work for the HOA board. More seriously, they can put extra pressure on public services, such as the police, fire brigade, and emergency medical services. So what can your board do about it?
First of all, many HOAs Rules and Regulations, and the Covenants Conditions and Restrictions (CC&Rs) already restrict or prohibit Airbnb.
Many CC&Rs prevent homeowners from leasing their property for less than 30 days. Airbnb and other short term rentals can qualify as a lease because the host is being paid. But that does depend on the HOAs definition of a lease. A lease can be the exclusive right of possession of a property, and short-term rentals do not fall into that category. However, if a lease is defined as the use of a unit, without the exclusive right of possession, then Airbnb definitely does.
Also, if the CC&Rs restrict homeowners having a business or commercial activity in their house then Airbnb could fall into this category. But normally businesses are allowed in the home so long as they’re not a nuisance (such as being detectable through noise, sight or smell). Now, it could be argued that short-term rentals are a nuisance but you would have to have a nuisance guest before taking that line.
Now, if your HOA does not currently have any rules in place to ban Airbnb then you can change the CC&Rs. You’ll need the approval of the homeowners to do that, which may be an uphill battle. While some homeowners might be thrilled to get rid of short-term rentals, many residents will probably not be impressed by the HOA trying to take away extra income they can make, especially if you live in a city that attracts a lot of tourists. The best way to pass the changes is to work with a HOA attorney. While this may be expensive, it will be worth it to get the language right. You need to meet the expectations of the residents and the board, and make sure that the new regulations are enforceable under state law. You may also have to protect yourselves from legal action by homeowners who bought the unit to be able to rent it out for short-term rentals.
Another scenario is that your HOA does have rules in place to stop residents renting out their units short-term, but people keep breaking them. What can you do to stop it happening? A common strategy is to fine homeowners steeply. For instance, for the first infraction you fine them $500 dollars and every time they violate the rule you double the fine. Now, some boards get nervous fining a resident that much money. However, if you have a fine in place, even if it’s high, you need to enforce it equally, and consistently. It’s the only way to prevent resentment towards the board and maintain your HOA’s reputation. You can also work with a HOA attorney to enforce your rules on short-term rentals.