The short-term rental industry has grown exponentially over the past several years, demonstrating a trend that is here to stay. It raises significant concerns for communities. Here are common concerns for short-term rentals.
Safety
Renters gain access to common areas. However, renters are not bound by the rules, regulations, and standards of conduct to which property owners must adhere. Someone who is only in the community for a short time may have just enough anonymity to be a threat to neighbors and residents.
Use of Common Areas
Renters gain access to facilities while in-stay. Some may misuse equipment or take advantage of amenities like swimming pools or tennis courts. Amenities should always be available to homeowners first and foremost, but how can that be regulated?
Insurance Liability
Another issue is whether a transient renter is covered under the community’s master insurance policy. Will the association policy provide coverage if a short-term renter gets hurt within the common areas? The same question applies to property damage as well
Proactive Approach
The HOA must be proactive if short-term rentals are permitted in the association governing documents. The board must take control of the practice by adding protective language to the covenants.
Minimum Rental Period
Include language that prohibits rentals under a certain amount of days or weeks. For example, a sublease is only permitted for 12 weeks or longer.
Whole Home Rental
Governing documents should include a provision stating that a short-term rental must be rented as a whole home. Whole home rentals would stop a property owner from renting out individual rooms for short periods.
Lease in Writing
Leases in writing are another proactive step the HOA can take for short-term rentals. The rental terms must be signed by all parties and submitted to the HOA for approval before tenancy.
Penalties
The HOA must create substantial penalties for homeowners who violate the provisions set forth for short-term rentals. Perhaps a penalty that includes fines on homeowners. The fines would be collectible as a lien on the property. The costs of collection, including attorney’s fees, would be charged to the property owner. The prospect of paying fines, incurring a lien, and paying legal fees might dissuade homeowners from engaging in short-term rentals.
Short-term rentals can create cash flow for property owners. However, the risks of liability, damage to common areas, and the safety of residents are concerns for an HOA. The board must decide what is best for the community regarding short-term rental tenants and take the appropriate action.
Prism Realty Association Management can help your HOA Board of Directors address the situation by working with all parties to create an appropriate action plan. Contact us today to learn more about how Prism Realty Association Management can help your community manage these issues.
