The short-term rental boom happened after most HOA communities around the country were created. Several communities lack restrictive covenants to inhibit short-term rentals. Either that or the restrictions are dated, ambiguous and easily challenged in court. An HOA Board cannot simply impose restrictions on short-term rentals or adopt new policies if they are not grounded with some authority. The authority to restrict and enforce HOA rules must come from the Declaration of Covenants, Conditions, and Restrictions (CC&R). The CC&R is a list of rights and responsibilities the homeowners and the HOA owe each other.
Amendment
The HOA will need to propose an amendment to their CC&R if the community does not have an existing short-term rental restriction. An amendment might require the approval of at least a majority of homeowners in the community. If that is the case, the HOA should include a “grandfather clause” within the short-term rental restriction to allow owners currently renting their homes to continue. The amendment could then establish a cap on the number of homes in the community that can be used as short-term rentals. Offering to meet homeowners where they are will help the HOA avoid objections and get the votes they need to approve the amendment. Rental restrictions should also include an enforcement mechanism for non-compliant homeowners.
Language
Austin has one of the oldest and strictest ordinances and limits on short-term rentals and is currently under heavy scrutiny. As this is a current and ongoing issue, the HOA should consult with an experienced attorney when amending its declaration. An attorney familiar with HOA law will ensure the amendment is enforceable and complies with state law. The language must explicitly define the short-term rental restrictions, clearly state the penalties for noncompliance, and be understandable and unquestionable. An amendment that is straightforward and easily understood will reduce the risk of challenges to the policy in the future.
Purpose
The purpose of short-term rental restrictions is to protect and preserve the safety and character of the community. The HOA should consider solutions to short-term rental problems and involve the community in its decision. Imposing restrictions and creating guidelines will work best if the HOA listens to their homeowners and vice versa.
As the short-term rental market continues to gain traction, HOAs must be proactive rather than reactive. Prism Association Management can help your Board of Directors create an action plan. Contact us today at info@prismrp.com | 512-676-5842.
