Short Term Rental Restrictions Continued
Adopting and Enforcing Short-Term Rental Restrictions
As we have seen, an HOA cannot just decide that it wants to prohibit short-term rentals one day. The prohibition must be grounded in some authority derived from the community declaration. For the most part, a community with an existing rental restriction in its mandate will have the right to enforce the regulation.
The HOA will need to amend its declaration following the amendment process provided under state law and the statement itself if it doesn't. Usually, the amendment requires the approval of at least a majority of homeowners in the community.
When proposing language for a rental restriction, an HOA board should clearly define what rentals will be prohibited. A common approach is establishing a minimum lease period (30 days), forbidden with any rental period below that threshold. If there will be any exceptions to the general prohibition, spell those out, too.
Avoiding Challenges
To avoid challenges from existing homeowners, it can be a good idea to include a grandfathering clause within a proposed amendment restricting rentals. Remember, multiple states have laws that prohibit enforcement of a rental restriction against a homeowner if the limitation was not in place when they acquired the property—unless the owner consents to the limitation. Even in states without these statutory protections, affected owners can argue that a newly adopted restriction deprives them of a vested property right.
A "grandfather" clause might let an owner currently engaged in short-term rentals continue doing so. Or an amendment could establish a cap on the number of homes in the community as short-term rentals. Rental restrictions should include an enforcement mechanism against non-compliant owners. For example, imposing fines on violative owners or access to shared facilities could be limited for so long as a violation continues. State HOA laws vary concerning permissible penalties, so an HOA needs to ensure its enforcement mechanism is statutorily compliant.
When All Else Fails
When all else fails, an HOA can seek recourse via civil litigation. In that case, the board (on behalf of the HOA) files suit against the non-compliant owner and requests an order from a judge directing the owner to cease short-term rentals. Of course, litigation is often expensive and time-consuming, so it is usually better to resolve things out of court if possible.
An attorney familiar with HOA law can help create an enforceable policy that complies with state law. Notably, an HOA should consult with an experienced attorney when attempting to amend its declaration. Then, they correctly observe to ensure the amendment process—mitigating the risk of future challenges to the policy.
Fair Housing Act Implications
Like any other policy, an HOA's short-term rental restriction policies must comply with the federal Fair Housing Act. The FHA prohibits housing discrimination based on race, color, religion, sex, familial status, national origin, or disability. 42 USC §3604(a). Blatantly discriminatory policies are banned. For instance, an HOA cannot adopt a policy prohibiting short-term rentals to Catholics or preventing Catholics (but only Catholics) from renting their properties.
The FHA can also cover policies and actions that are unintentionally discriminatory. If a policy results in a disproportionately "disparate impact" on a protected class, the policy may violate the FHA. Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S.Ct. 2507 (2015).
"Familial status" discrimination can be a potential FHA tripwire for HOAs. Under federal court decisions interpreting the FHA, "familial status" does not just mean things like whether a person is married, single, or divorced. The term usually includes most age-based discrimination. See, Iniestra v. Cliff Warren Investments, Inc., 886 F. Supp. 2d 1161, 1164 (C.D. Cal. 2012). Restrictions against families with children—or restrictions that appear designed to prevent rentals to families with children—can likewise amount to familial status discrimination in violation of the FHA.
So, for instance, an HOA that tries to enforce a validly adopted blanket prohibition on short-term rentals will probably be upheld. But an HOA that allows some short-term rentals—but not to renters who have children—may find itself subject to an FHA complaint.
Contact Us
HOA laws can be complex, with many variations between states. Homeowners who have questions about how their Association's rules affect their rights should consult with an experienced attorney familiar with state HOA laws. Contact us today to learn more about ways to help you connect with an attorney concerning rental restrictions.
