Short-term Rentals in a Pandemic: 5 Impacts on Community Associations

The popularity of Airbnb, Homeaway, and VRBO have made short-term rentals a topic of discussion among condominium, homeowner (HOA), and townhome community associations. By conveniently bringing owners and prospective guests together through websites and apps, these online services can convert a condo or home into a revenue-making rental property with very little effort.

However, short-term rentals can present a plethora of challenges to community members, boards, and property management companies. These challenges have only been compounded by the COVID-19 pandemic.

Below are five areas where the coronavirus and short-term rentals have intersected to impact community associations.

1. Local, City, or State Regulations

Various states and municipalities have declared temporary bans on short-term rentals to prevent the further spread of the coronavirus. For example:

• In September 2020, the City of Chicago banned one-night stays at short-term rentals to reduce house parties.
• In August 2020, Naperville, IL voted to indefinitely ban short-term rentals from operating until they developed more stringent policies. Violations range from $1,000 to $2500.
• Early in 2020, New Mexico restricted lodging levels, including short-term rentals, to 50% occupancy. In September 2020, occupancy was expanded to 75%.
• In August 2020, Jackson, New Jersey installed a 30-day minimum stay for all short-term rentals.
• California updated the state’s travel restrictions in December 2020, making it illegal for short-term rental operators to allow reservations from out-of-state guests who will not quarantine for 14 days.

It’s critical that the association work with their legal counsel to understand:

• zoning law restrictions, municipal codes, permits, and licensing standards related to short-term rentals
• federal, state, and regional legislative guidelines related to COVID-19 (ex. travel restrictions, occupancy limits)

2. Governing Documents

Bylaws, declarations, and Covenants, Conditions and Restrictions (CC&Rs) were designed to reflect the community’s unique needs and standards. However, the popular and growing short-term rental trend is not always reflected in the association’s governing documents. Accordingly, at a time when associations are dealing with the pandemic, they have also found their governing documents to be outdated when it comes to short-term rental rules and enforcement.

Thoughtfully drafted and consistently enforced short-term rental policies should address:

• minimum lease terms
• rental restrictions
• whether there are any exceptions, such as for family members of the owner, or any “hardships”
• whether guests need to be accompanied by unit owners
• fines and enforcement procedures

3. Association amenities

When a home or unit owner makes their house or condo available for short-term rentals, guests are usually allowed to utilize association services. This includes gyms, parking, laundry facilities, pools, and rooftop patios.

Security and upkeep are already concerns when access is granted to areas that are exclusively shared and maintained by community members. During the current coronavirus crisis, boards and management should consider initiating additional sanitation measures for common areas and heavily utilized amenity areas. Boards should ensure disease prevention protocols are being implemented in both a safe and compliant manner.

4. Insurance

Insurance [protection is provided by some of the online short rental services. The coverage is usually limited to the guest’s stay and up to specific dollar amounts. Short-term rental operators are also encouraged to carry landlord insurance.

However, based on how the property is managed or claimed, insurance providers may view short-term rentals as commercial operations akin to a hotel business. This can lead to the denial of an insurance claim.

If the accident occurred within the association’s common areas or there was damage to the association’s property, short-term rentals can affect an association’s insurance liability, coverage, premiums, and claims processing.

5. Owner communication

Association leaders should maintain and confirm correct contact (and emergency contact) information for board members, managers, owners, residents, association employees and service providers.  This will allow the association to efficiently communicate important information regarding short-term rentals and any virus-related updates specifically impacting their community.

Conclusion

The impact of the coronavirus is changing how short-term are permitted and operated in condominium, homeowner (HOA), and townhome community associations. Board members should proactively work with the association’s attorney to ensure appropriate short-term policies are in place before issues arises.

If your association has any concerns regarding short-term rentals and/or would like to update your governing documents, do not hesitate to contact our law firm by calling 855-537-0500 or visiting www.ksnlaw.com.

Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We represent thousands of clients and community associations throughout the US with offices in several states including Florida, Illinois, Indiana, and Wisconsin.

This article is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By reading this article you understand that there is no attorney client relationship between you and the article author. This article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. © 2021 Kovitz Shifrin Nesbit, A Professional Corporation.