Rental properties can be the bane of your homeowner association’s existence. Whether the owner originally occupied the property and later moved on to a new primary residence, or the owner purchased the property intending to rent the property out, an absent owner can mean a host of problems for the owners’ association. Short-term rentals through platforms like AirBNB or VRBO can introduce a plethora of guests and visitors coming and going through the community every few days. These tenants, guests and visitors don’t have the same incentive to preserve property values and honor the rules that the full-time residents have.
As a result, many associations elect to adopt some type of rental restrictions to limit or completely prohibit rentals within the community. These restrictions aren’t always well-received by the owners who have come to enjoy receiving rental revenue. Although rental restrictions are a limitation on the use of the property, courts have upheld these restrictions where properly adopted and when they are reasonable and rationally calculated to uphold the best interests of the community or development.
Courts have held, on a relatively consistent basis, that rental restrictions are valid as long as the restriction is reasonable and serves a legitimate purpose to the association. In a New York case, Four Brothers Homes at Heartland Condominium II, et. al., v. Gerbino, 691 N.Y.S.2d 114 (1999), the plaintiff association was successfully able to enjoin the defendant homeowners from leasing their condominium unit. The court ultimately granted the order to enjoin the defendants on the grounds that the leasing restriction was not an unreasonable restraint on alienation. Specifically, the court reasoned that the defendants willingly gave up some rights and privileges when they chose to purchase property in a restricted community.
In analyzing a rental restriction, the court will first and foremost look to the language of the restriction. For example, in Matter of Olszewski v. Cannot Point Assn., Inc., the court refused to enforce the rental restriction because it conflicted with the association’s governing documents. The court found that the HOA exceeded their authority by adopting rules prohibiting owners from renting their units because this rule conflicted with the provisions of the HOA’s bylaws granting a unit owner the right to convey or lease their home “free of any restrictions.”
Perhaps the most controversial type of rental restrictions is the kind adopted by the community after owners have already purchased and rented their units. We highly recommend you seek legal counsel to guide your association through the drafting, adoption, and implementation of such an amendment.
If an association is wants to restrict rentals within the community, it is imperative that you receive the advice of experienced counsel before drafting these restrictions. Even if you already have restrictions, enforcement can be very tricky for the community to navigate. Our attorneys at McCabe, Trotter & Beverly, P.C. are experienced and well-equipped to assist with drafting governing documents to pinpoint and prevent these issues from arising at any point in the association’s existence. We are also here to answer questions and to discuss issues you may have regarding any current rental restrictions or any disputes arising out of such. Please contact us at (803)-724-5000 for further information.
McCabe, Trotter & Beverly, P.C. blogs and other content are for educational and informational purposes only. This is not legal advice and does not create an attorney/client relationship between McCabe, Trotter & Beverly, P.C. and readers. Readers should consult an attorney to understand how this information relates to their personal situation and circumstances. You should not use McCabe, Trotter & Beverly, P.C. blogs or content as a substitute for legal advice from a licensed attorney.
Written by R. Myers Truluck, Jr.