Use of home for vacation rental

Started by DorothyO • 14 replies • 3309 views

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DorothyO (Washington)
Posts: 293

Posted:

Question: A homeowner in our 42 home association has moved to California, put the house on the market, but is now thinking of not selling it, and keeping as a rental OR a vacation rental here in wine country. Rentals are permitted. The vacation thing, I'm not so sure about. The only thing our covenants say on this matter is this: "Business Use: No trade, craft, business or profession of a public nature, commercial, or manufacturing enterprise of any kind shall be conducted or carried on upon any residential lot or within any building within (name of association) on a residential lot"

Our lawyer did not have the answer off the top of his head but is going to do some research. Anyone have any experience in this area? Personally, if it's a vacation rental I don't see how the association could enforce any covenants that get ignored by temporary occupants. Thank ye kindly.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Your HOA basically lacks a fining schedule for such activities. I would consider vacation rentals along the lines of time shares or business. Which business are against the rule I am sure. The problem is your HOA does not have fines for such activities JUST restrictions against it. Here is the true rub...Plus fines can not be the basis for liens or foreclosure in most states.

It sounds like back to the drawing board and modifying your CC&R's. I'd suggest consulting the attorney on how to get a fining schedule in place to have some teeth.

Former HOA President

CarolR11 (Colorado)
Posts: 2,563

Posted:

Our HOA is going to try to limit rentals to 30 days minimum when we revise our CC&Rs. Unless your docs have specific restrictions against short term rentals, I do not believe they can be termed "businesses" any more than long term rentals.

Meantime, we do have a schedule of fines, etc., that all Owners receive annually and we follow all of our other written procedures when any tenants, short or long term, violate the rules. It's the Owner in our and most HOA's who's called to hearing and fined when their tenants, guests, employees, etc. violate the rules.

DorothyO (Washington)
Posts: 293

Posted:

Yes, we do have fines for covenant violations, and it would be the homeowners who would be responsible, that's right. I forgot about that! Duh!

I also see vacation rentals as a commercial business which are prohibited, which is what I wanted to confirm with our lawyer. There are, however, some "businesses" that are allowed to be conducted out of one's home, which is what our attorney is going to clarify. I believe it has a lot to do with the type of activity the business generates in the neighborhood.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Dorothy

I do not see them as operating a business out of the home, as they do not live in the home.

If you all allow rentals anf there is no minimum time on the rental, then they are free to rent.

Understand something. I think rentals can be a death knell for an association, and should be controlled but I think your reasoning is weak.

Note to self. Check on minimum rental time in docs.

DorothyO (Washington)
Posts: 293

Posted:

John,
Our covenants are silent on rentals of any type. Also, the covenant that does address business being conducted out of the home does not mention the homeowner. It just says, "no trade, craft, business or profession of a public nature, commercial or manufacturing enterprise shall be conducted or carried on upon any residential lot. . ." It doesn't say conducted or carried out by whom. A possible scenario could be a homeowner allowing a friend or relative use the basement to offer Jazzersize classes, while the homeowner is at work. What this homeowner is thinking about is advertising their house in Washington wine country on a VRBO (Vacation Rental By Owner) website, which to me is an income-property, as opposed to renting your home due to a temporary work assignment, to which one shall return, or renting it while you sell it. Operating a rental property, potentially to different people every weekend or for two weeks, or one, or whatever, is commercial. But, that's what I have our lawyer checking out. This could be a good opportunity to see how the association feels on this issue, which is cropping up more and more around here.

BrianB (California)
Posts: 2,820

Posted:

i see all types of ducks you may want to get lined up, before you get too far.

Let's break it down in simple terms (ie, not everything here is spoken as an absolute)...

You have a rule that bans businesses in the home, and yet you do allow some businesses to operate from the home.

You want to potentially ban vacation rentals, but allow other rentals (see above about businesses in the home).

You want to ban a rental process that may occur entirely outside the confines of the HOA (ie, stretching the definition of "business occurring in the home".

While none of those is an absolute killer to the idea of banning a vacation rental, they are ducks I would certainly line up before I went after the ban (gaps in logic that should be filled).

LarryB13 (Arizona)
Posts: 4,099

Posted:

Why not just amend the CC&R's to ban short-term rentals, say less than 6 months? This is far more sound than trying to twist the "no business" rule into something it is not.

BTW, several years ago I was researching CC&R amendments and found one association that had banned the use of their homes as bed-and-breakfasts. The vote they recorded was 75 in favor of the restriction, 1 opposed. Gee, I wonder who wanted to start a B&B?

CarolR11 (Colorado)
Posts: 2,563

Posted:

I imagine your attorney will check to see if your municipality has restrictions against "transitory" living-- in apartments, etc. Often there's a 28 or 30 day minimum or the place must have a hotel license or something to that effect (B&B?, etc).

I don't know the details, but if your municipality has such restrictions, it might help.

FredS7 (Arizona)
Posts: 927

Posted:

> if it's a vacation rental I don't see how the association could enforce any covenants that get ignored by temporary occupants.

You could not be more wrong. All you do is fine the owner for every violation.

BrianB10 (North Carolina)
Posts: 24

Posted:

At our property management company we always insisted on associations trying to pass rental caps and restricting the rentals to a minimum of one year. High rates of tenancy are not only bad in regards to the association (tenants just do not seem to care as much, even though there are exceptions), but they can keep banks from financing on the properties, because they will be none conforming to HUD guidelines. In your case, as others have mentioned, if it is not in the declarations then they are free to rent. I am also in agreement that the restriction against home based businesses does not apply to the rental of the unit.

DorothyO (Washington)
Posts: 293

Posted:

The restrictions about what businesses can be run in an area zoned the way we are aren't the HOA's, they are the city ordinances -- some types are allowed while others aren't, according to our attorney.

Also, our attorney said this is not the same thing as a B&B, and so would not be held to those rules and regulations. Plus, a B&B would not be allowed to operate in our neighborhood as that is clearly a business. Early in our development an adult group home was proposed and sued us when we said no dice. We won. This is a fully residential neighborhood.

Fred, I believe I agreed that it would be the homeowner and not the renter who would be responsible for any covenant violation as Carol's post reminded me.

I'm not proposing a ban on anything. I'm collecting information, doing my research and trying to understand as much as possible before we can address the homeowner's concerns.

BrianB (California)
Posts: 2,820

Posted:

Now I am confused.. In your first post, you stated

Quote:

Posted By DorothyO on 07/18/2012
The only thing our covenants say on this matter is this: "Business Use: No trade, craft, business or profession of a public nature, commercial, or manufacturing enterprise of any kind shall be conducted or carried on upon any residential lot or within any building within (name of association) on a residential lot"

But then you stated

Quote:

Posted By DorothyO on 07/18/2012 10:15 AM
The restrictions about what businesses can be run in an area zoned the way we are aren't the HOA's, they are the city ordinances -- some types are allowed while others aren't, according to our attorney.

So, are you splitting the hair, and saying that your CC&R's don't have restrictions about what KIND of businesses can be operated, because your CC&R's ban ALL businesses being operated?

DorothyO (Washington)
Posts: 293

Posted:

Brian,
The first post is what our CC&R's say, which seem to ban all businesses operated from the home. However, does that mean a writer or consultant or free-lancer of some sort, can not work out of their home? Doubtful. Which is what the second post addresses, according to our lawyer. Some businesses are permitted. This is what I am seeking to clarify.

Essentially, defining what "business" means in our CC&R's, and if a vacation rental falls under that definitive restriction.

DorothyO (Washington)
Posts: 293

Posted:

Okay everyone. I just heard from our attorney who said that according to the most recent case here in Washington State, a vacation home is not considered a prohibited business since such usage is no different from how the homeowner uses it, e.g., sleeping, eating, etc. I'm always glad when I have the precedents of the courts to serve as support for a decision. Even if some association members protest this usage, our attorney advised that it is not a protest worth pursuing. The home is on the market for over half a million dollars, and given the desire of the owners to one day return, I'm counting on the management company, good friends of the owners, to vette the renters appropriately. Famous last words?

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