Rent Restrictions on Air BnB

LmT (California)
Posts: 237

Posted:

I am the secretary of an association for 26 cabins. We have rudimentary governing documents - they were written in 1978. There are many problems with our association and the way it is run - no open meetings, the president feels his word is the last word, election problems and on and on but... The main problem right now is an owner who is renting his cabin on Air BnB.

The majority of the owners are up in arms. We share a well that is at best 'delicate'. Parking is limited - these cabins were built in the 50's when cars were one per family. They are weekend and summer homes. This two bedroom cabin is being advertised as accommodating up to 10 people and has, in fact, had 10 people staying in it. You can imagine the strain this puts on parking, water use etc. Not to mention disturbing the quiet enjoyment of other owners.

Our president has seen SB150 and interprets it as 'there's nothing we can do about it'. I disagree. I have suggested that we adopt some Rules and Regulations and limit rentals to no less than 30 days. That way we are not 'prohibiting' rentals, rather 'restricting' them.

Before I go to bat for my fellow cabin owners I want to check with some of your members on how this law should be interpreted.

By the way, I have forwarded our documents (such as they are) to a HOA lawyer for a proposal to update them - and that will be another subject. But for this problem I want to be able to respond to our president with an accurate interpretation of this law.

RichardP13 (California)
Posts: 3,868

Posted:

Unless the restrictions are already in the CCRs, there is nothing you can do.

JaredC (Texas)
Posts: 264

Posted:

The first person I thought of was RichardP13. Yeah. I have to agree. People own property and what they do with it is their own business. HOA's be damned. For better or worse it is what it is.

PaaN
Posts: 219

Posted:

Quote:

Posted By RichardP13 on 08/31/2018 7:40 PM
Unless the restrictions are already in the CCRs, there is nothing you can do.

PERFECT

all further discussion will amount to Tauric Ka-Ka

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By JaredC on 08/31/2018 7:59 PM
The first person I thought of was RichardP13. Yeah. I have to agree. People own property and what they do with it is their own business. HOA's be damned. For better or worse it is what it is.

Actually, that's not quite right. I am handling this for an HOA. Their CCRs don't restrict short-term rentals, BUT, the city in which the HOA is in, does. The city is in the process right now of fining the two units for violating city municipal code. They are acting as hotels and not paying their taxes, nor have a permit to do so.

Pretty sure the city where the OP's HOA resides, doesn't.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

RICHARD,

Can’t the CCRs note the Board can develop and enforce Rules and Regulations?
- without specifying whatbthose Rules and Regulations are?

RichardP13 (California)
Posts: 3,868

Posted:

In California, rental restrictions or the ability to restrict rentals, MUST already be in the CCRs.

TimB4 (Tennessee)
Posts: 21,060

Posted:

Quote:

Posted By GeorgeS21 on 08/31/2018 8:47 PM

Can’t the CCRs note the Board can develop and enforce Rules and Regulations?
- without specifying whatbthose Rules and Regulations are?

Restrictions for private property must be agreed to and contained within the CC&Rs.

Restrictions for common area are established by the Board and are adopted as Rules and Regulations policies.

PaaN
Posts: 219

Posted:

Quote:

Posted By TimB4 on 09/01/2018 2:50 AM

Posted By GeorgeS21 on 08/31/2018 8:47 PM

Can’t the CCRs note the Board can develop and enforce Rules and Regulations?
- without specifying whatbthose Rules and Regulations are?

Restrictions for private property must be agreed to and contained within the CC&Rs.

Restrictions for common area are established by the Board and are adopted as Rules and Regulations policies.

EXACTLY CORRECT

LmT (California)
Posts: 237

Posted:

I didn't explain correctly the set up with our association. We each own a 1/26 equal undivided share of the 8+ acres. We then own the structures (cabin) separately. The 8 acres is common ground. It's an unusual arrangement. However, it probably would not alter this particular situation. Thank you all for your input. When I meet with our lawyer we can put these restrictions in our new CC&R's to avoid problems in the future. Meantime we will set some rules and regulations to avoid problems over parking, misuse of water etc.

KerryL1 (California)
Posts: 14,550

Posted:

I know you mentioned your old CC&Rs, LmT. Read carefully as there might possibly be a section that forbids transient use of the cabins? I don't remember the exact words, but they're pretty common.

LmT (California)
Posts: 237

Posted:

Quote:

Posted By KerryL1 on 09/01/2018 8:28 AM
I know you mentioned your old CC&Rs, LmT. Read carefully as there might possibly be a section that forbids transient use of the cabins? I don't remember the exact words, but they're pretty common.

Thank you, Kerry. I do have a copy of the old (1971) document recorded with the State of California. The By-Laws were recorded in August 1989 and they refer to that document. The By-Laws also refer to "the members' individual and joint use of the property".

It is entitled "Association Agreement" and it has language such as: ...their own individual mountain cabins which they use for this individual social and recreational enjoyment." Also, ...to regulate and govern their individual and collective use and enjoyment thereof for the individual and joint benefit of all owners concerned."

"The purpose of this agreement and association is to provide for certain rules and regulations respecting the premises and the owners' individual and joint use and enjoyment thereof, which is deemed to be for the maximum benefit to the premises and the relations among the owners in their use and enjoyment of same".

It's only three pages long but I wondered if any of this language could be used in our favor - perhaps Richard has some input. I'm grasping at straws here because this weekend I had calls from several of the other owners (the one's that use their places) and they were very angry regarding the 20 people staying at this particular 2 bedroom cabin and it happens most weekends.

I don't know what we can do, if anything.

KerryL1 (California)
Posts: 14,550

Posted:

You're right that Richard, a property manager, probably can help. I don't see anything in what you cited that bands owners from renting out their cabins short- or long-term. Our wording, for instance, says no rental for hotel, motel or transient purposes.

Labor Day Weekend--I can imagine...

What about your municipality? Are there any codes that restrict how many residents per room or sq. ft.? I also think the owner must pay some sort of occupancy tax. Perhaps you can learn these things. As you can see I don't know much about this.

Is there any way your HOA can make rules to severely limit parking that's convenient to that cabin. I'm trying to think of ways.

It could be y'all need to chip $$ in together and see an HOA attorney who might be able to help. But this doesn't look very promising.

LmT (California)
Posts: 237

Posted:

Quote:

Posted By KerryL1 on 09/04/2018 4:11 PM
You're right that Richard, a property manager, probably can help. I don't see anything in what you cited that bands owners from renting out their cabins short- or long-term. Our wording, for instance, says no rental for hotel, motel or transient purposes.

Labor Day Weekend--I can imagine...

What about your municipality? Are there any codes that restrict how many residents per room or sq. ft.? I also think the owner must pay some sort of occupancy tax. Perhaps you can learn these things. As you can see I don't know much about this.

Is there any way your HOA can make rules to severely limit parking that's convenient to that cabin. I'm trying to think of ways.

It could be y'all need to chip $$ in together and see an HOA attorney who might be able to help. But this doesn't look very promising.

I didn't think there was anything of use in those documents. We are, in fact, looking at hiring an attorney to rewrite our documents for this very reason and whilst it will not affect this particular case he will be able to advise us going forward. We are in the process of writing to the owner to appeal to his sense of neighborliness and do the right thing. Otherwise, we are going to have to write some R&R's that will curb his business and I will look up the county codes on occupancy.

Thanks, Kerry.

RichardP13 (California)
Posts: 3,868

Posted:

In regards to this subject, re-writing the Rules will not cut it. The enforcement mechanism is within the CCRs, either now, or something that you have to amend. Below is the section about Rental Restriction that became law in 2013:

Civil Code §4740. Limitation on Rental Prohibitions.
[Old: Civ. Code §1360.2]

(a) An owner of a separate interest in a common interest development shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in that common interest development to a renter, lessee, or tenant unless that governing document, or amendment thereto, was effective prior to the date the owner acquired title to his or her separate interest.

(b) Notwithstanding the provisions of this section, an owner of a separate interest in a common interest development may expressly consent to be subject to a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in the common interest development to a renter, lessee, or tenant.

(c) For purposes of this section, the right to rent or lease the separate interest of an owner shall not be deemed to have terminated if the transfer by the owner of all or part of the separate interest meets at least one of the following conditions:

(1) Pursuant to Section 62 or 480.3 of the Revenue and Taxation Code, the transfer is exempt, for purposes of reassessment by the county tax assessor.

(2) Pursuant to subdivision (b) of, solely with respect to probate transfers, or subdivision (e), (f), or (g) of, Section 1102.2, the transfer is exempt from the requirements to prepare and deliver a Real Estate Transfer Disclosure Statement, as set forth in Section 1102.6.

(d) Prior to renting or leasing his or her separate interest as provided by this section, an owner shall provide the association verification of the date the owner acquired title to the separate interest and the name and contact information of the prospective tenant or lessee or the prospective tenant’s or lessee’s representative.

(e) Nothing in this section shall be deemed to revise, alter, or otherwise affect the voting process by which a common interest development adopts or amends its governing documents.

(f) This section shall apply only to a provision in a governing document or a provision in an amendment to a governing document that becomes effective on or after January 1, 2012.

I am going through this right now as we speak about two unit using AirBnB. If I was in Los Angeles, I couldn't fight this, but the city in which the HOA resides just passed a new law banning short-term rentals because of loss of revenue. I don't have to have the CCRs amended as Municipal Code will trump (what a bad choice of words) the CCRs.They lucked out, because they were looking at $5000.00 to re-write their docs.

PaaN
Posts: 219

Posted:

seems the OP may use:

..... (d) Prior to renting or leasing his or her separate interest as provided by this section, an owner shall provide the association verification of the date the owner acquired title to the separate interest and the name and contact information of the prospective tenant or lessee or the prospective tenant’s or lessee’s representative. .....

(said action may have been done w/o the OP's 'direct' knowledge)

LmT (California)
Posts: 237

Posted:

Thanks, everyone, for the information. We have an appointment with a Lawyer to rewrite the documents so will be sure to include these restrictions in the new CC&R's. I realize it will not help with the current problem but in the future we will have the correct language in our documents.

KerryL1 (California)
Posts: 14,550

Posted:

Sounds good, LM. From what you've written, it seems that getting the number of votes to approve a rewrite of your CC&Rs won't be difficult unless your current one specifies 100% approval required.

LmT (California)
Posts: 237

Posted:

Quote:

Posted By RichardP13 on 09/04/2018 9:40 PM
In regards to this subject, re-writing the Rules will not cut it. The enforcement mechanism is within the CCRs, either now, or something that you have to amend. Below is the section about Rental Restriction that became law in 2013:

Civil Code §4740. Limitation on Rental Prohibitions.
[Old: Civ. Code §1360.2]

(a) An owner of a separate interest in a common interest development shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in that common interest development to a renter, lessee, or tenant unless that governing document, or amendment thereto, was effective prior to the date the owner acquired title to his or her separate interest.

(b) Notwithstanding the provisions of this section, an owner of a separate interest in a common interest development may expressly consent to be subject to a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in the common interest development to a renter, lessee, or tenant.

(c) For purposes of this section, the right to rent or lease the separate interest of an owner shall not be deemed to have terminated if the transfer by the owner of all or part of the separate interest meets at least one of the following conditions:

(1) Pursuant to Section 62 or 480.3 of the Revenue and Taxation Code, the transfer is exempt, for purposes of reassessment by the county tax assessor.

(2) Pursuant to subdivision (b) of, solely with respect to probate transfers, or subdivision (e), (f), or (g) of, Section 1102.2, the transfer is exempt from the requirements to prepare and deliver a Real Estate Transfer Disclosure Statement, as set forth in Section 1102.6.

(d) Prior to renting or leasing his or her separate interest as provided by this section, an owner shall provide the association verification of the date the owner acquired title to the separate interest and the name and contact information of the prospective tenant or lessee or the prospective tenant’s or lessee’s representative.

(e) Nothing in this section shall be deemed to revise, alter, or otherwise affect the voting process by which a common interest development adopts or amends its governing documents.

(f) This section shall apply only to a provision in a governing document or a provision in an amendment to a governing document that becomes effective on or after January 1, 2012.

I am going through this right now as we speak about two unit using AirBnB. If I was in Los Angeles, I couldn't fight this, but the city in which the HOA resides just passed a new law banning short-term rentals because of loss of revenue. I don't have to have the CCRs amended as Municipal Code will trump (what a bad choice of words) the CCRs.They lucked out, because they were looking at $5000.00 to re-write their docs.

Well, here I am again. We had our meeting yesterday and the President is adamant that we can just write some Rules and Regulations and limit STR's to 30 days or more. He cites various case law as he understands it, and the following. I don't want to get into a pi$$ing contest until I fully understand.

Richard and Kerry, what about the following quote from 'findhoalaw.com':

Rental “Restrictions” vs. Rental “Prohibitions”
By its own terms, Civil Code Section 4740 applies to a provision in a HOA’s governing documents that “prohibits” the rental or leasing of properties within the development. There is an ambiguity in the law as to whether Section 4740 would similarly apply to rental restrictions that do not serve as blanket rental prohibitions (i.e., a restriction allowing rentals provided that they are for terms of at least thirty (30) days). The degree to which both current and future owners are bound to comply with such restrictions remains unclear.

LmT (California)
Posts: 237

Posted:

Quote:

Posted By LmT on 10/01/2018 9:41 PM

Posted By RichardP13 on 09/04/2018 9:40 PM
In regards to this subject, re-writing the Rules will not cut it. The enforcement mechanism is within the CCRs, either now, or something that you have to amend. Below is the section about Rental Restriction that became law in 2013:

Civil Code §4740. Limitation on Rental Prohibitions.
[Old: Civ. Code §1360.2]

(a) An owner of a separate interest in a common interest development shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in that common interest development to a renter, lessee, or tenant unless that governing document, or amendment thereto, was effective prior to the date the owner acquired title to his or her separate interest.

(b) Notwithstanding the provisions of this section, an owner of a separate interest in a common interest development may expressly consent to be subject to a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in the common interest development to a renter, lessee, or tenant.

(c) For purposes of this section, the right to rent or lease the separate interest of an owner shall not be deemed to have terminated if the transfer by the owner of all or part of the separate interest meets at least one of the following conditions:

(1) Pursuant to Section 62 or 480.3 of the Revenue and Taxation Code, the transfer is exempt, for purposes of reassessment by the county tax assessor.

(2) Pursuant to subdivision (b) of, solely with respect to probate transfers, or subdivision (e), (f), or (g) of, Section 1102.2, the transfer is exempt from the requirements to prepare and deliver a Real Estate Transfer Disclosure Statement, as set forth in Section 1102.6.

(d) Prior to renting or leasing his or her separate interest as provided by this section, an owner shall provide the association verification of the date the owner acquired title to the separate interest and the name and contact information of the prospective tenant or lessee or the prospective tenant’s or lessee’s representative.

(e) Nothing in this section shall be deemed to revise, alter, or otherwise affect the voting process by which a common interest development adopts or amends its governing documents.

(f) This section shall apply only to a provision in a governing document or a provision in an amendment to a governing document that becomes effective on or after January 1, 2012.

I am going through this right now as we speak about two unit using AirBnB. If I was in Los Angeles, I couldn't fight this, but the city in which the HOA resides just passed a new law banning short-term rentals because of loss of revenue. I don't have to have the CCRs amended as Municipal Code will trump (what a bad choice of words) the CCRs.They lucked out, because they were looking at $5000.00 to re-write their docs.

Well, here I am again. We had our meeting yesterday and the President is adamant that we can just write some Rules and Regulations and limit STR's to 30 days or more. He cites various case law as he understands it, and the following. I don't want to get into a pi$$ing contest until I fully understand.

Richard and Kerry, what about the following quote from 'findhoalaw.com':

Rental “Restrictions” vs. Rental “Prohibitions”
By its own terms, Civil Code Section 4740 applies to a provision in a HOA’s governing documents that “prohibits” the rental or leasing of properties within the development. There is an ambiguity in the law as to whether Section 4740 would similarly apply to rental restrictions that do not serve as blanket rental prohibitions (i.e., a restriction allowing rentals provided that they are for terms of at least thirty (30) days). The degree to which both current and future owners are bound to comply with such restrictions remains unclear.

DouglasK1 (Florida)
Posts: 2,046

Posted:

If the renting owners are as ignorant as your president, there shouldn't be a problem. If on the other hand, they recognize that the association is overstepping it's authority and sue, it could get expensive.

Escaped former treasurer and director of a self managed association.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

We have an appointment with a Lawyer to rewrite the documents so will be sure to include these restrictions in the new CC&R's. I realize it will not help with the current problem but in the future we will have the correct language in our documents.

Just remember lawyers earn money by billing for hours. They will do whatever you want, but keep in mind it will lead to more billable hours. Nothing like a good legal paperwork limiting what people can do with their own property that will result in tons more billable hours for the lawyer.

What I'm saying is...... I'm sure he would love to write up some paperwork that will get your association sued at your request.