Short term rental problem

Hello! I am new to the forum and hoping for some input.
We live in a lakeside community in Michigan with full and part time owners. About the time we purchased our home for year-round residency, another couple bought a home (under an LLC) and promptly added bedrooms and facilities in order to rent it through AirBnB. Part of the problem is that the previous owners were renting (under board approval) because they were having trouble selling. The new guy rents year-round and apparently this is their business. They rarely spend any time at the house at all, except when we have an HOA board meeting because he has gotten himself on the board!
The bylaws clearly (at least to me!) say that any rental under 30 days is prohibited. So once some residents started squawking about this guy renting, the board consulted a local (small town) attorney that stated that the bylaws support short term rentals. Several other homeowners, us included, contacted an unbiased, out of the community, real estate attorney who told us (and documented research) that rentals are explicitly prohibited. Four years ago the entire HOA VOTED to prohibit short term rentals as well.
Well...of course, the guy is still renting. The board doesn't want to spend money or upset this guy to get him to stop. However, they want to "amend" the bylaws to show that it's prohibited got future buyers. BUT he will still get to advertise on AirBnb and continue with his business. His attorney sent a threatening letter to the board saying if we try and stop him, he will sue for the board to purchase his house.
We don't have an attorney on the board at this time and we have suggested going with the one that we used who supports this. But board members and neighbors are torn, wanting to keep friendships etc. and want to stay with the local attorney who apparently can't read bylaws!
WHAT DO WE DO NOW?? We are at a loss. Help!

Sorry, I meant the CC&R's within the bylaws.

This is the wording:
Section 5. Restrictions on Leasing. No member shall lease less than an entire unit in the Condominium and no tenant of a residential unit shall be permitted to occupy a residential unit, except under written lease, the initial term of which is at least thirty days, unless specifically approved in writing by the Board of Directors.
In addition, any owner who wishes to lease his property has to provide a copy of the lease to the Board for approval 30 days before it is presented to the party who will be leasing his property.
Which he hasn't done.
And the board refuses to enforce any of the CC&R's. They don't want to spend the money.

We live in a very small town which does not have HOA attorneys, so we went with a real estate attorney.

The county just had a huge lawsuit in a community for this very thing, during which they ruled that the resident was wrong for renting. Our township says nothing except that he has to be inspected and approved to rent, which again he hasn't done. And they again do nothing about it.
Very frustrating.

Does you Board have Directors and Officers insurance? If they do and the enforce they rules the insurance should cover any suits by the homeowner. If I was a Board member I would do my job and deal with the suit if they guy decides to sell. Make sure he does not have permission from the Board.

No, he doesn't have permission. This is a site condo HOA of expensive homes and the CC&Rs are not being enforced at all. WWYD?

Sorry, like I said...new to all of this. We have a document that says bylaws and within that are the CCRs from what I see.
There are seven on the board. He had his attorney send the board a threatening letter saying if he's not allowed to rent, that he will sue for the board to purchase his home.
The HOA vote was in the minutes from a meeting 4 years ago.
No, there are no fines at all for violations. They have not enforced any violations ever, at all.
They don't want to spend the money. And they don't want to confront this guy.
So yes, not sure why we have bylaws at all. Or a board. I'm not sure what our next move should be. I don't believe he should be on the board at all and I think they should start enforcing the bylaws. I know that the other board members have stated that he should be grandfathered in if we start enforcing. Of course, they also believe we should amend the bylaws to explicitly state what I believe is already obvious.
UGH.

Then you need to file a complaint with housing code enforcement.

Thanks for the advice. I will look for an HOA attorney in our area. My question is, if the fines are not written into the CCRs, how do we stop this guy? Does the board have to take him to court? They have never enforced the restrictions and I guess it's a matter of stopping the rock from rolling downhill.
Do we get him off the board?
Just a bit lost as to where to start. Or is is this all up to the attorney?
Thanks.

perhaps

juuuuust perhaps

the 'bylaw' restriction was an attempt to circumvent the actual CCRs

said CCRs having NO restriction against rentals

perhaps

juuuuust perhaps BOTH attorneys are actually correct !?

Cat

The letter to the BOD has them peeing in their panties. They either man up and take legal action or keep running scared.

Right! So now what? He never got board approval...

Why do you think it's a no-win?

Hmm....so considering that he does not have written approval for his unit (the previous owner was only allowed on a limited basis), the actual CCRs don't matter? Why do we even have them if they're not enforced/enforceable? They also state you cannot store your boat in your driveway and he is telling others to ignore that as well!

Based on experience.

I DO think Richard's being unhelpful b/c owe always have some choices before they must resort to having the courts enforce their governing documents.

Since you're on the Board, you must convince them to act. You also must be active in setting up a schedule of fines to enforce your convents and rules. Meantime, follow Augustine's advice. Yes it doe take work, but this is about th future of your community!

Your Board if your HOA is incorporated is protected by some version of the Business Judgement rule, Cat. It states that they're OK (can't be sued) IF they use due diligence in making decisions. corporate boards might make mistakes.

One of those steps is to seek advice from experts. Are their 2 opinions on this topic in writing??? What do these opinions say? How do they differ form the attorney you et. al hired?

The difference between the three attorneys' opinions are because this:

Section 5. Additional Restrictions on Leasing. No member shall lease less than an entire unit in the Condominium and no tenant of a residential unit shall be permitted to occupy a residential unit, except under written lease, **the initial term of which is at least thirty days**, unless specifically approved in writing by the Board of Directors. The Board may, except to the extent prohibited by law, require a security deposit from any proposed tenant of a residential unit as a condition to the approval of any lease.

is on a whole different page than this:

Section 2. Notices of Desire and Intent.
(a) A member who desires to rent or lease his Condominium unit for any term shall provide notice of such desire to the Board of Directors at least ten (10) days before presenting a lease form to a potential tenant.

And according to our attorney, the other two just didn't read far enough.
And yes, they are restrictions within the bylaws. There are no covenants in the documents.
It was all drawn up by an attorney.
Is there a problem with that?

(an 'easier' link)

COVENANTS

EXCELLENT

no longer the HOA's problem

also, one can notify the IRS of the STRs



@Richard: even a stopped clock is correct twice a day

(assuming a 12 hr clock)

#1 a realtor can't tell a buyer anything about the HOA. Just that there is one if they know. Many states but not all may require the HOA's documents to be handed over at/by closing by the seller. Otherwise, it's considered the buyer's responsibility to be informed. Meaning No ONE else is responsible for educating/providing HOA CC&R/Articles of Incorporation. Those documents are considered PUBLIC documents. Available at the Records department of your county. By-laws or ACC documents are the INTERNAL documents of the HOA. Which the HOA provides. Although by-laws are often filed (not required) with the CC&R's.

So your person's excuses are just that. EXCUSES. Do you play into those? The HOA holds the power here. If the documents say there is an approval process prior to renting, then they are clearly in violation for not doing so. It is then the HOA's responsibility to enforce that by creating a Fining Schedule or another form of punishment. Maybe take away access to amenities like the pool. Which can extend to their renter. No one wants to rent if they can't use the pool. So it doesn't have to be fines.

I would say if they decide to sue, then counter sue them for the legal expenses the HOA is incurring. Also you all can sue to enforce the rule as well. Which may be fines or restricted access.

Still don't understand how this person thinks that they can sue the HOA for paying for their house? Really where is the logic in that? The HOA doesn't own the property nor did they sell it to them. They just responsible for enforcing the restrictions on that property. The HOA isn't responsible for someone's profit margin. Plus there is also a restriction most likely regarding home business restrictions as well...

This is not the first time in the last couple of years that I have heard of attorneys making boneheaded mistakes that laypeople call them out on.

Of course, the violator's attorney will fiercely advocate for his/her client, which includes prevarication. It's the attorney's job, and it's just the way it is. The worn-out lawyers' joke that goes, "When can you tell if an attorney is lying? When she or he opens her or his mouth." has enormous truth to it. It's their job to sell falsehoods.

The section of your Bylaws restricting renting is consistent with the Michigan Condominium Act. I see no problem.

This is in the restrictions regarding leases as well. Perhaps this is where he thinks he can ask for the BOD to purchase his house, if they don't approve his renting.

"If disapproved, the Association shall offer to purchase or lease, or provide another purchaser or tenant acceptable to it, on terms not less favorable to the seller or landlord than those originally proposed, and the seller or landlord shall be bound to consummate the transaction with such approved purchaser or permit the approved tenant to enter into possession within thirty (30) days thereafter."

Again, thanks for all your advice guys! Seven people, volunteering to be on the board, and NONE of them really understands their responsibilities or understands the document set in front of them.
We have actually had the conversation in meetings where one member says, "Well, I don't want to really take a side on this issue."

SIDE?? How about the side of the actual restrictions?? Or your property value??
I am so fed up I am ready to buy some livestock for my backyard just to prove I can do it and nobody will stop me!