A change in Master Deed? or Rules and Regulations?

Originally the Master Deed said that no units could be leased for less than 30 days.

Then about five years ago an amendment to the Master Deed was passed by over 67% of the members to allow less than 30 day rentals.

The caveat being that those members have to pay an additional yearly fee to the Association to operate as a short term rental.

About 95% of the members turned their units into short term rentals, airbnb, vrbo, etc. (I am one of the few owners that live in our property)

After the new amendment went into place, it was observed that "one night rentals" often equals prostitution.

So the Board decided on a three night minimum.

The question is, does this fall under Rules and Regulations that the board can do from time to time, or is that another amendment to the Master Deed?

Tennessee COA
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Master Deed below
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Short Term Rental

Change section 18(a): LEASE AND TRANSFER OF A UNIT: NOTICE TO ASSOCIATION Leases as follows:

Delete the sentence reading: "No Lease may be for a term of less than thirty (30) days.
Add the sentence reading: "Leases less than thirty (30) days will be classified as "Short Term Units" and subject to the provisions of section 18(a. l ).

Add paragraph (a.1) to section l 8(a): Each Short Term Rental unit shall be registered annually with the Association by the Unit Owner.

Add paragraph (a.2) to section l 8(a): The rate of assessments for each Short Term Unit shall initially be established at one and one half ( 1.5%) times the rate applicable to two bedroom units. This ratio of assessments between short term units and two bedroom Units may be adjusted as determined from time to time by the Board of Directors of the Association. Assessments totaling twelve ( 12) months for each Short Term Unit must be paid in lump sum at the time of registration and are nonrefundable regardless of the Owners intent to cease short term rental.

Add paragraph (a.3) to section l 8(a): In addition to the yearly Short Term Unit assessments, each initial registration of a short term rental unit shall ·pay to the Association a one time amount equal to three (3)months of regular assessments for the administrative cost of managing the Short Term Unit registration. Expired registrations shall be considered "initial" registrations and subject to additional three (3)months of assessments.

Add paragraph (a.4) to section l 8(a): Adherence to all existing and future covenants, rules, regulations and master deed restrictions of the Association are the responsibility of Short Term Unit owner. Failure to register and comply with owner responsibilities of the Master Deed will result in all provisions of enforcement including but not limited to sections 7, 17 and 18 of the Master Deed. Additionally, Short Term Unit owners failing to comply with. registration of the short term rental provisions as set forth will be obligated to pay all initial fees and assessments, plus ten percent ( l0%) in the initial year of registration. It is the responsibility of the Short Term Unit owner to adhere to all current and future federal, state, and local regulations for short tern rental properties, and the Short Term Unit owner shall indemnify the Association any legal fees, fines, penalties, or other costs incurred by the Association or its Board of Directors as result of non-compliance by at Short Term Unit owner.

Add paragraph (a.5) to section 18(a): The Board of Directors of the Association may· terminate the registration of any Short Term Unit based on evidence of continued violation of the ''RULES AND REGULATIONS" of the Association to include but not limited to loud boisterous conduct that· is disruptive to residents. Termination of short term registration will require re-registration of the unit subject to the majority vote of the Board of Directors of the Association.

Agree with the toothpaste is out of the tube. And I've told some horror stories on this forum.

Regardless if it is one night, two nights, or three nights.
The question is if this can be a "Rule" or does it go back to amending the Master Deed again.

Disagree. It would only need a change to the R and R as the three day minimum is still less than the 30 day minimum.

Yep, to we stepped in it.
Trying to figure out R&R or Master Deed.

Janine, Lawyer up, i.e., consult with the attorney for the association before the Association steps in it more deeply. If 90% of the owners are renting via Airbnb and VRBO, changes made may threaten income streams, upset bookings committed to months out, and subject the association to a withering succession of lawsuits, TROs, and who knows what else.

Use the attorney to get it right and make the change as unassailable as possible before it is implemented.

My personal opinion, although I am not an attorney nor did I sleep in a Holiday Inn Express last night, is that the Board may modify the number of days through a simple change to the Rules of the Association. 1 day, 3 days, or 29 days is still less than the 30 days stipulated in the amendment.

I'm asking this for my own clarification. I thoughts the courts frowned on rules being more restrictive than what is outlined in the governing documents. In this case since the master deed says 30 days or less doesn't this automatically grant one day leases?

If the board can pass a rule that says you can't lease for 1 day then do they have the right to later pass a rule that says all leases have to be at least 180 days? If not, what's the difference? Either example is clearly changing what is already defined in the master deed.

My understanding is that rules and regulations can be more restrictive than the governing documents as long as the rule does not conflict with or violate the governing docs. For example the board can restrict parking for safety reasons, but cannot take away parking if it is a right in the governing docs.

An Illinois appeals courts overturned a board rule that prohibited rentals over 30%, because the governing docs allowed rentals, so the rule conflicted. On the other hand another Illinois appeals court upheld a board rule that prohibited bringing additional dogs onto the property, since the governing docs were silent on the issue, so the rule did not conflict.

An amendment to the governing documents is presumed to be valid by the courts, but Rules and Regulations are not presumed valid and are more easily challenged in court. You are always better off doing the amendment if you can afford it.

It is common for associations to set minimum rentals periods (although it is usually more like six months or a year). I think the board can get away with setting the period to three days minimum. However, make sure it will pass a "reasonableness test". In other words make sure you can document the prostitution idea.

What does your local laws say about STR? I live in the unincorporated portion of Clark county and there is a flat out ban on STR's while the city on Las Vegas has tight restrictions on them.

Some things to consider, since 70% or more of the property is STR, that in the eyes of insurance companies constitutes commercial use. increased rates on per unit rates, even for those not renting out
their unit. Higher D&O rates and what about cleaning and maintenance of the common areas? contracted out or an employee? Now you are faced with hight reserves and higher assessments to
cover high use maintenance. Do you have an elevator? $$$$$$$ You might be even facing getting a business license from your local government..

The original post says that the amendment says:

Delete the sentence reading: "No Lease may be for a term of less than thirty (30) days."

So they don't have a 30 day restriction. It has been deleted.

That said, I agree with your other comments. Three days seems reasonable. In this case the reason given is prostitution.

I don't my first line of defense would be a prostitution clause, hey some of my friends are....., well we won't go there.

Janine

I am going out on a limb and safe you're safe. BUT, whatever you guys do, don't use the prostitution defense.

Our local law allows STR. And yes, higher insurance costs now, not enough reserves, more maintenance needed but not being done, and if I personally want to sell my unit then the buyer can't get a regular mortgage, they have to get an investment mortgage with a higher down payment.
There is no going back on deciding STR or not at this point as it has been 5 years, and the owners are constantly booked.
This is just the technicality of whether the Board has the authority to put a minimum stay rule in the Rules and Regulations if needed, or does that require an amendment to the Master Deed which requires 67% vote.

Then I think "Condominium property" is too ambiguous, and a court might very well say that the Board cannot place restrictions on the use of units beyond what is in the covenants. Minimum 3-day rental is beyond what is in the covenants.

"Condominium property" = property belonging to the condominium, meaning the condominium corporation. I do not think each unit could be said to be owned by the condo corporation.

As Jan said:

Originally the Master Deed said that no units could be leased for less than 30 days.

Then about five years ago an amendment to the Master Deed was passed by over 67% of the members to allow less than 30 day rentals.

I say a rule cannot override/change that less then 30 day rentals (this includes as little as one day) are allowed. It will take an amendment.

No, I am not saying this.

My earlier post speaks for itself.