B&B

Started by JoeD14 • 9 replies • 344 views

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JoeD14 (Washington)
Posts: 14

Posted:

anyone having issues with B&B rentals?

In this case, it's a 6 bedroom home. The owner is aiming for the corporate retreat, large family gatherings,
I think the main problem is everyone showing up with a fishing pole. It's a private stocked lake. The members pay dearly each year to stock the lake.

How does everyone's bylaws deal with this issue?

Joe

BillH10 (Texas)
Posts: 1,217

Posted:

JoeD14

On the basis of the small amount of information you posted, most documents prohibit using a property for business activities. Working from home is not business use of the home but arguably renting it as a B&B, corporate retreat, or whatever certainly is. Local and state political governance is beginning to address such uses of residential property.

Also, the short term rental provisions found in the declaration will apply, regardless of the use made of the property by the renter or owner.

Forget the lake and use as a B&B or corporate retreat, look at the documents to see if the underlying rental is not in compliance with the provisions in the declaration. That will stop the fishing issue.

AugustinD
Posts: 3,698

Posted:

Quote:

Posted By JoeD14 on 03/09/2022 5:13 PM
anyone having issues with B&B rentals?

In this case, it's a 6 bedroom home. The owner is aiming for the corporate retreat, large family gatherings,
I think the main problem is everyone showing up with a fishing pole. It's a private stocked lake. The members pay dearly each year to stock the lake.

How does everyone's bylaws deal with this issue?

You are right to go to the Bylaws and CCRs. Should a dispute about this land in court, the Bylaws and/or CCRs will be key in determining the rights of short-term residents. Look especially for any authority the governing documents give to regulate rentals.

BillH10 is correct of course that this this a hot topic nationwide and is seeing more and more litigation on the topic for HOAs and COAs. Some of the time the courts say that STRs are still "residential use." If the Bylaws/CCRs do not say more that is helpful, your HOA may be out of luck. Some of the time the courts have said that certain STRs are commercial use. And so on.

The members may indeed pay dearly to stock the lake. But it's a six bedroom house. Presumably everyone in the house could have a fishing pole and love fishing, regardless of whether the inhabitants are renters or owners of the home. If your governing documents allow to bill for stocking fish based on say square feet of house, then this might be the best approach.

Out of curiosity, how is the assessment fee for stocking the lake computed? Flat rate per home? Built into the regular assessment? Is the regular assessment house size dependent?

What exactly do your Bylaws and CCRs say on the subject of short term rentals?

Washington does have a statute dedicated to short term rentals. See https://app.leg.wa.gov/RCW/default.aspx?cite=64.37 . The OP's city may also have ordinances on the subject.

This 2014 Washington Supreme Court case may help give an idea of how Washington Courts think about this subject:

https://law.justia.com/cases/washington/supreme-court/2014/86870-1-134.html

CathyA3 (Ohio)
Posts: 6,299

Posted:

It's not in our bylaws but in the CC&Rs. Our rental restriction prohibits short term rentals of any sort.

In addition, if your HOA is allowing business activities, you run the risk of your insurer saying "nope, not covering that" if there is an injury in conjunction with this B&B. Our attorney is adamant about not permitting business activities of any sort in our community because he's seen this sort of thing happen, and it was not pretty for the HOAs that then had an uninsured loss to contend with.

Y'all gotta jump on this right now unless your homeowners have deep enough pockets to risk their personal assets in this way. The fish are the least of your problems.

MichaelS56 (Minnesota)
Posts: 858

Posted:

BillH10 said it all for our Association in Minnesota. No Business in the governing documents

PatJ1 (North Carolina)
Posts: 568

Posted:

Quote:

Posted By MichaelS56 on 03/10/2022 6:52 AM
BillH10 said it all for our Association in Minnesota. No Business in the governing documents

IMO, renting out a residential property does not fall under conducting a business from a residential property. Otherwise all rental properties would be in violation of many governing documents. Are all residential rentals prohibited in Minnesota?

What do the governing documents state about short term rentals, or renting less than the entire property? Our CCR's state not for "hotel" purposes. Our attorney advised us that the term might not hold up in court to restrict short term rentals, AIRBNB's, but was willing to send a letter not knowing how far we could take it.

BillD16 (Texas)
Posts: 971

Posted:

As others have alluded, there may be city / county / state laws concerning STRs? Although I’m not certain how good I feel about an HOA attempting to use them for leverage - my HOA recently fielded an anonymous complaint about a supposedly unlicensed STR and it made no-one happy.

If the concern is truly about the impact on the fish: have you discussed this with the owner? Your concern about the cost of stocking the lake is not unreasonable, and if the owner is a reasonable person, perhaps y’all can come to an agreement?

BillD

HOA Board ex-President
Austin, Texas USA

“You can’t put too much water in a nuclear reactor”

CathyA3 (Ohio)
Posts: 6,299

Posted:

There have been court cases ruling that STRs are not "residential use" but in fact "business use". Some of the reasoning involved the following points:

* STRs often require lodging licenses, as do hotels.

* Many/most rental property is owned by an LLC, not an individual owner as would happen if somebody moves and rents out his unit.

* Investment property does not qualify for residential mortgages - investors must take out a commercial loan. (Actually, this applies to any rental, not just STRs.)

* People who stay in STRs are not "living there" in any sense of the term. They do not list the STR as their permanent address with their employer, banks, the IRS, etc. They do not receive mail there. They do not keep all of their possessions at the STR. If they get kicked out of the STR on short notice, they do not become homeless.

* People who stay in STRs do not sign leases and do not get renter's insurance (I think the latter requires a permanent address). The STR websites themselves make it obvious: they refer to their customers as "customers", not tenants. (Not 100% sure, but I don't think STRs are governed by a state's landlord-tenant laws - different laws apply since the nature of the transaction is different.)

AdamL1 (UnitedStates)
Posts: 559

Posted:

Here's a case study I just read. Seems you can just amend your CCR's to really throttle the restrictions on short term rentals.

my summary
- the guy AirBnB's his townhome, the guests piss off all the neighbors.
- CCR's read: The 1980 Declaration defined the permitted "Use and Regulation of Uses" for the lots within the Subdivision, providing that "each lot shall be used for single family residential purposes only, on an ownership, rental or lease basis."
- CCR's also include language to amend the CCR's with a 90% vote.
- The HOA amends the CCR's to add a ton of rental restrictions, effectively stopping AirBnB.
- the guy continues to rent, and which forces the HOA to sue him, the guy counter-sues, both sides file for summary judgement.
- the guy argues that he had a 100% unrestricted right to rent, and that the Amendment is not valid, because it adds a new burden, not an amendment to an existing burden. It is not an amendment, but rather an addition.
- the Court admits there's been no precedence in the State thus far, but other states have ruled on this issue. Washington says new additions are not allowed. North Carolina defines them all as the same thing, as an amendment.
- the Court rules that it does not want to "draw a bright line distinction" and that its all the same thing...an amendment is anything that changes the CCR's.
- the Court rules that the guy knew and signed the contract when he bought his house, knowing that the CCR's could be amended. If he didn't like it, he could have walked away.
- the Court rules that the Amendment is valid.
- the guy argues that the Amendment is discriminatory to just him.
- the Court rules that even though the guy was the reason for the Amendment, it still applies to everyone and until the guy can bring forth evidence of discrimination, there's no valid claim. A fear of future damage does not constitute a claim.

https://law.justia.com/cases/idaho/supreme-court-civil/2015/42192.html
https://caselaw.findlaw.com/mo-court-of-appeals/1353156.html
https://digitalcommons.law.uidaho.edu/cgi/viewcontent.cgi?article=6162&cidaho_supreme_court_record_briefs
https://lawprofessors.typepad.com/land_use/2015/09/the-sharing-economy-versus-hoa-ccrs-the-battle-begins.html

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By AdamL1 on 03/10/2022 8:44 AM
Here's a case study I just read. Seems you can just amend your CCR's to really throttle the restrictions on short term rentals.

... snip ...

Yes, in theory. In practice, you have a window of opportunity. Once you have too many landlords in your community, you won't have enough votes to pass the amendment since amending CC&Rs usually requires a super-majority (67% or 75%) of owners to vote yes. For many communities, it may already be too late unless the local municipality chooses to regulate or prohibit STRs inside its boundaries.

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