In a recent Rembaum’s Association Roundup article regarding Florida’s newest non-native invasion of overnight rentals through Vacation Rentals by Owner (VRBO) and AirBnB, we discussed what an association can do in order to protect its community from becoming the newest unnamed hotel/motel through the adoption of lease restrictions and lease approval requirements. Although these methods remain available to associations, one avenue of enforcement has been fully obliterated from the list of possible ways to rid the community of short-term, overnight and transient rentals as a result of a decision in a recent appellate case. In short, if your community’s governing documents prohibit commercial activity, this prohibition will NOT protect the association from VRBO and AirBnB rentals.
In Florida’s First District Court of Appeal case of Santa Monica Beach Property Owners Association, Incorporated v. Acord, the Acords owned two properties within the Santa Monica Beach community which they were renting on a short-term basis through VBRO. The association’s restrictive covenants provided that the properties can only be used for residential purposes and prohibited use of any property for business purposes. Upon learning of these transient rentals, the association sent letters to the Acords requesting that they stop their “vacation rental business.” The association’s enforcement efforts lead to the litigation.
The association argued that the transient rentals of the properties violated its restrictive covenants because the properties were being offered and advertised for rent on the internet as transient public lodging establishments, the Acords were required to collect and remit state sales tax and local bed tax on the rentals, and the Acords had obtained a license to operate their properties as transient public lodging establishment under the name “Acord Rental.”
The Acords argued that the short-term vacation rentals were residential uses, and not business uses, because the renters were using the properties for residential purposes.
Quite shockingly, the Court agreed with the Acords providing that the critical issue in determining whether short-term vacation rentals are residential uses of the property is whether the renters are using the property for ordinary living purposes (such as sleeping and eating), not the duration of the rental. Because the renters were using the Acords’ properties for residential purposes, the Court held that the use of the Acords’ properties as short-term vacation rentals is not prohibited by the association’s restrictive covenants.
Therefore, while an association may tackle the issue of transient rentals in its community by enforcing provisions of its governing documents, including for example, minimum lease term requirements and lease approval requirements, as discussed in our prior article, the association’s ability to enforce its residential use requirement and/or commercial use prohibition against short-term rentals has been obliterated as a result of this recent decision. To view our prior article please visit www.rembaumsassociationroundup.com.
Aside from the nuisance and safety issues which arise due to transient renters coming in and out of the community, another more sinister issue has arisen regarding the short-term rental of properties through websites. It seems as though scammers are creating fraudulent online listings through these websites for vacant properties. Through the online listing, these scammers rent the property and collect their fee. However, when the renters arrive at the property, no one is there. With the influx of people’s use of these vacation rental websites, both owners and associations alike need to keep an eye on the listings provided on these websites and the comings and goings within their communities to tackle this transient rental issue.
To ensure your association is properly protected against transient rentals, the association’s lawyer should be asked to review the governing documents to ensure the necessary language is included and to make recommendations to better protect the association from the likes of VBRO and AirBnB rentals.