Short Term Rentals A Neighborhood Problem. by Joseph E. Adams of Becker

Short Term Rentals A Neighborhood Problem

Joseph E. Adams

Q: How can a homeowners’ association regulate owners renting out their houses to short term guests?  If the association were to enforce with a penalty, how can it collect on it? (E.H., via e-mail)

A: The place to start is knowing what your governing documents and local laws say about the subject. For example, some municipalities limit rentals in residential areas to a 30-day minimum, so violations could be reported to the local code enforcement agency.

Most documents limit the use of homes to “residential use.” These provisions have been extensively litigated in courts across the country and there is not a bright line test defining what activities constitute residential or commercial uses. However, courts have generally been reluctant to apply a residential use provision as a restriction on short-term rentals, and there is at least one appellate court decision in Florida to that effect.

Therefore, the most effective way to address rental restrictions is a specific provision in your declaration of covenants setting forth permissible and impermissible rental durations. Many declarations contain such a provision, while some do not. If your declaration does not contain a rental limitation, it would have to be amended in the manner set forth in the declaration. Most declarations require some level of super-majority approval for amendment, two-thirds and 75% being the most common standards. Some declarations require the vote be calculated based on all eligible voters, and some provide that the calculation is based on those who vote at a duly noticed meeting at which a quorum is established.

You should also be aware that the Florida Homeowners’ Association Act was amended in 2021 to limit the ability of homeowners’ associations to amend rental rights. The retroactive application of that statute to pre-existing associations is a complicated and open legal question. The new law provides that amendments limiting the duration or frequency of permissible rentals is only applicable to those owners who vote in favor of the amendment, those who vote against the amendment or don’t vote are “grandfathered,” but the amendment would be binding on their successors in title.

Importantly, Section 720.306(1)(h) of the Florida Homeowners’ Association Act does permit amendments that prohibit rentals for a term of less than six months or prohibit rentals of less than three times during a calendar year to be applied to all parcel owners if the declaration is properly amended, whether an owner voted in favor of the amendment or not.

Once you have determined what the actual rule is, the next question is how you enforce it. As stated above, if the rental violates local ordinances, referring the matter to code enforcement may be an effective and inexpensive way to seek redress.

Fining and suspension of common area use rights are one avenue, but probably not the most effective for this kind of violation. Many homeowners’ associations do not have the level of amenities where suspension of the right to use them deters violations. Fines are capped at one thousand dollars in the aggregate for ongoing violations, unless the governing documents permit a higher amount. There is also a somewhat detailed notice and hearing process that must be followed to impose a fine or suspension.  If a fine is properly levied, it can be a lien upon the home if it is for one thousand dollars or more and the language of your documents may also come into play. Otherwise, the venue to collect a fine is small claims court, and the prevailing party in a suit to collect a fine is entitled to recover their attorneys’ fees from the losing party.

The better approach for this type of violation is direct legal action by the association against the owner seeking a court order (injunction) to enforce the rule against short term rentals. Well-written documents may give you additional leverage in a court action. Generally speaking, the winning party can collect their legal fees from the losing party. The association’s lawyer should be brought into the picture early in the process, so he or she can advise what pre-suit steps may be necessary to protect your ability to enforce the restriction.

Joseph E. Adams is a Board Certified Specialist in Condominium and Planned Development Law, and an Office Managing Shareholder with Becker & Poliakoff. Please send your community association legal questions to jadams@beckerlawyers.com. Past editions of the Q&A may be viewed at floridacondohoalawblog.com.