Hoa's Power: Restricting Condos From New Airbnb Laws

With the rise of Airbnb and other home-sharing services, many homeowners' associations (HOAs) are considering implementing covenants to ban short-term rentals. The question of whether an HOA can restrict new Airbnb laws is a complex one, involving the rights of the homeowner, the HOA's ability to enhance property value, and the interpretation of deed restrictions. While an HOA may have the power to ban Airbnb under current deed restrictions prohibiting commercial use, there is room for ambiguity in cases where restrictive covenants fail to explicitly bar commercial uses. State courts have held that HOA restrictions will be binding as long as they have been properly passed and are subject to amendment processes.

The power of HOAs to ban Airbnb

Homeowners' associations (HOAs) have the power to ban the use of Airbnb, VRBO, and other short-term rentals under their current deed restrictions if prohibitions against "commercial use" of parcels are already in place. However, ambiguities can arise when a restrictive covenant fails to explicitly bar commercial uses. In these cases, it is necessary to review the zoning regulations for each particular property under the controlling city Municipal Code. If there is no language expressly restricting leases, transient occupancy, or short-term vacation rentals in the controlling documents of the complex, the HOA cannot penalise owners for acting as Airbnb hosts until the HOA Board takes action to amend the regulations, usually by a majority vote.

State courts have long held that restrictions enacted by HOAs can and will be binding so long as they have been properly passed subject to amendment processes laid out in their controlling documents. In Michigan, HOA members have a common-law right to try to enhance the value of their property through contractual agreements concerning the use and development of their real property. A covenant prohibiting other short-term rental arrangements does not impact a homeowner’s ability to sell the property, but it may be more difficult to sell than a similarly situated property that is not subject to HOA oversight.

For homeowners who are subject to HOA oversight and controls, the enactment of a ban on short-term rentals is permissible, so long as the HOA follows its stated amendment process. Each case must be examined individually according to the local rules and governing documents, so it is important that homeowners have an attorney review these documents before renting out their home to Airbnb guests in order to avoid being penalised by the HOA.

Deed restrictions and commercial use

If you are a homeowner who is subject to HOA oversight and controls, the enactment of a ban on short-term rentals is permissible, so long as the HOA follows its stated amendment process. However, ambiguities arise when a restrictive covenant fails to explicitly bar commercial uses. In such cases, there could be some room for ambiguity to be argued, though what other purposes that language could reasonably imply would be difficult to argue.

If prohibitions against 'commercial use' of parcels are already in place, an HOA may already have the power to ban the use of Airbnb, VRBO, and other short-term rentals under their current deed restrictions. State courts have long held that restrictions enacted by HOAs can and will be binding so long as they have been properly passed subject to amendment processes laid out in their controlling documents.

Homeowners should be aware that if there is no language expressly restricting leases, transient occupancy, or short-term vacation rentals in the controlling documents of the complex, the HOA cannot penalise owners for acting as an Airbnb host until the HOA Board takes action to amend the regulations, usually by a majority vote. Each case must be examined individually according to the local rules and governing documents, so it is important that you have an attorney review these documents before renting out your home to Airbnb guests in order to avoid being penalised by the HOA.

Zoning regulations and short-term rentals

Homeowners' associations (HOAs) can restrict the use of Airbnb and other short-term rentals if prohibitions against the "commercial use" of properties are already in place. This is because state courts have long held that restrictions enacted by HOAs can and will be binding so long as they have been properly passed subject to amendment processes laid out in their controlling documents.

However, if there is no language expressly restricting leases, transient occupancy, or short-term vacation rentals in the controlling documents of the complex, the HOA cannot penalise owners for acting as an Airbnb host until the HOA Board takes action to amend the regulations, usually by a majority vote. Each case must be examined individually according to the local rules and governing documents, so it is important that you have an attorney review these documents before renting out your home to Airbnb guests in order to avoid being penalised by the HOA.

In Michigan, HOA members have a common-law right to try to enhance the value of their property through contractual agreements concerning the use and development of their real property. A covenant prohibiting other short-term rental arrangements does not impact a homeowner’s ability to sell the property, though it may be more difficult to sell than a similarly situated property that is not subject to HOA oversight.

Ambiguities in restrictive covenants

Homeowners' associations (HOAs) are increasingly considering covenants to ban short-term rentals, such as Airbnb, due to the rise in popularity of these services. However, there are ambiguities in restrictive covenants that can make it difficult to determine whether an HOA can legally impose such restrictions.

One ambiguity arises when a restrictive covenant fails to explicitly bar commercial uses. In these cases, HOAs may still be able to limit short-term rentals, depending on how deed restrictions are phrased and the deference shown to HOAs by local courts. For example, in Michigan, HOA members have a common-law right to enhance the value of their property through contractual agreements concerning its use and development. This means that a covenant prohibiting short-term rentals may be permissible, as long as the HOA follows its stated amendment process.

It is important to note that each case must be examined individually according to local rules and governing documents. Homeowners should review the zoning regulations for their specific property and consult an attorney before renting out their home to Airbnb guests. This will help ensure that they do not violate any HOA restrictions and avoid potential penalties.

Overall, while HOAs may have the power to ban short-term rentals through restrictive covenants, ambiguities in these covenants can create room for argument and interpretation. Homeowners should be aware of their rights and responsibilities under HOA oversight and seek legal advice when necessary to avoid penalties.

The rights of homeowners vs. HOA members

However, if there is no language in the controlling documents of the complex that expressly restricts leases, transient occupancy, or short-term vacation rentals, the HOA cannot penalize owners for acting as Airbnb hosts until the HOA Board takes action to amend the regulations, usually by a majority vote. This is where the rights of homeowners come into play. Homeowners have the right to enhance the value of their property through contractual agreements concerning the use and development of their real property. A covenant prohibiting short-term rental arrangements does not impact a homeowner's ability to sell their property, but it may make it more difficult.

It is important to note that each case must be examined individually according to local rules and governing documents. Homeowners should consult an attorney to review these documents before renting out their home to avoid being penalized by the HOA. Ultimately, the rights of homeowners and HOA members must be balanced, with the goal of protecting the interests of all parties involved.

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