HOA Considerations for Short-Term Rentals

Homeowners’ associations offer resources, protection, and security to community residents. Unfortunately, these benefits come at the expense of some freedoms, including the ability to host short-term rentals in some cases. If you’re a homeowner and HOA member, you might be wondering whether you’re permitted to facilitate short-term rentals. The answer to this question depends on various factors, including the specific bylaws of your HOA and HOA insurance stipulations. Read on for more information on HOA considerations for short-term rentals.

Benefits of Short-Term Rentals

The first consideration an HOA should take into account is the potential benefit of short-term rentals. It’s estimated that short-term rental arrangements generate 30% more in income than traditional long-term leases. This is great for homeowners and HOAs because this surplus income can often be funneled back into the HOA. More income means more resources, and for some HOAs, this can be a remarkable advantageous arrangement. Even if this income is not directly returned to an HOA, it often empowers homeowners to invest in their own property, which reflects well on the community as a whole.

Disadvantages of Short Term Rentals

Though there are many benefits to an HOA short-term rental arrangement, there are some disadvantages, too. The most common complaint is the risk posed by frequent turnover amongst short-term residential guests. Many HOA members prefer to know their neighbors and maintain a tight-knit sense of community. This is made difficult by a home that has a new resident every week or month. This can compromise the security of a community and increase unwanted traffic, too, making it an unattractive option for some HOA members.

Legality of Short-Term Rentals

Legally, can an HOA restrict short-term rentals? This is a tricky question that many HOA members have attempted to answer, but generally speaking, yes. An HOA is permitted to restrict or prohibit homeowners’ ability to facilitate short-term rentals. This is because every homeowner who lives in an HOA signs a contract agreeing to the terms established by the HOA. If these terms indicate that short-term rentals are restricted or prohibited, homeowners are legally required to comply with restrictions.

Enforceability of Restrictions

Though an HOA is within its bounds to restrict or prohibit short-term rentals, HOA leaders should seriously consider the enforceability of such a measure. If a homeowner violates an HOA policy, what will the penalization be? If it is a trivial fine, it may not dissuade homeowners from continuing to violate the policy. HOAs need to establish clear and effective consequences that will prevent homeowners from hosting short-term rentals if it is against the terms of their community. Ensuring enforceability is key to maintaining a safe community.

About Kevin Davis Insurance Services

For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (855)-790-7393 to speak with one of our representatives.