Should HOAs Allow Short Term Rentals?

The safety concerns associated with short-term rentals have become increasingly apparent in recent years as HOAs have decisions to make. Many guests report feeling unsafe in their accommodations, and many hosts have realized that inviting strangers into their homes comes with risks. These are just a few reasons why short-term HOA rentals are often prohibited. A string of short-term tenants can disrupt the peace of a community, expose residents to increased risk, and violate the association’s bylaws.

Short-Term Rentals: HOAs with a Decision to Make

You might be wondering, though — do HOAs allow short-term rentals if a homeowner oversees it? More importantly, should HOAs allow short-term rentals? Consider the pros and cons that HOAs should take into account.

Pro: Increased Revenue Can Help Residents Pay Dues

Any HOA leader knows that collecting HOA dues is often an arduous task. You usually have to remind residents of their debt, penalize late payments, and chase down payments. Some residents will inevitably fall behind simply because they don’t have the funds to pay. Allowing short-term rentals can increase your residents’ revenue and make it more likely that they will stay up-to-date on their HOA dues.

Con: There Is Minimal Vetting of Guests

Many HOA members object to short-term rentals based on the assumption that rental platforms don’t do background checks on guests. This assumption isn’t entirely correct, but guests are typically subject to low vetting standards before booking a short-term rental. Airbnb does conduct background checks, for example. Background checks can have limitations. Thus, the company does not guarantee it can identify guests who have felony convictions or sex offender status. 

Pro: Short-Term Renters May Be Better Than Long-Term Renters

Although long-term tenants of an HOA property may receive more thorough vetting than short-term guests, this doesn’t necessarily mean they will be better. Only allowing long-term guests can make an HOA vulnerable to prolonged problems if the tenant in question happens to be troublesome. On the other hand, short-term tenants are often gone before they can inflict much harm.

Con: Short-Term Rentals May Not Be Insurable

HOAs must also consider the liabilities that could emerge from these situations. In most cases, an HOA insurance policy would protect the community from any such liabilities, but policies like this may not extend to short-term renters. Community members could be held responsible for any property damage, injuries, and other significant incidents that a short-term renter causes. Subsequently, if an HOA does choose to permit short-term rentals, it must get the right insurance.

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.