J. Patrick Sutton Cases & Issues Blog

MORE HOA Leasing and Renting Crackdowns

HOA's Boards are unilaterally deciding to clamp down on short-term rentals even when the governing documents don't allow that or the HOA has been allowing such rentals for years or even decades. There are good defenses and counterclaims to such suits.
Some HOA's are gunning for owners who rent out their homes for short terms, such as vacation rentals. In many cases, the HOA governing documents either don't permit the HOA to ban such rentals or are just too unclear for the HOA to assert that it can. HOA's do it anyway, which leads to expensive litigation that is easily avoided. All the HOA has to do is get its members on board with amendments to the governing documents. If the members don't want to restrict short-term rentals, then the initiative will fail -- as it should.

Though homeowners have long been renting out their homes as they see fit, the advent of the internet and home rental sites like HomeAway has made it easier for renters and homeowners to connect. Last year, when I had to move my family out of our home for a week for some major repairs, I got on HomeAway and found a house in my own neighborhood. This allowed the kids to continue to walk to school and us to stay in our regular neighborhood rhythm. When we visit Seattle, we now use HomeAway or VRBO too. It's a great service.

Unfortunately, the fact that it's now so ridiculously easy to rent out your house also means that new sorts of problems are going to arise. It's reasonable for neighborhoods to feel threatened by transient home renters who come and go every weekend. But it's not reasonable to outright deny homeowners the important property right to rent out their homes, if they otherwise have that right. This is particularly true for people who buy homes in order to rent them out, such as vacation houses and cottages. If the bundle of rights these people purchased included the right to rent, or else didn't plainly restrict it, that can't just be taken away without specific laws or else, in the case of HOA's, changes to the HOA governing documents.

I've been handling cases where homeowners clearly have the right to rent out their homes, but HOA boards -- not the members as a whole -- unilaterally decide, without support in the governing documents to ban short-term rentals. Because in these instances there is no principled basis for deciding what constitutes a "short term," the HOA boards just make one up -- 30 days, 90 days, what have you.

An HOA board that's willing to go this far typically isn't willing to negotiate. Such boards just start filing lawsuits against homeowners. When I look at these cases, I look for evidence that the HOA has been allowing short-term rentals (waiver), that the governing documents either affirmatively allow them or aren't clear (such restrictions on property use have to be very clear in Texas to be enforceable), and that my client relied on the state of affairs when they bought their property. All of these constitute either a defense to an HOA lawsuit or a counterclaim that my client can assert.
J. Patrick Sutton Cases & Issues Blog