Mr.
My Prescott AZ HOA Planned Community CCR’s state: “no lots or structures shall be used … for business or commercial purposes of any kind”.
My HOA is allowing residences to be used as VRBO (AirBnB) because both the HOA and HOA attorney say a VRBO (AirBNB) is NOT a “business”.
The Prescott Tax Code definition of “Business” includes AirBnBs and requires a business license to operate a VRBO among other business requirements, insurance, neighbor notification, emergency contact.
Can you explain if this is a correct interpretation of our CCR’s restricting business purpose of any kind by our HOA Board and Attorney that a VRBO (AIrBNB) is NOT a business?
One of our Board members is operating an HOA property as a VRBO (AIrBNB) and our HOA is allowing 7 VRBO’s to operate within our HOA Planned Community.
Thanks for any clarification on this.
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Rory,
While I understand the concerns relative to short term rentals and how they can negatively impact community life. The courts have consistently ruled that restrictions contained in covenants relative to business activity do not apply to the residential leasing of a home in those communities, nor does it apply to business like realtors of any other business that do not impact the community in any way. So, your community’s limitation to business operation do not apply to AirBNB short term rentals. Every homeowner has the absolute right to use their property in any way they chose unless existing restrictions in recorded covenants prevent that use. Because someone else in the community does not like that is totally irrelevant.
If your CC&R’s have restrictions on rentals that have time limitations greater than one week, that would specifically apply to this situation and would effectively limit the ability of any homeowner from renting out their home for anything less than the time restriction in the CC&R’s. Since 2016 when state law prevented municipalities to regulate short term rentals many associations rushed to the approach to apply restrictions in their governing documents that did not exist prior. Those were all inappropriate and invalid and when challenged in court eliminated by the court, because to apply such a restriction that did not exist prior to that point would have required the unanimous consent of all homeowners.
Look elsewhere in your CC&R’s for rental restrictions that may apply and approach this issue this way. Just know that you cannot add any restriction to any property that was not reasonably foreseeable when anyone bought that property without the unanimous consent of all homeowners. You can modify your CC&R’s with restrictions that apply to future buyers but not to current owners.
Dennis
Rory,
One more point. What I’ve always recommended to communities is to focus on the behavior instead of the property right to use personal property in any way they wish. Your community is free to establish rules relative to the noise and behavior of short term renters that would negatively impact the ability of any other homeowner to use and enjoy their property or that of the community. Those behavior based rules are how communities without use restrictions should approach this problem, and fine the homeowner based on violations of those rules by their tenants.
Dennis