I recently wrote about a trend in Pennsylvania case law that has permitted short-term vacation rentals, such as Airbnb, HomeAway, VRBO and others, in otherwise residential neighborhoods. In each of these cases, a homeowner rented out their single-family residential dwelling to vacationers, the municipality claimed the short-term rental was a violation of the Zoning ordinance, and the Pennsylvania Commonwealth Court said that the short-term rentals were still residential uses, not hotels or tourist homes. All of these cases said that if the municipality wanted to prohibit short-term vacation rentals, they needed to specifically and unquestionably prohibit that use.
Short-term vacation rentals are even more of a problem for condominium and homeowners’ associations. While each of the cases above dealt with municipal enforcement, the exact same analysis will apply when an association tries to prohibit short-term rentals. That is, is there something in the association’s governing documents that specifically prohibits short-term rentals? Many association documents place limits on certain kinds of leasing. If short-term vacation rentals are a problem with the association, they should review their documents to make sure that: (i) they have the ability to regulate leasing of units; and (ii) that something in their documents actually prohibits short-term leasing.
Both short and long-term leasing of units affects associations. I have previously written on this important topic. Associations can amend their governing documents to restrict leasing of units. This change can be made the same way as any other amendment to the governing documents. The association needs only sixty-seven percent approval (unless the documents specify a higher percentage) to make this change. Unanimous unit owner approval is not necessary.
If the association wants to restrict leasing, it should know that some restrictions are not allowed by the Federal Housing Agency (FHA). That does not mean these are not enforceable. It does mean, however, that depending on the way leasing restrictions are written, units within the community may not be eligible for FHA-originated loans.