Short Term Rentals in Communities-a Constantly Changing Landscape

By:  Amy K. Tinetti, Esq., Hughes Gill Cochrane P.C.

Rental restrictions have been a topic of conversation among those living in and serving community associations for several years.  However, in the past few years the conversation has shifted from things such as rental caps to specific provisions regarding short term rentals.  Associations are understandably concerned about short term rentals given that associations are “shared risk, shared rewards” entities, owners may have expectations about living in a residential (i.e., primarily owner-occupied) community,  most CC&Rs prohibit “transient” housing, associations are self-governing and associations do not have a legal relationship (or a direct right of enforcement) against tenants.  Associations are struggling with whether to prohibit short term rentals altogether or permit short term rentals under certain circumstances (as evidenced by Watts v. Oak Shores Community Assn. (2015) 235 Cal.App.4th 466).  But associations are also dealing with increasing regulation on the part of cities that are struggling with how to address the ever-growing short term rental market.

Cities are also struggling with how to regulate short term rentals.  Some cities, like some associations, are banning short term rentals altogether out of a concern over “hotelifying” their cities and the neighborhoods within them.  Other cities, such as San Francisco, see short term rentals as a source of tax income, and have enacted strict legislation allowing short term rentals, but requiring hosts to register with the City, rent their homes for a maximum of 90 days per year, and pay hotel taxes to the City.  Despite the fact that the City is allowing short term rentals under these conditions, the San Francisco legislation permits community associations to prohibit short term rentals.  Recent changes to the San Francisco legislation requires Airbnb to police its hosts by requiring that hosts register with the City as a condition to being listed as a host on the Airbnb site.  Airbnb is taking steps to challenge this legislation; we know that Airbnb has a great deal of money and is willing to spend it to oppose legislation like that recently passed in San Francisco.

The city of Dana Point, which had adopted legislation that, among other things, allowed community associations to prohibit short term rentals, recently decided to relinquish authority over the issue of short term rentals to a state agency, the California Coastal Commission.  The Coastal Commission, incidentally, in places such as Oxnard, has issued cease and desist letters to associations that have adopted restrictions on rentals for fewer than 30 days, on the grounds that such restrictions limit overnight housing accommodations at the beach.  Nearly 4,000 residents of Dana Point, upset about the City Council’s decision to cede authority to the Coastal Commission, recently petitioned for a referendum.  Following validation of the signatures, the City Council will have the option to cancel the ordinance and the related zoning change or let the voters decide.

Short term rentals are not going away and, given the money at stake at the players at issue, this is going to be a hot topic (with very few clear answers) for the immediate future.  There is not a “one size fits all” approach; associations will need to examine what is in the best interest of their members given the location and general makeup of the community.  Those who live in and work with associations should also be on the lookout for “partnering programs” between short term rental platforms such as Airbnb that will allow associations to have more information about short term rentals in the community and provide the associations with a source of income.  We can also expect that CAI and CLAC will continue to monitor any legislation in this area that impacts community associations.

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