3117 Whiting Ave, Charlotte NC 28205 · Member since 2022 · 5 posts · 2 votes
I have a friend who has a str in an area where it is prohibited, but he is one of those guys who shoots first and asks questions later.
The city has cited him with a cease and desist for the short-term usage of this property. He was presented the idea by another friend of making a private membership association where the LLC that owns the STR leases it to the membership association for 5 years, and then anyone (guests) who has the key to this association can access any one of the properties (he has 3 in total).
- this is one of those "I'm not renting the house, I'm renting the parking space, and the house just is accessible for anyone renting the parking space" mentalities.
Has anyone accomplished something along these lines?
Sounds like an incredibly dumb idea for your friend to attempt. The City is not going to look at his house any differently just because he calls it something different. To them it will be a Short Term Rental. Period.
And when you violate a Cease And Desist Order from a municipality, you will pay consequences. Ask him if he's feeling lucky.....?
Sounds like an incredibly dumb idea for your friend to attempt. The City is not going to look at his house any differently just because he calls it something different. To them it will be a Short Term Rental. Period.
And when you violate a Cease And Desist Order from a municipality, you will pay consequences. Ask him if he's feeling lucky.....?
I don’t have the experience you’re looking for, but I think you already know this is a bad idea. If he ignores or tries to circumvent the C&D he’s going to end up in court, because the city isn’t just going to say “oh yeah good idea that’s totally legal.” So think about whether this argument would pass muster in court. For more reasons than I care to write out, it clearly would not.
Tell your "friend" he is not as smart as he thinks he is and he will be much better off in the long run learning to play by the rules. If he has to break rules to make a profit then he needs to take the time to learn the in and outs of investing before actually investing.
I have a friend who has a str in an area where it is prohibited, but he is one of those guys who shoots first and asks questions later.
The city has cited him with a cease and desist for the short-term usage of this property. He was presented the idea by another friend of making a private membership association where the LLC that owns the STR leases it to the membership association for 5 years, and then anyone (guests) who has the key to this association can access any one of the properties (he has 3 in total).
- this is one of those "I'm not renting the house, I'm renting the parking space, and the house just is accessible for anyone renting the parking space" mentalities.
Has anyone accomplished something along these lines?
The question should really be whether or not STR's are actually prohibited or not. POA's and the like send out cease & desist orders all the time that are not justified under state or federal law. These cases are being litigated all over the country and in many cases have gone in favor of the STR owner. Insinuating that someone is going to go to jail if they don't comply with a cease & desist order is presumptuous and I would argue it sends the wrong message regarding the STR industry and it's potential investors.
Thanks for all of these replies. He is a good friend and I'm more disappointed in him that he selected a property without doing all of his research on STR regulations in the area before pulling the trigger, but I wanted to at least tell him I checked around even though i knew it was a far-out there argument from the very beginning.
He has even informed me that he has a Private Membership Association Advisor who I have asked to speak directly with, but he has yet to provide that person's info. If I ever get the chance to speak with them, I will report back here on their very far-off legal position.
Thanks for all of these replies. He is a good friend and I'm more disappointed in him that he selected a property without doing all of his research on STR regulations in the area before pulling the trigger, but I wanted to at least tell him I checked around even though i knew it was a far-out there argument from the very beginning.
He has even informed me that he has a Private Membership Association Advisor who I have asked to speak directly with, but he has yet to provide that person's info. If I ever get the chance to speak with them, I will report back here on their very far-off legal position.
Thanks again y'all!
You're being a good friend, maybe too good. He will not learn by you doing his homework for him. Might not even hurt to let him try it and pay some consequences...that is the best learning experience.....
Thanks for all of these replies. He is a good friend and I'm more disappointed in him that he selected a property without doing all of his research on STR regulations in the area before pulling the trigger, but I wanted to at least tell him I checked around even though i knew it was a far-out there argument from the very beginning.
He has even informed me that he has a Private Membership Association Advisor who I have asked to speak directly with, but he has yet to provide that person's info. If I ever get the chance to speak with them, I will report back here on their very far-off legal position.
Thanks again y'all!
Hey, David. I'm digging into this as well. Is there any news from your friend by any chance? If he's had success, I'd love to get in contact with him.
This PMA idea does seem far-fetched, but I'm open to any ideas before pulling the plug on my STR residence.
Hey @Aaron McKenzie, did you read the replies? Why would you want to try something is most likely against the regs. I will only serve to annoy your neighbors and the city.
This is a losing strategy and will probably have you LTRing the place.
Hey, Michael. I'm considering all my options before resorting to LTR. I rather live next to an STR than an LTR, so I'm actually do my neighbors a favor (whether they perceive it or not).
You're actually not doing them a favor if they don't want to live next to a STR. You might as well say you would rather live next to a ar than a rental property so you're doing them a favor by opening a bar next to them.
Turn it in to a LTR, turn it in to a MTR, move in and househack, sell it, give a lawyer $10,000 retainer to fight it and when you lose go back to options 1-4. Ps. Do that quickly so you're not already facing several thousand in fines (usually assessed per day it was available as a STR).
Did they buy this property because they’re a narcissist who thinks laws don’t apply to them, or because learning first is too hard? This was a cheap mistake with several solutions. Learn and move on.
Bill, we can go back and forth about this and I can describe all the problems that can ensue from LTRs. So I can say STRs are much more beneficial for my neighbors whether they believe that to be the case or not.
And there was no mistake on my part. I was fully aware of the risks and understood the situation. I'll say plainly I made the right choice buying the home.
Meanwhile, I'm going to explore the PMA approach. Seems far-fetched, but we'll see where it goes.
Sounds like an incredibly dumb idea for your friend to attempt. The City is not going to look at his house any differently just because he calls it something different. To them it will be a Short Term Rental. Period.
And when you violate a Cease And Desist Order from a municipality, you will pay consequences. Ask him if he's feeling lucky.....?
I second this! People tend to forget that the only people who can take your property and get away with it are the government. As a rule, I try not to mess with any entity that has a standing army (the police) to enforce its decisions with violence.
Sounds like an incredibly dumb idea for your friend to attempt. The City is not going to look at his house any differently just because he calls it something different. To them it will be a Short Term Rental. Period.
And when you violate a Cease And Desist Order from a municipality, you will pay consequences. Ask him if he's feeling lucky.....?
I second this! People tend to forget that the only people who can take your property and get away with it are the government. As a rule, I try not to mess with any entity that has a standing army (the police) to enforce its decisions with violence.
Let's not disparage the police. They enforce the laws on the books and most of the time don't need to use violence to accomplish enforcement.
Great thread here. Looks like most are not in favor of this approach. Our city recently issued an urgent ordinance restricting STRs and I missed the boat (for a number of reasons)to gain proper licensing and it was capped within 30-60 days.
After consultation with my lawyer, the approach of membership/association was recommended. Based on the law of memberships and associations setting up your residence in this way would change the way the business is structured. Hence, LLC rents to the membership/association. All members pay a nominal membership fee and agree to a membership agreement.
While I can appreciate the resistance to standing up to municipalities I also appreciate the opportunity to stand up to them to reaffirm your rights as a business owner.
Also, let's not forget that the rationale for these ordinances is poor STR operators and LTR accessibility. There may be some lobbying from hotels corps and real estate groups as well. The bottom line there are many operators out there that run a tight ship and have zero complaints and great ratings that are now being pushed around by these municipalities. Yes, we could easily transition to an MTR or LTR but Im not sure I want to bow down and lose out on a great business venture because the city wants to impose new regulations. At the end of the day, I agree that this is a risk/liability/profitability decision.
Holistic Health Care doctors use a PMA when the FDA tells them they can't offer anything other than prescribed drugs. Chiropractors have used PMAs to get started when Chiropractic care was seen as fringe medicine. Restaurants use them to serve alcohol in dry counties.
A PMA is nothing more than contract law where two people engage in a contract and in their 1st amendment right to association tell the government they have NO jurisdiction. The government is there to make laws to protect the public. You change your status from public to private when using a PMA.
I'm sorry, but those of you saying this won't work and, "ask him if he likes the color Orange" are way off base here. Firstly, he's not going to go to jail. They could put a fine in place, but they're not just going to arrest him.
How the PMA process is different is fundamental. He's actually COMPLYING with the cease and desist order by creating a PMA. He's no longer looked at legally as a public facing short term rental and therefore effectively complying with the cease and desist order. He isn't changing the name, he's changing the structure. Just like going from a short term Airbnb to corporate rental would be a structure change. Sure, emplyees use the property, but the company has an annual lease. The employees are not subleasing, they are using the property as controlled by the company and employees of the company have the right to use a company resource. In a PMA you create a private club that's non-legislative in nature. There is an annual lease from the owner of the property to the club so, no STR happens. Now the club controls it just like a Country Club would and the only people able to use the property are members of that association. In the same way an employee of a company would, a member of the club does. There's no sub-lease. In the Airbnb profile the listing is "Members Only - This property is only available to members of our association. Not a member? Ask about becoming a member today". Club Med charges a $100 membership fee for this reason. You MUST be a Club Med member to stay at a Club Med property.
This strategy is 100% not like renting a parking space. That was a terrible analogy. This strategy is not being the same as a Short Term Rental but rather being viewed as a an annual lease. Being Non-Legislative means they can't shut down your Club like they could shut down a business so your constitutional right to provide products and services inside the membership is intact.
Many businesses that learn of Private-Domain rights will stop doing business in the public sector because their entities are no longer swayed by the ever changing rules and regulations of the legislature.