Has anyone fought an HOA's ruling against AirBNB

7 Replies

Hey I have a condo in Milwaukee that I have been using as an airbnb investment property. I recently received a letter from the HOA stating that AirBNB is now not allowed and will face a $500/ day fine.

I was wondering if anyone else has come across this issue. The property was a cash cow for us but does not make sense as a traditional rental. Is there any legal action we can take to argue this? I see the loss of income as damages.

Also, what legal grounds would an HOA have to enforce a penalty?

Thanks for your responses. Hope none of you are going through this.

It is likely a violation of the condo rules.  Also, it probably violates the terms of your mortgage....and do you have it properly insured...as a typical owner occupant policy, nor a typical rental policy would cover short term rentals. 

I sold 3 condos this year from investors who got fined from their condo associations for AirBnBing, and none of them were successful in their battles with the HOA, nor with their battles to get the fines removed.

Thanks for your response Russell. Also, really liked your episode! So cool to see you active on here.

The condo is owned outright. I believe the policy covers short term rentals but I am not sure. The agent is a friend and is aware of how we use the property. 

Interesting on the Airbnb rulings in your experience. I figured that would be the case but just thought I would check it out.

Originally posted by @Frank Manning :

Thanks for your response Russell. Also, really liked your episode! So cool to see you active on here.

The condo is owned outright. I believe the policy covers short term rentals but I am not sure. The agent is a friend and is aware of how we use the property. 

Interesting on the Airbnb rulings in your experience. I figured that would be the case but just thought I would check it out.

 You buy the property subject to the bylaws, which can be modified at any time.

This is exactly why I am against condo investing.  Did you buy it solely with the AirBnB model in mind?  Did the bylaws ban it when you purchased or was it added later.  Neither will change anything, just wondering 

@Frank Manning I haven't had any luck with my HOA either. The only thing I can think of would to get the other owners on board and then call a board meeting voting in favor of it. Also if you want that Airbnb money you can turn your condo into a corporate rental and get about what you make a month on average as an STR.

You can't 'fight' an HOA. They will win. Every time. In fact, you are part of the HOA, so you're fighting against yourself. Think about that.

What you can do is talk to the board. In most cases, that's all they want. They are community members just like you, who have volunteered time to help run the business of the community. Many times there is resentment there for community members that do not volunteer, or seem to even care, about the community rules and/or property values.

Take the time to go to a board meeting and explain your situation. Mea culpa, you didn't read the rules well enough, ask for extra time to figure out your exit strategy (which you really should have had figured out prior to buying the property). Get clarification on what is the minimum number of consecutive days approved for rental. If it's 30-90, you may very well be able to keep going as a corporate rental like Myka stated above. However, I wouldn't volunteer this information and I would keep the leases handy in case they again accuse you of violation of the rules. If they are not on board with STR or even Corporate/Nursing rentals, this is likely to considered a 'loophole' and they may attempt to close it by extending that out to minimum 6 or 12 month leases.

Don't let things get contentious when you meet with them. Again, this will not work. If anything, try to be friendly enough that they'll want to invite you to become a board member when a seat opens up. It will help if you start attending the monthly meetings. You'll likely be the only resident that does, except for the occasional person that shows up with a complaint. This will require about 1 hour of time per month, and the payback can be great.
Once you're on the board, you can convince them why this is good for the community, or at least why it's not a bad thing, and help to shape the rules to allow for STRs. In fact, if you're attending regularly, you may not even need to become a board member to get to that point. As long as you're attempting to work with them, not against them, you may get what you want.

After that, you'll just need to worry about the next step up in local government, and if your city/county/etc. plans to restrict STRs in any way in the future.

You say using it for AirBNB is "now not allowed".  What happened here?  Was this always prohibited, but the prohibition was ignored and has started being recently enforced?  Did they just discover you were doing it and are enforcing a provision that's always been in the bylaws and always enforced and you just hadn't been caught?  Did they change the bylaws?  If there was a change in the bylaws or enforcement policy, were you aware that was being considered?  Did you get involved?

The downside to HOA properties is you always have a business partner who can dramatically affect you yet who's interests aren't really aligned with yours.

@Frank Manning

I feel your pain…. Just got shut down by my HOA last week.

I stood up in the HOA monthly meeting and spouted a speech about how the HOA is raising the dues and my taxes are going up and I'm having a hard time paying my mortgage (the mortgage one was a lie). The point is they didn't care…. I even went further and said without the Airbnb money I will have to go into foreclosure, which will affect the entire build. They told me to move out and rent it out, I again lied and said the rent will not cover the mortgage. They then suggest I sell my unit or get a roommate and then quickly moved on to another subject leaving me still standing up and awkwardly sitting down not able to say anything else on the matter....

Luckily I was just using Airbnb to get additional income while I looked for my next deal, the condo does cash flow very well as a regular rental which was the plan all along. But again, they didn’t care at all, even when I said I would go into foreclosure….. 

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