October 2016 Condo Association News Roundup


October brings a number of interesting articles.  First, we have a big throwdown between New York State and Airbnb related to short term rentals.  On the opposite side of the spectrum, Arizona signed a law that encourage Airbnb use.  There’s also a depressing but important article on what happens when Condo Associations do not handle late fees and delinquency.  Here is the October 2016 Condo Association News roundup!

New York Governor Signs Bill Authorizing Fines for Airbnb Rentals

Warning: Paywall Article

Greg Besinger, Wall Street Journal, October 21, 2016

New York: the city of expensive and regulated housing.
New York: the city of expensive and regulated housing.

The Airbnb battles continue.  New York, which has been one of the biggest Airbnb markets, has also been aggressive in fighting the service.  The new law allows for fines of up to $7,500 for both Owners and Businesses (aka, Airbnb or VRBO) who advertise rentals of less than 30 days in multiunit buildings.  Such rentals are already a violation in New York City.  Airbnb has filed a lawsuit against the state, arguing they can’t be responsible for users of the site who knowingly violate the NY laws.  

It should be noted that New York’s aggressive stance towards Airbnb has caused the site to more aggressively punish violators by kicking them off the service.  How much of this is lip service as opposed to optics is not clear.  

New Arizona Law Could Affect Homeowner Associations

Janet Betts, Timothy Burr, Jonathan Loe, JD Supra Business Advisor, October 20, 2016

Phoenix: open desert and open rentals.
Phoenix: open desert and open rentals.

On the other end of the spectrum, Arizona signed a bill earlier this year which takes effect on January 1 which “prohibits municipalities from restricting or regulating the ability of homeowners to use their property as vacation rentals and short-term rentals, with certain specified exceptions,” according to the article.  CC&R’s are one of the exemptions, so HOAs and Condo Associations still should be able to ban Airbnb and VRBO.  For Associations who do not already have existing bans on short-term rentals, they would need to amend their CC&Rs, which is an exceedingly difficult process.

This Arizona law marks a big change in terms of promoting short-term rental services.  While CC&Rs are being protected for now, I wouldn’t be surprised to see legislation proposed – and potentially passed – in 2017 that overrides Condo Acts or the like to mandate short-term rentals.  Communities need to make sure they understand the issues  and think about pragmatic policies around short-term rentals.  

Residents Upset Over Extra Homeowners Fee to Cover Hundreds Who Defaulted on Dues

Manolo Morales, Khon 2, October 14, 2016

This is an article that breaks my heart, and highlights one of the greatest challenges for Associations and Owners.  The Village Park Association in this story has such a delinquency problem that they are assessing an extra $80 per household to pay their bills, causing many Owners to feel that such a charge is unfair.  The unfortunate reality is that an Association must pay its bills.  When some Owners fail to pay their dues, the burden does shift to others.

To fight this, the Association needs to have strong delinquency policies to ensure Owners pay and to punish habitually delinquent Owners.  The Association also needs to budget its annual dues assuming some level of delinquency so Owners aren’t hit with a surprise bill.  This news story shows exactly what happens if delinquency runs rampant – honest Owners are forced to pay.  

That’s all for the October 2016 Condo Association News! Did you know that you can get even more news articles by signing up for our mailing list?  Mailing list subscribers get monthly bonus news stories and analysis.  Join the list today!

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