As summer approaches, Boards may see a rise in short-term rentals in their communities
For those communities whose Declaration or By-Laws restrict leasing to some degree, the question becomes whether the Board can and should enforce these restrictive provisions. One case is illustrative, proving that a community may prevail in an action against a home owner for illegal rentals.
A home owner within a homeowners association in the Lake George area regularly rented his home, usually on a weekly basis, and in violation of the community’s governing documents. The Board of Directors sought an order of the Court preventing the home owner from these rentals. The community’s Declaration expressly states that the right to sublet individual lots shall be limited to one-year rental terms only. The Declaration goes on to state that no daily, weekly, or monthly rentals shall be allowed. Thanks to meticulous record keeping by the defendant’s neighbor, the Board easily proved that the home owner violated the leasing provisions on several occasions by renting his unit for varying lengths of time, always shorter than one year. The Court found in favor of the Board since there was “simply no question that the Declaration prohibits daily, weekly and monthly rentals of homes within the subdivision, as well as provides for an award of reasonable expenses and attorney’s fees to the prevailing party in any lawsuit seeking to prevent a violation of the Declaration.”
The Court initially awarded the HOA a preliminary injunction prohibiting the defendant from renting the home for less than a year
When the defendant nonetheless rented the home for six months, the Court found the defendant home owner guilty of civil and criminal contempt, assessing a fine of $25,000.00. Ultimately, the Court awarded summary judgment to the HOA and a permanent injunction prohibiting defendant from renting the home for less than one full year at a time.
For those communities where the Declaration and/or By-Laws expressly prohibit rentals to any degree, the decision to bring an action against a home owner is probably an easy one, especially when the provision incudes the right of the association to collect legal fees.
What about those communities for which there is no lease restriction provision?
If short-term rentals are becoming an issue, the Board may want to consider an amendment to the Declaration and/or By-Laws. Adding to that amendment a provision that a home owner in violation of the rule must pay any legal fees incurred by the Board will make it a lot easier for the Board to enforce the rule. The Board of Directors in this case easily prevailed because their Declaration, i.e., the contract between the homeowners association and each home owner, expressly included the lease restriction provision and the opportunity for the HOA to recover its legal fees. Compare this to another where the Board’s right to attorney’s fees was denied since the governing documents did not expressly allow for it.
Mayfair Resort Homeowners Assn., Inc. v LG Lakeside Living L.L.C., NY Slip Op 50391(U), decided May 4, 2021, Supreme Court, Warren County; Board of Mgrs. of the 207-209 E. 120th St. Condominium v Dougan, 2022 NY Slip Op 31491(U), decided May 4, 2022, Supreme Court, New York County.
