Make it Your Misson: A New Year's Resolution for HOA Boards
December 14, 2015
Condo associations grappling with short-term rentals
October 5, 2015
The majority of condo declarations, even those that allow longer-term leasing, prohibit transient occupancy.
After Kevin Marvinac enrolled in graduate school and his girlfriend joined a nonprofit organization, money was tight. So they listed the second bedroom in their North Side condominium as a short-term rental on the home-sharing website Airbnb.com. That was March. Since then they have lodged about 40 guests from around the world. Their interactions have been overwhelmingly positive.
"The money is nice, but it's not No. 1," Marvinac said. "The experience is. We have had amazing people stay with us. We love hosting and being a concierge to our guests."
Writing rules your community association can live with
Before Marvinac signed up, he consulted with the five-unit self-managed condo association. The governing documents permit short-term rentals if the board consents. Marvinac, the board president, explained how the program works and his screening process and security measures. The board agreed with conditions: Marvinac must provide guest names and reservation dates ahead of arrival, and he must accompany them on the rooftop deck.
Other associations are not as obliging. Some are aggressively tracking, fining and shutting down owners who rent out their units by the day. The majority of declarations, even those that allow longer-term leasing, prohibit transient occupancy, said association attorney Michael C. Kim of Michael C. Kim & Associates in Chicago.
"Transiency has a negative connotation," he said. "It brings in potential security risks because people who are there for a day or two may have a casual disregard for the property and take less care of it."
Many owners prefer to live within a more permanent stable population that shares a sense of community and investment, he added.
"The concern is they don't know who is coming and going," said Jim Stoller, president of The Building Group management company in Chicago. "Owners who want this to be their primary residence don't like the idea of high turnover or that keys for common areas are more accessible."
None of Stoller's client associations permit short-term rentals. His management team regularly scours rental websites for listings in those buildings, and they review security camera recordings. Building personnel watch for unknown visitors with luggage.
"It's sort of a cat-and-mouse game," he said. "When we are aware of it, we go after it."
Short-term rentals are a "major issue" at downtown condos managed by Tairre Dever Sutton, president at Des Plaines-based Tairre Management Services. One board recently sent an attorney-drafted letter to its residents. The letter is a strong reminder that short-term rentals are disallowed and that daily fines of $300 may be assessed."I now monitor the (Internet) for buildings I have caught people staying in," she said. "So it adds a lot of time to my management of properties as well."
Stoller said buildings with high percentages of investor-owners may be more tolerant of short-term rentals to help owner-investors maximize their income. But as the real estate market improves, the number of owner-occupants is increasing, and associations are less inclined to allow any form of leasing. "Ten years ago we had a very different picture," he said. "You'd rather have a renter than a foreclosure. Today we see very few foreclosures. Buildings feel they don't have to make accommodations."
Marvinac's hope is that condo associations can find ways to co-exist with owners who travel the short-term rental route. Perhaps these owners could share their revenue or kick into a common-area beautification fund, he suggested."When you completely shut the door with no negotiation, you have people go off on the side furtively and do things against the bylaws," he said. Marvinac's quest for positive guest reviews inspires him to beautify his condo and keep it in top repair. Doing so could eventually help property values for his entire building, he said."I'm seeing Airbnb makes sense, but it's not right for every building," Stoller said.