All Forum Posts by: Paul Sanders

 They currently have about 100K in the bank that was to be used for a common space amenity, but I suppose could be used for enforcement legally.  I'm not sure battling them legally will get the results I need, only possibly delay it.  Thanks for the feedback! 

I purchased a property in an area with an HOA in 2020 in a ski town with the intent to build a home on it to live in during retirement (15 years away) and rent until then using it occasionally when not rented to cover the mortgage. At the time of purchase, there were several STR rental properties active in the neighborhood. Fast forward to today and one of those existing STR's has become a nuisance to the neighborhood and so the HOA board is planning to ban all STR's using what they believe are provisions in the CC&Rs to justify it and have consulted an attorney to validate the legal standing on implementing this ban.

The CC&Rs were written in 1998 (before STR's was even a thing) and have these sections being cited by a couple members of the board as justification for banning the rentals (note there is not anything explicit about STR's in the documents)

Section 1 – Single Family Residential – states in part, “… Lots… shall be used for no purpose other than residential purposes.” The section continues, “… Bed and Breakfast establishments, boarding homes, dormitories or multiple units, or any other similar lodging arrangements are specifically prohibited.”
Section 3 – Commercial Use – states, “…no part of a Lot or Dwelling shall be used or caused to be used or allowed or authorized in any way, directly or indirectly, for any business, commercial, manufacturing, mercantile, storing, vending, or other such nonresidential purposes…”. The exception is the Association may, “…authorize such services on the Common Areas as it deems appropriate for the enjoyment of the Common Areas or for the benefit of the Members.”
Section 5 – Nuisance – states, “No noxious or offensive trade or activity shall be carried on upon any Lot … which may be, or may become an annoyance or nuisance to the neighborhood, or which shall, in any way, interfere with the quiet enjoyment of each of the Owners of his respective Dwelling…”

Feel free to think, "you fool! Never buy in an HOA for just this reason!" but replying to my post with that won't really help but as an example to others.

What I’m looking for is suggestions on how to deal with this.

A couple additional facts that might be helpful, include that the HOA president rented his home out for 10 years (on Airbnb). All the other subdivisions in the city allow for STRs. Only about 30% of the subdivision is built out. When this was discussed at the last HOA meeting 2 weeks ago, only 18 lot owners out of 65 total were represented on the meeting, about half of the attendees were good to allow STR's while the other half were opposed. It takes 2/3rds of the owners to update the CC&R's to either update to allow STR's or to specifically ban them.

For curiosity I asked Co-Pilot about it and got this response:

The language in your CC&Rs stating that “no business or bed and breakfast is allowed” can indeed impact the interpretation of short-term rentals, but it may not be as straightforward as it seems.

Definition of Business: Courts have often ruled that short-term rentals (like those listed on platforms such as Airbnb) do not necessarily qualify as a “business” in the traditional sense. This is especially true if the CC&Rs do not explicitly mention short-term rentals1.

Bed and Breakfast Clause: The mention of “bed and breakfast” typically refers to properties that operate similarly to a commercial establishment, offering lodging and meals. If your CC&Rs prohibit bed and breakfasts, this could imply that any rental activity that resembles a B&B might be restricted. However, short-term rentals where the owner is not providing meals may not fall under this definition.

Legal Precedents: Various court cases have established that renting out a home for short periods does not automatically convert it to a commercial use, especially if the property is still being used primarily for residential purposes.

HOA Enforcement: If the HOA decides to enforce this clause against short-term rentals, it may need to clarify its stance and possibly amend the CC&Rs to explicitly include or exclude short-term rentals to avoid confusion.

In summary, while the CC&Rs may suggest restrictions, the interpretation can vary based on legal precedents and the specific wording of the documents. If you’re concerned about this issue, it might be beneficial to consult with a legal expert familiar with HOA regulations in your area.

Any suggestions?

Do I spend money on an attorney to try and fight this?

Do I give up and sell the property?

Do I try to reach out to the owners and try to gather enough support to amend the CC&Rs to allow STR's?

Do I try to rent it for 8 days or more (MTR) but for the same price as I would a 3 night minimum?

Do I convert to a LTR knowing it won’t cover the mortgage fully?

Do I ignore them until some legal proceedings force me to stop doing it as STR?

 I looked at NoiseAware based on Michael's suggestion and while it does seem to fit the need really well, I am starting to get monthly fee fatigue with all the subscriptions companies sell to help you manage your rentals!  I suppose there isn't any way around it, but I can't help but think back to the old stories about the banks and tool suppliers of the miners in the gold rush making all the money and the miners going broke and dying in their mines! 

 Thanks for the info, I'll check on that!

Hi all, has anyone dealt with noise complaints at their SRT and looked into a possible solution such as a noise / decibel level monitoring system or device that will alert you if guests get too loud? Parties are a big concern in this neighborhood by the full-time residents and HOA, and I wondered what others might be doing. How have you handled this?

 Thanks @Brooklyn McCarty, I've confirmed that the HOA and town regulations support SRT currently and have heard no news otherwise. There are a couple homes in the area already set up as SRT. In fact, according to AirDNA, the best performing rental in the area is a 7 bdrm / 6 bath home nearby this property. The only existing properties in the area are selling for 20% more than I can build for.

Yes, late April and May are considered "mud" season up there and folks turn their attention to summer sports at that point.  @Ryan Moyer, do you generally stay there with just your immediate family? I ask because I think some families look to rent a house vs a condo to stay together and split costs. I also find the HOA dues to be considerable in owning / renting the condos and always going up, where building a house, I won't have to deal with that. Maybe I'm putting too much weight on that?

Thank you @Michael Baum for the reply.  

Timeline is tricky in a mountain town like Brian Head.  There has been lots of snow there this winter (good for our drought).  Excavation on the site would ideally be in May / June and I hope to have everything completed in November to capture the bookings for ski season next winter.  Certainly that is an ideal timeframe and if delays occurred on the exterior structure, it would have to be finished the following summer.

The home would be 6 bedrooms, 4 baths, almost 3,000 sq ft.  I think the build cost would be in the neighborhood of $250 / sqft.  

Years ago, I fell in love with the Brian Head Utah area as it's close to several national parks, skiing in the winter and lots to do in the summer. I tried to buy a place before the pandemic frenzy took off and was outbid on several properties. Instead, I settled on a property (raw land in a subdivision) on which I could build a home with the goal of renting it out and eventually retiring there (~15 years from now). However, the costs of building have also skyrocketed and with rates climbing I feel like I'm being squeezed out again. I've started the process of securing a conventional construction loan, have a builder lined up and am ready to go once the snow melts. I've researched the other STR's in the area using AirDNA and feel like it's a market that's growing but also seeing more competition coming into the area as a result. I've read through many starter blogs on BP, attended several webinars on this website, and tried to do my due diligence. I'd like to cover the mortgage and expenses of the property and use it a few times a year myself but am increasingly worried about the revenue being able to cover the costs due to rising rates and the large upfront investment of building the home. I have the equity in the property to cover the 20% needed for the loan and the DTI, but just barely.

Reading in the forums I don't see many investors following a similar path, typically instead purchasing an existing property.  Looking for some unbiased feedback on whether or not this approach is workable or too difficult for someone new to this whole process.  What advice would you share?