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Subject: Short term rental problem
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Author Messages
RoyalP
(South Carolina)

Posts:203


12/04/2018 6:52 PM  
Posted By CatF on 12/04/2018 4:16 PM
Here is a wrap up of the recent court case in our county. The judge ruled that short-term vacation rentals by the Defendants constituted commercial activity.

https://micondolaw.com/2016/06/09/allegan-county-trial-court-rules-that-short-term-vacation-rentals-violate-deed-restrictions/

As to the other issue. I don't see how, if the restrictions explicitly say 30 days or more for leases, how he could sue the board for anything. It's his fault he didn't follow the restrictions and has had two years to make all kinds of money.

BTW, how does one check with the IRS on this sort of thing??





IRS Tax Fraud Link:

FRAUD
RoyalP
(South Carolina)

Posts:203


12/04/2018 6:55 PM  
Posted By CatF on 12/04/2018 4:26 PM
And yes, it does mention it being a nonprofit with the state of Michigan.




not-for-profit


a nonprofit is a charitable organization
RoyalP
(South Carolina)

Posts:203


12/04/2018 6:58 PM  
The IRS form to report fraud:

FRAUD FORM
KerryL1
(California)

Posts:5950


12/05/2018 6:55 AM  
Seems like "nonprofit" is used differently in states. Our HOA, for instance, is a nonprofit mutual benefit corporation. I think that's the common term in CA.
AugustinD


Posts:1208


12/05/2018 7:09 AM  
I would never recommend that CatF or anyone else allege tax fraud without any evidence. When the IRS contacts the alleged violator, and the alleged violator explains that CatF has a grudge against him over a HOA dispute, and then hands over his correctly completed taxes, CatF is either now in some legal jeopardy or has undermined any court claim she has against him regarding violation of the condo's Bylaws. One should not put another through IRS hell without an extraordinarily good reason. "Revenge" is not a good reason.
RoyalP
(South Carolina)

Posts:203


12/05/2018 7:26 AM  
If the rentor is violating local or state statute the rentor most likely, IMO, would not be declaring said income to the IRS.
MelissaP1
(Alabama)

Posts:7762


12/05/2018 8:36 AM  
If the person is innocent, then no problem with the IRS filing. If the person isn't reporting their income, then that is an issue. I would mention in the filing that the HOA has restrictions for this type of use.


If the HOA hasn't gotten off it's booty to start making ways to enforce or change this situation, then it's got to go to an outside source that is.

Former HOA President
AugustinD


Posts:1208


12/05/2018 8:50 AM  
Melissa and RoyalP, I am glad you have the time to give to an IRS audit, begun without any evidence whatsoever but based on someone's desire to get revenge against you. I would have a pretty dim view of someone who claimed I had committed tax fraud without any evidence, potentially requiring me to spend many hours of my precious retirement time with an IRS agent. It's the stuff of vindictive and incompetent HOA boards wanting to inflict harm because the board could not find a better way to stir up trouble for a member who, in this case, may very well be in compliance with the rules, at least by a court's reading. Stepping outside the HOA arena, to allege a violation of U. S. law, without evidence, is particularly revolting. Fortunately I think what goes around often comes around.
RoyalP
(South Carolina)

Posts:203


12/05/2018 9:45 AM  
Posted By AugustinD on 12/05/2018 8:50 AM
Melissa and RoyalP, I am glad you have the time to give to an IRS audit, begun without any evidence whatsoever but based on someone's desire to get revenge against you. I would have a pretty dim view of someone who claimed I had committed tax fraud without any evidence, potentially requiring me to spend many hours of my precious retirement time with an IRS agent. It's the stuff of vindictive and incompetent HOA boards wanting to inflict harm because the board could not find a better way to stir up trouble for a member who, in this case, may very well be in compliance with the rules, at least by a court's reading. Stepping outside the HOA arena, to allege a violation of U. S. law, without evidence, is particularly revolting. Fortunately I think what goes around often comes around.





you do have a point

i tend to get 'caught up' by the tauric ka-ka

the meter is now @ 100

over and out

(of this thread)
CatF
(Michigan)

Posts:24


12/05/2018 10:04 AM  
I wouldn't do it, however you don't know this guy! haha He would and has done the same to others in his former neighborhoods...
MelissaP1
(Alabama)

Posts:7762


12/05/2018 10:46 AM  
Excuse me? This person threatened the HOA with a lawsuit. He's acting as if his hands are "clean" in this whole mess. They are not. The HOA has the right to defend itself in court representing the fact the one filing is not of clean hands. Which may mean not filing taxes correctly or not asking for permissions to have 30 day or less rentals.

I am not going to have someone threaten my HOA with a lawsuit and let them steam roll all over the HOA. Also not going to be uneducated on how to protect my HOA from such lawsuits. An option is to see if they are reporting their income from this Airnb business correctly. They aren't reporting or getting permissions correctly from the HOA. Why would I think they were being truthful with their bank or IRS?

My opinion on this situation is that the owner neglected to get permissions to run an AIRNB with their home. The HOA got wind of this and asked them to stop it or get permission for it. All of which is required. Instead the owner came back with a legal letter threatening legal action against the HOA for requiring this. So the HOA either needs to fix up their enforcements loopholes or wait to go to court to prove their side of things. Plus counter-sue to enforce the requirement to get permission. Which who knows could be approved?

Former HOA President
AugustinD


Posts:1208


12/05/2018 12:11 PM  
Melissa, how do you know this member's hands are not clean?

I do not think he's steamrolling. I think this member may have found a loophole in the governing documents.

I agree a court, first, might very well agree with CatF and find this member (call him "John Jerk") in violation. Subsequently I think the risk is high that the Judge will order the Association to buy John Jerk's unit or rent it out for him for 30+day periods, at airbnb nightly rates. Going to court costs a fortune. It often takes a few years typically to see resolution. An appeal, if needed or desired, is not cheap. I think the best course of action for CatF to take is to get the Bylaws amended.
MelissaP1
(Alabama)

Posts:7762


12/05/2018 1:49 PM  
Read this all again. The OP stated the MEMBER is THREATENING the HOA. It's NOT the HOA threatening the member. The HOA most likely told the member to be aware of their violation of getting PERMISSIONS before doing 30 day rentals or using property as an Airnb.

The HOA board is now in a panic of how to handle this situation. Apparently they don't know how to do it. Otherwise, they would have put into place a fining schedule or other punishment for violating the rules. They also would have had on record the request/denial of the member asking for permission to do the 30 day short term rental. Maybe had a form for this?

So my advice is to not bow down to the lawsuit threat. Get their ducks in a row. If they don't want short term rentals in their HOA, then take steps of eliminating/preventing it.

Former HOA President
AugustinD


Posts:1208


12/05/2018 2:21 PM  
Melissa, you re-read the thread. The member is renting out his unit right now as a less-than-30-day, airbnb rental. The OP does not like it and wants to know how to proceed. She has your opinion that, for one thing, she should report the member to the IRS. This despite there being no evidence of tax fraud. Instead there is just a desire by you to make this member's life difficult. The OP has my opinion that the covenants could reasonably be interpreted to say that disapproval of the member's rental situation means the Association has to buy or lease the member's unit. I think the OP's best course of action is not court. Nor do I feel an appropriate course of action is reporting to a federal agency that the member is violating federal law, without any evidence whatsoever. Jerk this member apparently is, but the Board should not respond in kind, as far as I am concerned, and doing so is likely to bite them in the arse. My position remains the best bet for the OP and her board is amendment of the Bylaws.
LetA
(Nevada)

Posts:550


12/06/2018 9:52 AM  
The City of Las Vegas just passed Airbnb restrictions, if you call them that.
https://www.reviewjournal.com/news/politics-and-government/las-vegas/las-vegas-council-rule-a-ban-in-disguise-on-short-term-rentals-1543624/
CatF
(Michigan)

Posts:24


12/09/2018 8:47 AM  
Thanks for all your comments once again.
Here's a wrap up of the "meeting" held yesterday with the BOD.
Somehow there are now EIGHT people on the board, not seven as is stated in the restrictions. (Just realized this today.)
So we have another discussion about the STR issue. Mr. John-Jerk is still sitting in on this.

They have decided that GOING FORWARD they don't want STRs in our community.

They are torn because OUR attorney said they weren't allowed, citing the restriction that I quoted earlier. But THEIR attorney and JJ's attorney say they are allowed. We got an opinion from an outside attorney before I was on the board, then the HOA voted to pay for his opinion and now is reneging on this, saying the opinion came before they said they'd pay. (no timing was cited in the minutes or during the meeting)

So yesterday they decided they wouldn't pay for our attorney's opinion. Then they vote on whether the board should pay for our attorney's opinion AND JJ's attorney's opinion. Again, JJ is allowed to participate.
The president abstains as does one other director (because they don't want to make enemies), the other four vote NO. Two of us vote YES.
So that's that.
During the conversation that went around about the STRs in general, JJ commented that he's "grandfathered in".
Also, they stated that the restrictions that state that anyone renting AT ALL has to come to the board ten days in advance with the lease agreement to be approved is just "too much hassle". "Why don't we just have JJ give us a list of renters, addresses and phone numbers in advance?" JJ:"Well, I sometimes don't know in advance AND I don't get their addresses."
WTF?
Seriously, I wanted to flip the damn table over and stomp out.
I am so angry it's unreal.
So in the end they decided to have my attorney and the BOD's attorney get together to get their stories straight and come up with a plan going forward to amend the bylaws. Oh AND they want to send a letter to area realtors letting them know that we don't allow STRs.
UGH.
Have at it.
MelissaP1
(Alabama)

Posts:7762


12/09/2018 9:01 AM  
I don't see the purpose of sending that to any Realtors. They aren't responsible for informing people of the HOA rules/regulations. They aren't even involved with providing the documents to a buyer/seller. Plus it's nearly impossible to send out to every realtor or company. They really don't care. Their job is to sell a house or represent the buyer purchasing a house.

So I would skip the realtor notification as they are basically the "used car salespeople" of reality. No offense to Realtors as I am friends with many and have considered being one myself. It's just if you look at the reality of what a realtor is. They are basically a "Used House" seller akin to a "Used car sales" person...

Former HOA President
AugustinD


Posts:1208


12/09/2018 9:03 AM  
CatF, thank you for the update. Your humor made me laugh aloud at a few points. But yes, I would want Member-Director John-Jerk's time on the board and as a member in the condominium radically shortened. Is buying his unit really not an option? Where I am, real estate values are up. I hope you continue to keep the thread updated, especially about the proposed meeting of the two attorneys 'to get their stories straight.'
CatF
(Michigan)

Posts:24


12/09/2018 9:09 AM  
As to the realtor comment, I think the reason they want to go down that road is that JJ claims that his realtor told him that STRs were legal, that he went to other subdivisions and were told they weren't, that's how we got so lucky to have him here.
As to buying his "unit" it's a site condo subdivision, his house is probably worth over $500k.
Yeah.
UGH.
I am starting to wonder if I should a) just get a chicken coop and some livestock in the backyard since that's a restriction, b) file a complaint against the BOD for not enforcing the restrictions and protecting our home value or c) quitting the board and just tuning it all out.
Basically it's a good ole boy club and my friend and I are the only ones that really want to follow restrictions and ignore friendships.
SMH
MelissaP1
(Alabama)

Posts:7762


12/09/2018 3:49 PM  
A HOA doesn't keep home values. It keeps the neighborhood ATTRACTIVE to potential buyers. So don't get caught up in the "Property Value" rhetoric. What effects home values is REAL #'s. Like what houses sold or foreclosed for in last 6 months in a certain radius. I could not buy a house cause I hate the wallpaper. Doesn't make the house value less...

Former HOA President
CatF
(Michigan)

Posts:24


12/09/2018 3:55 PM  
Ok, I get that.
BUT if our neighborhood becomes a haven for renters, I won't be able to sell my house. We already have had members move out because of this guy.
All I'm sayin'.
Other neighborhoods have the realtors strictly saying "no" but now we've got this guy advertising everywhere for renters.
MelissaP1
(Alabama)

Posts:7762


12/09/2018 10:46 PM  
Having too many rentals effects 2 things... The offering of certain loan programs like FHA. They have a PUD form to fill out that records things like rental percentage, fee simple, and liens/foreclosure/legal actions. It's like an assessment of the HOA. Think the range is less than 50% rental. Once that is exceeded, then loans rates/types are off the table.

2nd It also means that if you try to refinance your home, the rate could be higher. That is what the real effect of having high percentage of rentals. It's not necessarily the condition of the home. That is something the HOA does have restrictions in enforcing.




Former HOA President
GeorgeS21
(Florida)

Posts:796


12/10/2018 5:02 AM  
Property value is NOT rhetoric ... well managed HOAs normally improve property values relative to non HOA properties.
MelissaP1
(Alabama)

Posts:7762


12/10/2018 5:16 AM  
I would not say they improve home values. I would say they keep the area more attractive/desirable for potential buyers. I would pay more money or the asking price of a house MORE if it was well kept along with the neighbors. That doesn't equate home value. Home value is based on REAL #'s. Houses that were sold/foreclosed on in a specified area in a 6 month period of similar size/options. It's something that can be measured/touched/documented.

My neighborhood is quite odd. I live next door to my former HOA. Those houses go for $100K. They are small square footage homes close together. My neighborhood is older and with larger houses. Ours go for about $135. The neighborhood across from me on other side. Those houses go for $300K+. If I was to sell my house (My neighborhood doesn't have a HOA and has 1 acre treed lots) I'd only be able to put it up for the $135K. It's what the home values of my neighborhood is valued at. That is what my neighbor's houses sell for.

I've not bought a house because did not like the wallpaper. It was 150K house. Did it lose any home value because did not buy it? Nope. It just didn't sell to me because I wasn't attracted to the home. It did sell to someone else and they did pay the 150K.

Former HOA President
CatF
(Michigan)

Posts:24


12/10/2018 5:38 AM  
OK well regardless. We have restrictions for a reason and they are not being enforced at ALL. Not sure what to do. That was my question.
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