Clubhouse Rental – Should we? Would You?

We are a new single home HOA community that now is homeowner controlled. We have a small clubhouse that is only used for association sponsored meetings (committees and board) and a few association sponsored social events as per our use rules. The furniture occupying the clubhouse is very nice furniture that would be found in a living room and dining room of a home, i.e. a couple sofa’s and end tables and a dining room type table that sits 6 people, lamps, etc.

We receive many requests from residents to rent out the clubhouse for parties, and for those sale type parties like Southern living.

What should we consider or beware of before we make a decision? If your community rents out the clubhouse what would you do different?

Thanks.

Oh, and also remember that any income arising from renting your clubhouse must be reported as non-exempt function income on your IRS Form 1120-H.

Here are some basics on our rental policy - hope these are useful

First, renting the community building is only available to homeowners who are current in maintenance fees. If the homeowner is renting out his/her unit and the tenant wants to rent the building, the homeowner must sign off on the reservation form and is ultimately held responsible for any damages.

The community pool is next to the building, but it isn't included in the rental fee - otherwise pool use is an additional charge and the homeowner must provide a lifeguard/pool monitor at his/her expense. Since I've lived here, I don't think I've heard of anyone renting the pool area.

Events may start no earlier than 9 am and must be concluded by 11 pm. The homeowner may stay until 2 am to finish cleaning up the place, after which EVERYONE must be out.

There is a $100 deposit, which is returned if the building passes a post event inspection by a designated board member or property manager/designee. The board member also inspects the building before giving the key to the homeowner, and the homeowner must return the key within 24 hours after the event ends.

We're considering purchasing digital cameras to use in walk-throughs and may also use them to document any messes to justify keeping the deposit, if necessary.

Our security officer is authorized to enter the building at any time during the event to investigate complaints and shut the event down if warranted (e.g. serving alcohol to minors)

There are a few more things we may add to

This issue has just come up in our neighborhood. It brings to mind a few questions since the rental is to an outside agency which is causing increased traffic/parking as well as the bumping of the long standing pool/card night to accomodate the rental. Also the club is usually locked making it a white 'vacant' elephant in this non-member's opinion.

All the best of my understanding,

1. The zoning is residential so doesn't commmercial or for-profit use impact conflict with the zoning and permitted uses in residentially zoned areas.

2. Commercial or for-profit use could impact (increase) the taxation of the property.

3. If rental income is being created should sales taxes also be collected and a proper business number be obtained with appropriate remittances to upper levels of government.

The other issues that go without saying is insurance (liability) impact, bumping of members ability to use the facility in order to rent out to an outside agency etc etc.

I just wish someone would come up with an acceptable plan.

We have a nice space, nicely decorated and refurbished lately. 1500 sq ft, with living room area with fire place, a dinning area, two rest rooms, a kitchen equipped and the rest a large rectangular room for a meeting or party room. I have lived next to this unit for 19 years. It has been used by renters, by owners, by special groups over all that time. We charge $100 for rent and has to be turned over clean, and all that stuff. We hold an owners once a month social session that last an hour during some of the months. I had my way, no outside rental would be allowed, if an owner wants to use it, have at it but must be present and responsible. If owners want to have card etc., get key from manager, return key after cleaning up. No charges involved, it is not worth it. You rent to outside concerns, owner sponsored or not, you get liability, plus use of alcohol and more responsibility, under aged attendees, more liability, spill over to outside areas. noise, parking problems, and time and money spent running down violators of rule and payment for damages.

That little space can serve a very useful purpose for owners, especially for committee meetings, Board meetings, Annual meetings. It is considered common property for tax purposes, it is a nice amenity and some say under used.....so what. The benefits outweight that. Over the years there has been some important discussions that greatly influenced the operation of our regime, not all of them good, I may add. It is just a nice easy place to go, a neutral ground.

Susan,
You're a covenant watcher, and a good one, I might add; what is your read on sponsoring an "outsider". Is that legal; now if sponsoring means being in attendence, I see no problem because the member assumes the responsibility by his presence. Who has authority if the sponsor is not there and the person has a conflict with an owner over the appropriate use of the amenity.

I would not want to fine tune that argument. Also doesn't it seem odd that a member can sponsor an "outsider", and at the end of the party or whatever, you are asking your members who volunteer their time to watch dog this person a member sponsored. At least make the one that sponsors responsible for the restoration of the facility.

Or is this "Nitpicking?"

We have not had that many problems. The homeowner is the person responsible for the lease agreement, so who cares if it's her/his daughter-in-law who is having a baby shower?

The person who is head of the committee overseeing the center gets a small stipend for every rental, since, as you can tell, this involves a lot of pre-interview and post-inspection time.

We looked at the $$$ budget numbers and decided that building must be able to pay for itself, or at least close to it. If someone wants to hold a jewlery party there, that's OK. It still requires a homeowner to "sponsor" the rental.

We rent our clubhouse (800 sq ft space, full kitchen) out for $25 and a $50 refundable deposit. I'm considering changing the structure because $25 is nothing for renting a public room in California, and it's very time-consuming to monitor whether the residents are following the rules or not.

I'm increasing the fee to $150, $100 of which is a flat cleaning fee. There will be a further $50 deposit to be refunded if the place is cleared out and no trash is left.

We have a couple who run a janitorial service who live in the complex so we have contracted them to clean after every event. That way the place is maintained.

I might add that we've recently upgraded the space with new furniture, carpet, and paint, so we want to be sure it isn't trashed.