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Subject: A change in Master Deed? or Rules and Regulations?
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JanineR
(Tennessee)

Posts:219


11/09/2021 10:58 AM  
Originally the Master Deed said that no units could be leased for less than 30 days.

Then about five years ago an amendment to the Master Deed was passed by over 67% of the members to allow less than 30 day rentals.

The caveat being that those members have to pay an additional yearly fee to the Association to operate as a short term rental.

About 95% of the members turned their units into short term rentals, airbnb, vrbo, etc. (I am one of the few owners that live in our property)

After the new amendment went into place, it was observed that "one night rentals" often equals prostitution.

So the Board decided on a three night minimum.

The question is, does this fall under Rules and Regulations that the board can do from time to time, or is that another amendment to the Master Deed?



Tennessee COA
------------------------------
Master Deed below
------------------------------
Short Term Rental

Change section 18(a): LEASE AND TRANSFER OF A UNIT: NOTICE TO ASSOCIATION Leases as follows:

Delete the sentence reading: "No Lease may be for a term of less than thirty (30) days.
Add the sentence reading: "Leases less than thirty (30) days will be classified as "Short Term Units" and subject to the provisions of section 18(a. l ).

Add paragraph (a.1) to section l 8(a): Each Short Term Rental unit shall be registered annually with the Association by the Unit Owner.

Add paragraph (a.2) to section l 8(a): The rate of assessments for each Short Term Unit shall initially be established at one and one half ( 1.5%) times the rate applicable to two bedroom units. This ratio of assessments between short term units and two bedroom Units may be adjusted as determined from time to time by the Board of Directors of the Association. Assessments totaling twelve ( 12) months for each Short Term Unit must be paid in lump sum at the time of registration and are nonrefundable regardless of the Owners intent to cease short term rental.

Add paragraph (a.3) to section l 8(a): In addition to the yearly Short Term Unit assessments, each initial registration of a short term rental unit shall ·pay to the Association a one time amount equal to three (3)months of regular assessments for the administrative cost of managing the Short Term Unit registration. Expired registrations shall be considered "initial" registrations and subject to additional three (3)months of assessments.

Add paragraph (a.4) to section l 8(a): Adherence to all existing and future covenants, rules, regulations and master deed restrictions of the Association are the responsibility of Short Term Unit owner. Failure to register and comply with owner responsibilities of the Master Deed will result in all provisions of enforcement including but not limited to sections 7, 17 and 18 of the Master Deed. Additionally, Short Term Unit owners failing to comply with. registration of the short term rental provisions as set forth will be obligated to pay all initial fees and assessments, plus ten percent ( l0%) in the initial year of registration. It is the responsibility of the Short Term Unit owner to adhere to all current and future federal, state, and local regulations for short tern rental properties, and the Short Term Unit owner shall indemnify the Association any legal fees, fines, penalties, or other costs incurred by the Association or its Board of Directors as result of non-compliance by at Short Term Unit owner.

Add paragraph (a.5) to section 18(a): The Board of Directors of the Association may· terminate the registration of any Short Term Unit based on evidence of continued violation of the ''RULES AND REGULATIONS" of the Association to include but not limited to loud boisterous conduct that· is disruptive to residents. Termination of short term registration will require re-registration of the unit subject to the majority vote of the Board of Directors of the Association.

LetA
(Nevada)

Posts:1462


11/09/2021 11:58 AM  
Now the toothpaste is out of the tube and you can't put it back in. One night rentals is not a sign of prostitution, hourly yes. You have a hot mess on your hands because now you have a commercial property
and a whole mess of issues that come with it. It's bad enough when you have lousy renters that trash nice communities, now you have a onslaught of crappy people coming through every day.
It sounds like you are going to have a slam dunk with the percentage of owners that might OK the change. Personally would meet them half way and do a two day minimum, typically day trippers stay two days
not three.
JanineR
(Tennessee)

Posts:219


11/09/2021 12:14 PM  
Agree with the toothpaste is out of the tube. And I've told some horror stories on this forum.

Regardless if it is one night, two nights, or three nights.
The question is if this can be a "Rule" or does it go back to amending the Master Deed again.
CathyA3
(Ohio)

Posts:2588


11/09/2021 12:58 PM  
Nope, a change to language in the Master Deed requires another amendment to the Master Deed.

You did indeed step in it.
MaxB4
(California)

Posts:1594


11/09/2021 1:07 PM  
Disagree. It would only need a change to the R and R as the three day minimum is still less than the 30 day minimum.
JanineR
(Tennessee)

Posts:219


11/09/2021 1:08 PM  
Yep,
For the record, as an owner I did not vote for short term rentals.
But now I'm on the Board, I question the previous board's authority to decide that it has to be three days minimum.
And to fine owners who don't comply, if it is not correctly recorded that this is a change.
JanineR
(Tennessee)

Posts:219


11/09/2021 1:11 PM  
Yep, to we stepped in it.
Trying to figure out R&R or Master Deed.
AugustinD


Posts:1902


11/09/2021 1:30 PM  
Posted By JanineR on 11/09/2021 10:58 AM
The question is, does this fall under Rules and Regulations that the board can do from time to time, or is that another amendment to the Master Deed?
If the board wanted to restrict use of common area, then this would be one thing. The board wanting to change a use restriction on units is a different matter.

I see zero authority for the board to create a lawful rule that requires a three day minimum for rental of a unit.

I believe a vote of the owners is necessary to create a three day minimum rental period. Even if a super majority supports this by a lawful vote to amend, there is some question of whether the courts would support such a vote. I keep in mind that the courts do not like amendments that change the general scheme of a HOA.
BillH10
(Texas)

Posts:783


11/09/2021 1:34 PM  
Janine, Lawyer up, i.e., consult with the attorney for the association before the Association steps in it more deeply. If 90% of the owners are renting via Airbnb and VRBO, changes made may threaten income streams, upset bookings committed to months out, and subject the association to a withering succession of lawsuits, TROs, and who knows what else.

Use the attorney to get it right and make the change as unassailable as possible before it is implemented.

My personal opinion, although I am not an attorney nor did I sleep in a Holiday Inn Express last night, is that the Board may modify the number of days through a simple change to the Rules of the Association. 1 day, 3 days, or 29 days is still less than the 30 days stipulated in the amendment.
JanineR
(Tennessee)

Posts:219


11/09/2021 2:44 PM  
Thank you for the responses.

I will be one vote of five to put this to a lawyer to give their opinion.

However listening to different points of view on this topic from this forum helps to prepare the right question, and to be able to follow up with additional questions, since lawyers don't always agree.

So please keep the discussion going, if you have the time.
JohnT38
(South Carolina)

Posts:792


11/09/2021 3:38 PM  
I'm asking this for my own clarification. I thoughts the courts frowned on rules being more restrictive than what is outlined in the governing documents. In this case since the master deed says 30 days or less doesn't this automatically grant one day leases?

If the board can pass a rule that says you can't lease for 1 day then do they have the right to later pass a rule that says all leases have to be at least 180 days? If not, what's the difference? Either example is clearly changing what is already defined in the master deed.
JeffT2
(Iowa)

Posts:637


11/09/2021 3:59 PM  
What is the wording in your master deed and Bylaws about Rules and Regulations and the power of the board to create Rules and Regulations?

Are there any other provisions that reflect on this, such as the ability of the board to interpret the master deed and bylaws, regulate rentals in any way, or a general statement of board authority?
JeffT2
(Iowa)

Posts:637


11/09/2021 5:03 PM  
My understanding is that rules and regulations can be more restrictive than the governing documents as long as the rule does not conflict with or violate the governing docs. For example the board can restrict parking for safety reasons, but cannot take away parking if it is a right in the governing docs.

An Illinois appeals courts overturned a board rule that prohibited rentals over 30%, because the governing docs allowed rentals, so the rule conflicted. On the other hand another Illinois appeals court upheld a board rule that prohibited bringing additional dogs onto the property, since the governing docs were silent on the issue, so the rule did not conflict.

An amendment to the governing documents is presumed to be valid by the courts, but Rules and Regulations are not presumed valid and are more easily challenged in court. You are always better off doing the amendment if you can afford it.

It is common for associations to set minimum rentals periods (although it is usually more like six months or a year). I think the board can get away with setting the period to three days minimum. However, make sure it will pass a "reasonableness test". In other words make sure you can document the prostitution idea.
MaxB4
(California)

Posts:1594


11/09/2021 5:10 PM  
Can someone explain how having a three day minimum is more restrictive than having less than thirty days. Rules are to be "fair and reasonable". How is insisting that a minimum stay be at least three days. Based on the desire of HOA's throughout the country wanting to get rid of STR's, I think this is pretty damn appealing and generous. Also based on court decisions I've read, on STR's, this would stand up in court.
LetA
(Nevada)

Posts:1462


11/09/2021 5:11 PM  
What does your local laws say about STR? I live in the unincorporated portion of Clark county and there is a flat out ban on STR's while the city on Las Vegas has tight restrictions on them.


Some things to consider, since 70% or more of the property is STR, that in the eyes of insurance companies constitutes commercial use. increased rates on per unit rates, even for those not renting out
their unit. Higher D&O rates and what about cleaning and maintenance of the common areas? contracted out or an employee? Now you are faced with hight reserves and higher assessments to
cover high use maintenance. Do you have an elevator? $$$$$$$ You might be even facing getting a business license from your local government..





JanineR
(Tennessee)

Posts:219


11/09/2021 5:13 PM  
I'm pasting the Rules and Regulations wording below.

I know that this forum does not provide legal advice, but please keep the debate continuing if you have the time. As so far there have been a lot of different ways of thinking, and all really helpful.






-----------------------
Master Deed: (not changed in the amendment)
-----------------------
17 (a) By taking title to a Unit, each Unit Owner agrees to be, and shall be, governed by, and shall comply with, the terms of this Master Deed, the Charter, Bylaws and rules and regulations adopted pursuant thereto, and by such documents and regulations as they may be amended from time to time.

18. LEASE AND TRANSFER OF A UNIT: NOTICE TO ASSOCIATION. (not changed in the amendment)
Every Unit Lease shall be in writing and shall provide that the lessee thereunder shall be bound by and subject to all of the obligations of and restrictions upon the Unit Owner under this Master Deed, the Bylaws and the rules and regulations of the Association. A copy of those rules and regulations shall be attached to each Unit Lease and shall be delivered by the Unit Owner to the lessee. The Unit Owner making a Unit Lease shall not be relieved from an' of its obligations under this Master Deed.

-----------------------
ByLaws: (not changed in the amendment)
-----------------------
The Board has the power to:
6)a)5) To adopt rules and regulations, with written notice thereof to all Unit Owners, governing the administration, the administration, management, operation and use of the Condominium property and the Common Elements, and to amend :such rules and regulations from time to time;

10. Rules and Regulations. All rules and regulations adopted by the Board of Directors shall be the rules and regulations of the Association unless and until rejected by a resolution adopted at a meeting of the members. The Directors shall give written notice to all members of the adoption of rules and regulations or of the amendment of any existing rule or regulation.
JeffT2
(Iowa)

Posts:637


11/09/2021 5:22 PM  
Posted By MaxB4 on 11/09/2021 5:10 PM
Can someone explain how having a three day minimum is more restrictive than having less than thirty days. Rules are to be "fair and reasonable". How is insisting that a minimum stay be at least three days. Based on the desire of HOA's throughout the country wanting to get rid of STR's, I think this is pretty damn appealing and generous. Also based on court decisions I've read, on STR's, this would stand up in court.



The original post says that the amendment says:

Delete the sentence reading: "No Lease may be for a term of less than thirty (30) days."

So they don't have a 30 day restriction. It has been deleted.

That said, I agree with your other comments. Three days seems reasonable. In this case the reason given is prostitution.
JeffT2
(Iowa)

Posts:637


11/09/2021 5:26 PM  
Posted By JanineR on 11/09/2021 5:13 PM
I'm pasting the Rules and Regulations wording below.

--------------
ByLaws: (not changed in the amendment)
-----------------------
The Board has the power to:
6)a)5) To adopt rules and regulations, with written notice thereof to all Unit Owners, governing the administration, the administration, management, operation and use of the Condominium property and the Common Elements, and to amend :such rules and regulations from time to time;




Okay, so the board can make rules affecting "use", and I don't see any conflict with the governing docs, so the board can likely make the rule.

Not sure about TN courts.
MaxB4
(California)

Posts:1594


11/09/2021 5:34 PM  
Posted By JeffT2 on 11/09/2021 5:22 PM
Posted By MaxB4 on 11/09/2021 5:10 PM
Can someone explain how having a three day minimum is more restrictive than having less than thirty days. Rules are to be "fair and reasonable". How is insisting that a minimum stay be at least three days. Based on the desire of HOA's throughout the country wanting to get rid of STR's, I think this is pretty damn appealing and generous. Also based on court decisions I've read, on STR's, this would stand up in court.
In this case the reason given is prostitution.


I don't my first line of defense would be a prostitution clause, hey some of my friends are....., well we won't go there.
AugustinD


Posts:1902


11/09/2021 7:19 PM  
Posted By JanineR on 11/09/2021 5:13 PM

ByLaws: (not changed in the amendment)
-----------------------
The Board has the power to:
6)a)5) To adopt rules and regulations, with written notice thereof to all Unit Owners, governing the administration, the administration, management, operation and use of the Condominium property and the Common Elements, and to amend :such rules and regulations from time to time;
Is there a definition of "Condominium Property" in either the Bylaws or CCRs?


Courts can throw and have thrown out amendments to the governing documents even when the vote was otherwise proper.
MaxB4
(California)

Posts:1594


11/09/2021 7:35 PM  
Janine

I am going out on a limb and safe you're safe. BUT, whatever you guys do, don't use the prostitution defense.
MaxB4
(California)

Posts:1594


11/09/2021 7:36 PM  
Posted By MaxB4 on 11/09/2021 7:35 PM
Janine

I am going out on a limb and safe you're safe. BUT, whatever you guys do, don't use the prostitution defense.



Say you're safe
JanineR
(Tennessee)

Posts:219


11/10/2021 8:59 AM  
Posted By LetA on 11/09/2021 5:11 PM
What does your local laws say about STR? I live in the unincorporated portion of Clark county and there is a flat out ban on STR's while the city on Las Vegas has tight restrictions on them.


Some things to consider, since 70% or more of the property is STR, that in the eyes of insurance companies constitutes commercial use. increased rates on per unit rates, even for those not renting out
their unit. Higher D&O rates and what about cleaning and maintenance of the common areas? contracted out or an employee? Now you are faced with hight reserves and higher assessments to
cover high use maintenance. Do you have an elevator? $$$$$$$ You might be even facing getting a business license from your local government..








Our local law allows STR. And yes, higher insurance costs now, not enough reserves, more maintenance needed but not being done, and if I personally want to sell my unit then the buyer can't get a regular mortgage, they have to get an investment mortgage with a higher down payment.
There is no going back on deciding STR or not at this point as it has been 5 years, and the owners are constantly booked.
This is just the technicality of whether the Board has the authority to put a minimum stay rule in the Rules and Regulations if needed, or does that require an amendment to the Master Deed which requires 67% vote.
JanineR
(Tennessee)

Posts:219


11/10/2021 9:05 AM  
Posted By AugustinD on 11/09/2021 7:19 PM
Posted By JanineR on 11/09/2021 5:13 PM

ByLaws: (not changed in the amendment)
-----------------------
The Board has the power to:
6)a)5) To adopt rules and regulations, with written notice thereof to all Unit Owners, governing the administration, the administration, management, operation and use of the Condominium property and the Common Elements, and to amend :such rules and regulations from time to time;
Is there a definition of "Condominium Property" in either the Bylaws or CCRs?


Courts can throw and have thrown out amendments to the governing documents even when the vote was otherwise proper.




I don't see a definition for "Condominium property" just "Condominium"

----------
(b) The name by which this condominium is to be identified is "XYZ Condominiums", hereinafter called the "Condominium."
AugustinD


Posts:1902


11/10/2021 9:17 AM  
Posted By JanineR on 11/10/2021 9:05 AM

I don't see a definition for "Condominium property" just "Condominium"

----------
(b) The name by which this condominium is to be identified is "XYZ Condominiums", hereinafter called the "Condominium."
Then I think "Condominium property" is too ambiguous, and a court might very well say that the Board cannot place restrictions on the use of units beyond what is in the covenants. Minimum 3-day rental is beyond what is in the covenants.

"Condominium property" = property belonging to the condominium, meaning the condominium corporation. I do not think each unit could be said to be owned by the condo corporation.
MaxB4
(California)

Posts:1594


11/10/2021 10:50 AM  
Janine

What Augie is stating as the gospel is that if the definition of "pool" is not in your CCRs, then the Association has no legal authority to create "pool rules", which most every HOA I know of has, even though there is absolutely no mention of a pool in their CCRs.

Go figure.
JohnC46
(South Carolina)

Posts:11659


11/10/2021 11:26 AM  
As Jan said:

Originally the Master Deed said that no units could be leased for less than 30 days.

Then about five years ago an amendment to the Master Deed was passed by over 67% of the members to allow less than 30 day rentals.


I say a rule cannot override/change that less then 30 day rentals (this includes as little as one day) are allowed. It will take an amendment.
MaxB4
(California)

Posts:1594


11/10/2021 11:35 AM  
Did math suddenly change? Isn't 3 days still less than less 30 days?
AugustinD


Posts:1902


11/10/2021 12:03 PM  
Posted By MaxB4 on 11/10/2021 10:50 AM
JWhat Augie is stating as the gospel is that if the definition of "pool" is not in your CCRs, [snip]
No, I am not saying this.

My earlier post speaks for itself.
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