A popular trend in current vacation destinations is the use of second residences as short-term rental properties. A number of on-line services, including VRBO and Airbnb, have arisen to serve this need. Many homeowners associations do not want to see their units used in this fashion, and they attempt to eliminate or restrict such use. Are such restrictions legal in Texas?
The reasons for restricting short-term rentals
The reasons for restricting short-term rentals are fairly obvious. Short-term renters have no ownership interest in the property, and they are less likely to limit their use of the facilities, thereby depriving permanent residents of the use of their own property. In addition, short-term renters tend to treat the property poorly, paying little or no attention to cleanliness, neatness, and maintenance.
Short-term renters are also more likely to be messier and noisier than permanent residents. For all these reasons and more, HOAs view restricting short-term rentals as a worthwhile goal.
Making restrictions work
Texas has no blanket restrictions on short-term rentals. Prohibitions on such use must come from the HOA or the local municipality. Most restrictions on short-term rentals are stated in the HOA’s declaration. The declaration is a contract to which all homeowners are parties. Most courts assume that restrictions on short-term rentals are legally enforceable if the restriction promotes a legitimate purpose and is not forbidden by statute.
If the municipality in question does not have an ordinance or statute prohibiting short-term rentals, the home-owners association must include such a provision in its declaration. The HOA must also give adequate notice to potential homeowners before they close the purchase transaction of the existence of such a limitation.
In most states, a restriction on short-term rentals can only be enforced prospectively, that is, the restriction cannot be enforced on a party who purchased a unit in the association when the restriction was not part of the declarations.
Solid legal support
A HOA that is wondering whether it has the power to prevent its members from engaging in short-term rental transactions may wish to consult an attorney who is well-versed in condominium law for advice on the scope and effect of such provisions in Texas.