Short-term rentals have become increasingly popular in recent years, offering homeowners an opportunity to generate additional income while providing travelers with flexible lodging in desirable communities. For homeowners’ associations, however, the rise of short-term rental platforms has created new questions about safety, enforcement, insurance, and the residential character of the community.
As more owners consider listing their homes for weekend or vacation stays, associations must determine whether their governing documents permit short-term rentals, whether restrictions are appropriate, and how those restrictions can be adopted and enforced.
Association Restrictions on Short-Term Rentals
The definition of a short-term rental may vary by association, but it commonly includes the lease or occupancy of a home for fewer than thirty (30) days.
In Pennsylvania, homeowners’ associations may have authority to restrict or prohibit short-term rentals in their communities, depending on the language of their governing documents and applicable statutory requirements under the Uniform Planned Community Act.
To be enforceable, short-term rental restrictions must be authorized by and consistent with the association’s declaration, its supreme governing document. Pennsylvania courts have interpreted an association’s declaration as “the equivalent of a contract between the members of the homeowners’ association and the association itself.” Chan v. Ass’n of Prop. Owners of the Hideout, Inc., 323 A.3d 92, 102 (Pa. Cmwlth. 2024).
In practical terms, this means an association cannot enforce restrictions through its bylaws or rules if those restrictions would conflict with or exceed the authority granted to the association in its declaration.
What Are Some Common Restrictions?
Common restrictions may include requiring owners to obtain approval before listing a property, registering short-term renters with the association, providing occupant information, maintaining adequate rental insurance, or limiting the number of rentals permitted each year. Associations may also restrict access to amenities, apply pet rules to renters, and impose conduct standards intended to reduce disruption within the community.
Why Do Associations Restrict Short-Term Rentals?
Although short-term rentals may generate income for homeowners and support local economies by generating tax revenue, various issues can arise when non-owners rent out a home for the weekend.
Associations may be concerned with:
- Damage to the leased premises and surrounding common areas;
- Noise disturbances due to non-owners and their guests;
- Violations of association rules by non-owners; and
- Overcrowding in the community, particularly in parking lots.
Associations may also experience increased exposure to claims, including the risk of damage to common areas by non-owners and potential gaps in standard homeowners’ insurance policies that do not cover short-term rental activity. Given these concerns, many associations view short-term rentals as both a safety issue and a source of liability exposure, prompting some to adopt restrictions or to prohibit short-term rentals altogether.
Compliance Recommendations for Homeowners
Homeowners interested in short-term renting should check their association’s governing documents before listing the rental. By obtaining a copy of the governing documents, they can determine the extent to which short-term rentals are allowed. From there, homeowners can make informed decisions about their obligations and whether to list their property.
When homeowners violate short-term rental rules, they will likely receive a notice from the association directing them to stop. This allows the homeowner to correct the violation by discontinuing the rental activity and avoiding further enforcement action. However, if violations continue, an association may escalate to its formal enforcement process, which could result in fines, legal action, or other consequences set forth in the governing documents.
Effective Strategies for Homeowners’ Associations
For associations considering how to regulate short-term rentals, clear and carefully drafted rules are essential. These rules should address a host of issues, including:
- What constitutes a short-term rental;
- The type of restrictions imposed, including whether the association categorically bans short-term rentals or permits them up to a certain extent;
- Conduct policies for renters and occupants, including their use of common areas, parking, and trash services;
- Maximum occupancy limits in accordance with applicable building codes and safety regulations;
- The person complaints about short-term rentals should be reported to;
- The person responsible for enforcing the short-term rental restrictions;
- The investigation process for violations of the rules; and
- Consequences for non-compliance.
Once legally enforceable rules are established, associations should enforce them fairly and consistently. If the rules are not enforced, homeowners may have little incentive to comply. Moreover, if the rules are enforced selectively against some members and not others, the association may expose itself to claims of discriminatory or inconsistent enforcement.
Ultimately, short-term rental restrictions are most effective when they are clearly authorized by the governing documents and consistently enforced. Associations are encouraged to take a proactive approach by reviewing their declarations, identifying community-specific concerns, and adopting legally enforceable rules that meet their needs.
KingSpry Partner, Taisha K. Tolliver-Duran, counsels homeowners’ associations to ensure compliance with their governing documents and applicable laws. If we can be of assistance, please contact our real estate attorneys at 610-332-0390 or ttolliver@kingspry.com.
