Virginia – Limited Residential Lodging Act (HB812 and SB416) May Create Unintended Consequences for Associations

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As two bills move through the Virginia General Assembly that would allow property owners to rent out their homes, or portions of their homes, for periods of less than 30 consecutive days, community association volunteer leaders must consider the impact short-term residential lodging will have on their community.

Governing documents of many (most) condominium, cooperative, and property owners association prohibit short-term rentals, use of the home for hotel or transient purposes and leasing only a portion of the home.

These restrictions were not established arbitrarily – most are included to satisfy requirements of federal mortgage underwriters (like FHA).  If short term rentals are permitted or tolerated in FHA-approved condominium associations, FHA certification could be jeopardized and association officers may be subjected to liability, if the signed certification is violated.

And, while both bills clarify that they are not applicable to recorded covenants, both may invite or empower owners to use a short-term rental hosting service.

Associations without express prohibitions in the recorded documents must begin to consider how, if at all, to address short term rentals and the conduct they invite.  While many short-term rental uses are consistent with hotel (or bed and breakfast) style usage, some usage is less desirable (see the link from NBC Los Angeles below).

Because every set of governing documents is different, the application of law to each community association differs.  As always, contact an experienced attorney for advice and counsel.

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