The Sharing Economy Takes a Hit in Idaho

THE SHARING ECONOMY TAKES A HIT IN IDAHO

State lays a path for the elimination of short-term rentals in HOA covenants.

February 29, 2016

Back in June 2015, the Idaho Supreme Court addressed the relationship between short-term rentals (VRBO, Airbnb, Inc., etc.) and Homeowner’s Association (HOA) covenants, conditions, and restrictions (CC&Rs) in Adams v. Kimberley One Townhouse Owner’s Association, Inc., 352 P.3d 492 (Idaho 2015). The court upheld an amendment to CC&Rs of an HOA that all-but-eliminated the use of a single-family residence for short-term rentals.

In 2003, a townhouse was purchased, subject to CC&Rs with a provision allowing for subsequent amendments to the covenants by a two-thirds vote of the lot owners.

In 2012, the owner began renting the unit as a short-term vacation property. The short-term renters precipitated various complaints from owner-occupants of other units within the subdivision, who then voted to amend the CC&Rs to prohibit rentals for less than six months and to require board approval of rental documents and advertisements.

The owner continued to engage in short-term rentals after the amendment and the HOA board enacted rules that imposed a $300 fine for each day a unit is rented in violation of the short-term lease requirements and a $100 fine for each day a unit is advertised in violation of those requirements.  The owner challenged the amendment and brought a declaratory judgement action seeking to invalidate the amendments.

The district court granted summary judgement to the association, which the supreme court affirmed.

While the owner argued that the rental restrictions were invalid because of “arbitrary discretionary enforcement by the Association”, among other reasons, the modifications in the amendment were not “new” unknown burdens, but instead were anticipated within the broad amendment authority granted in the original declaration. The amendments were found not to have gone “too far” in changing the nature of the original restrictions.

With the sharing economy booming, and short-term vacation rentals increasing, it’s likely this is the first of many HOA amendments, and related legal cases, in our state.

Sources: Probate & Property Magazine (November/December 2015), Adams v. Kimberley One Townhouse Owner’s Association, Inc