Monthly Archives: March 2015

NAR analysis of Case-Shiller Price Index

Today, Case Shiller released their housing price index data for January 2015 which showed that house prices rose 4.4 percent from December one year ago for the 10-city composite, 4.6 percent for the 20-city composite, and 4.5 percent for the national index. Last week NAR reported growing prices in January and February.  Price growth in […]

February Pending Home Sales

NAR released a summary of pending home sales data showing that February’s pending home sales index is up 3.1% from last month and improved 12.0% from a year ago which is a good start for the spring months. Pending sales are homes that have a signed contract on them but have yet to close. They […]

Airbnb Rentals

QUESTION: Wondering if Davis-Stirling addresses Airbnb and how associations can deal with problems created by short-term rentals.

ANSWER: No it’s not addressed by the Act and yes you can do something about the problem.

Growing Problem. For those unfamiliar with Airbnb, it is a website for people to rent out their homes or even rooms on a short-term basis, whether it be a night, a weekend or a week. The service has become popular with tourists seeking lodging outside of hotels. Airbnb was founded in 2008 and in seven short years has grown to a $20 billion company with over 800,000 listings.

The problem with Airbnb short-term rentals was recently the subject of a front page article by the Los Angeles Times, “Homes as Inns Put New Pinch on Housing.” The reporter observed that landlords have discovered they can make more money renting their houses a few days at a time rather than months at a time. This has led to “a whole cottage industry” that cities are struggling to regulate because of the negative impact it’s had on the rental market. Long-term, stable renters have been pushed out by transient renters. Many municipalities now require short-term rentals obtain a license and pay a transient occupancy tax the same as hotels.

Impact on HOAs. Homeowner associations also suffer problems related to transient renters such as security issues, rules enforcement problems, higher maintenance costs, and increased administrative expenses because they require greater supervision. To meet the challenge, one association restricted short-term rentals and imposed a fee on landlords to offset the expenses they created.

Lawsuit. An unhappy landlord promptly sued the association over the restrictions and fees and lost. (Watts v. Oak Shores.) He appealed, and again lost. Thanks to his aggressive litigation, we now have favorable case law on the subject and he has a bill for $1.2 million in legal fees.

Published. We reported on the case three weeks ago. This past week, the court reclassified the case from unpublished to published, which means it can now be cited as case law. The court’s three major rulings are significant: (i) association’s have the right to restrict short-term rentals, (ii) boards can impose a reasonable fee to offset expenses associated with renters, and (iii) courts should defer to boards on decisions related to the maintenance, control and management of common areas.

Prohibiting Short-Term Rentals. If associations want to prohibit short-term rentals, they should be able to do so without the necessity of amending their CC&Rs. Most already have provisions in their CC&Rs that give them the authority they need. The first, found in many documents, prohibits owners from using their units for hotel-like operations. The second prohibits owners from running a business in the development. The third is the nuisance provision found in all governing documents. And, finally, most documents give boards broad powers to adopt rules and regulations for the benefit of the membership.

RECOMMENDATION: Associations wanting to restrict short-term rentals and/or impose fees on landlords should have legal counsel review their documents and make recommendations. To read the court’s decision, see Watts v. Oak Shores.

SOFTWARE MARKETING

WANTED

We are looking for someone to market our Smart HOA management software.

It’s a base plus commission that will grow as sales increase.

If you are interested, please contact us at maureen@smarthoa.com.

BOOTLEGGED

HARDWOOD FLOORS

A common problem encountered by condominium associations is bootlegged hardwood floors.

Violation. In Ryland Mews HOA v. Munoz, a new owner installed hardwood floors in violation of the CC&Rs and created intolerable noise conditions for the owner below. When confronted, Munoz refused to mitigate the problem claiming his wife suffered severe allergies.

Lawsuit. The association sued Munoz for the following CC&R violations: (i) creating a nuisance that unreasonably interfered with the quiet enjoyment of another owner’s condominium, (ii) altering his unit in a manner that increased sound transmission to an adjoining unit, and (iii) failing to get written approval from the architectural committee.

Court Order. The association asked the court to issue a preliminary injunction that Munoz relieve the problem pending trial on the merits. The court agreed and ordered Munoz to install rugs over 80% of his floors. Munoz appealed and lost, thus providing us with more case law on how to handle hardwood floors (and hard-headed owners). Munoz’ violation of the CC&Rs and his refusal to compromise saddled him with an order to install rugs and a looming trial that could result in fines, an award of attorneys’ fees, and an order to remove his hardwood floors.

COMMENT: Having an allergy does not give an owner the right to ruin his neighbor’s life. There are plenty of hypoallergenic rugs and other products on the market that could have simultaneously resolved the allergy and noise problems. It took a court to order Munoz to be a good neighbor. Even that was not sufficient, it took two courts. Some people are just not suited for condo living. To read the case, see Ryland Mews HOA v. Munoz.

Airbnb Rentals

QUESTION: Wondering if Davis-Stirling addresses Airbnb and how associations can deal with problems created by short-term rentals.

ANSWER: No it’s not addressed by the Act and yes you can do something about the problem.

Growing Problem. For those unfamiliar with Airbnb, it is a website for people to rent out their homes or even rooms on a short-term basis, whether it be a night, a weekend or a week. The service has become popular with tourists seeking lodging outside of hotels. Airbnb was founded in 2008 and in seven short years has grown to a $20 billion company with over 800,000 listings.

The problem with Airbnb short-term rentals was recently the subject of a front page article by the Los Angeles Times, “Homes as Inns Put New Pinch on Housing.” The reporter observed that landlords have discovered they can make more money renting their houses a few days at a time rather than months at a time. This has led to “a whole cottage industry” that cities are struggling to regulate because of the negative impact it’s had on the rental market. Long-term, stable renters have been pushed out by transient renters. Many municipalities now require short-term rentals obtain a license and pay a transient occupancy tax the same as hotels.

Impact on HOAs. Homeowner associations also suffer problems related to transient renters such as security issues, rules enforcement problems, higher maintenance costs, and increased administrative expenses because they require greater supervision. To meet the challenge, one association restricted short-term rentals and imposed a fee on landlords to offset the expenses they created.

Lawsuit. An unhappy landlord promptly sued the association over the restrictions and fees and lost. (Watts v. Oak Shores.) He appealed, and again lost. Thanks to his aggressive litigation, we now have favorable case law on the subject and he has a bill for $1.2 million in legal fees.

Published
. We reported on the case three weeks ago. This past week, the court reclassified the case from unpublished to published, which means it can now be cited as case law. The court’s three major rulings are significant: (i) association’s have the right to restrict short-term rentals, (ii) boards can impose a reasonable fee to offset expenses associated with renters, and (iii) courts should defer to boards on decisions related to the maintenance, control and management of common areas.

Prohibiting Short-Term Rentals. If associations want to prohibit short-term rentals, they should be able to do so without the necessity of amending their CC&Rs. Most already have provisions in their CC&Rs that give them the authority they need. The first, found in many documents, prohibits owners from using their units for hotel-like operations. The second prohibits owners from running a business in the development. The third is the nuisance provision found in all governing documents. And, finally, most documents give boards broad powers to adopt rules and regulations for the benefit of the membership.

RECOMMENDATION: Associations wanting to restrict short-term rentals and/or impose fees on landlords should have legal counsel review their documents and make recommendations. To read the court’s decision, see Watts v. Oak Shores.

SOFTWARE MARKETING
WANTED


We are looking for someone to market our Smart HOA management software
.

It’s a base plus commission that will grow as sales increase.

If you are interested, please contact us at maureen@smarthoa.com.

BOOTLEGGED
HARDWOOD FLOORS

A common problem encountered by condominium associations is bootlegged hardwood floors.

Violation. In Ryland Mews HOA v. Munoz, a new owner installed hardwood floors in violation of the CC&Rs and created intolerable noise conditions for the owner below. When confronted, Munoz refused to mitigate the problem claiming his wife suffered severe allergies.

Lawsuit. The association sued Munoz for the following CC&R violations: (i) creating a nuisance that unreasonably interfered with the quiet enjoyment of another owner’s condominium, (ii) altering his unit in a manner that increased sound transmission to an adjoining unit, and (iii) failing to get written approval from the architectural committee.

Court Order. The association asked the court to issue a preliminary injunction that Munoz relieve the problem pending trial on the merits. The court agreed and ordered Munoz to install rugs over 80% of his floors. Munoz appealed and lost, thus providing us with more case law on how to handle hardwood floors (and hard-headed owners). Munoz’ violation of the CC&Rs and his refusal to compromise saddled him with an order to install rugs and a looming trial that could result in fines, an award of attorneys’ fees, and an order to remove his hardwood floors.

COMMENT: Having an allergy does not give an owner the right to ruin his neighbor’s life. There are plenty of hypoallergenic rugs and other products on the market that could have simultaneously resolved the allergy and noise problems. It took a court to order Munoz to be a good neighbor. Even that was not sufficient, it took two courts. Some people are just not suited for condo living. To read the case, see Ryland Mews HOA v. Munoz.


Adrian Adams, Esq.
Adams Kessler PLC


“Much More Than Just a Law Firm!” We’re friendly lawyers–boards and managers can contact us at (800) 464-2817 or info@adamskessler.com.

REALTORS® Reported Strong Buyer Traffic in Many States in February 2015

In a monthly REALTORS® Confidence Index Survey, NAR asks REALTORS®: “How do you view buyer traffic in your market?”. The map below shows the buyer traffic index by state. An index above 50 indicates that more REALTOR® respondents viewed traffic conditions as “strong” compared to those who viewed conditions as “weak.” In many states, there […]

Consumer Interest in Housing Gains Momentum

The Federal Reserve Board of New York released its update to the Survey of Consumer Expectations this morning.  Consumer optimism toward housing has improved significantly at the lower credit spectrum from last spring and remains robust at the middle and upper credit tiers.  The positive trend relative to a year ago points to sustained improvement […]

REALTORS® Are Upbeat About the Outlook in the Next 6 Months

Confidence about the outlook for the next six months improved across all property types, according to the February 2015 REALTORS® Confidence Index Survey. In the single family market, the REALTORS®  Confidence Index - Six-month Outlook  increased to 75 (72 in  January 2015; 68 in February 2014).  For the first time, the index for townhomes and […]

How to Prepare for an Eviction Court Hearing

At some point in a landlord’s career, it will be time to attend an eviction court hearing. Whether it’s because the tenant hasn’t paid rent or has violated the lease agreement in some way, there will be a time when the tenant should no longer be allowed to live in the property and the landlord needs […]

Read more on How to Prepare for an Eviction Court Hearing

Unemployment Insurance Claims Continue To Decline in Most States

The number of people losing jobs continues to remain on a downtrend. Initial unemployment insurance claims that were filed during the week that ended March 21 totaled 282,000 (seasonally adjusted), fewer by 9,000 claims from the previous week’s unrevised level. A decline in the number of unemployment claims indicates fewer job losses and greater job […]