Is There Anything My Neighborhood Can Do to Ban Short-Term Rentals?
Posted on September 27, 2024 by Joseph Evans
In 2014, long before the pandemic spurred the proliferation of short-term residential home rentals like those offered through Airbnb and other services, the Washington Supreme Court in Wilkinson v. Chiwawa Community Associations addressed whether a homeowners’ association (“HOA”) exceeded its power to amend covenants when a simple majority of the homeowners voted to prohibit short-term rentals like those offered through Airbnb and other services. The Court ultimately determined that if an HOA maintains a governing covenant that authorizes its members to change only existing covenants (which is common for many Western Washington neighborhoods), this level of authority does not extend to an HOA seeking to adopt a new covenant, which requires unanimous membership approval versus a simple or super majority. Accordingly, should an HOA wish to adopt a new covenant banning short-term rentals, where no such covenant exists in the governing documentation, all homeowners must uniformly agree to the ban setting the threshold for approval much higher. The Court further determined that an adopted covenant is a “change” when it is “consistent with the general plan of development and related to an existing covenant.”
Recently, the Washington Court of Appeals (Division III) encountered the same issue in Twin W Owners’ Association v. Murphy as to whether a homeowner’s association may amend its restrictive covenants to ban or highly regulate the use of a given residence as a short-term vacation rental. Judge Fearing authored the opinion for analogous circumstances where the relevant covenants similarly did not contain a provision that reserved to the HOA the power to add new covenants. Just as the Supreme Court ruled in Wilkinson, Division III found that( — because the governing covenants only authorized a change to the existing covenants and the to-be adopted covenant was a new covenant) the HOA’s supermajority vote invalidating short-term rentals was void and the lower court’s ruling was affirmed. Again, unanimous approval was required for the covenant just as in Wilkinson.
Notably though, with his opinion in Murphy, Judge Fearing took issue with the Supreme Court’s decision in Wilkinson. Specifically, Division III noted that historical covenants or those similar to the pertinent ones at issue in Murphy “never contemplated the use of land within associations for short-term vacation rentals” and that “no one expected a burgeoning short-term vacation rental industry.” Judge Fearing raises a valid point. Requiring such a high threshold to effect provisions governing short-term rentals, especially for remote or older neighborhoods that typically do not have covenants limiting or banning short-term rentals, could leave those associations hamstrung from implementing protective covenants. While such latitude provides greater commercial freedoms for certain homeowners, the inability to regulate short-term rentals can come at the expense of neighborhood tranquility and the attendant issues associated with rowdy/short-term vacationers and users. Unless the current law in Washington is altered, homeowners and buyers should be wary of covenants pertaining to short-term rentals (or the absence thereof) when buying or selling a home. Such issues can become thorny and potentially lead to litigation among neighbors/associations. The lawyers at Lasher are available to help you evaluate association covenants and amendments thereof.
