“Restricting Rentals in Condominiums and Homeowners’ Associations” – FLCAJ
One of the questions I am frequently asked by my community association clients is whether they can restrict rentals by either (1) requiring a minimum lease term, (2) prohibiting rentals for a certain period of time after an owner purchases (for example, one year), (3) setting a maximum number of units/homes that can be rented in the community, and/or (4) requiring the owners to obtain association approval for all rentals and tenants.
History of Rental Restrictions in Context of Community Associations
Florida’s courts previously ruled in the condominium context that leasing was a “vested right” and that amendments could not take away those rights from existing owners. However, that rationale was ultimately overturned by the Florida Supreme Court in the Woodside Village Condominium Association, Inc. v. Jahren, 806 So.2d 452 (Fla. 2002). The Supreme Court’s decision was in the condominium context, and the Court stated that courts “have consistently recognized that restrictions contained within a declaration of condominium should be clothed with a very strong presumption of validity when challenged.”
With respect to amendments to the covenants and restrictions of a “homeowners’ association” (HOA), there has been some debate in the law as to the standard of review. In a recent case, Riviera-Fort Myers Master Association, Inc. v. GFH, et al., 313 So. 3d 760 (Fla 2nd DCA 2020), the Second District Court of Appeals considered seven amendments to the community’s master declaration. One of these amendments set forth numerous restrictions and conditions on leases of the residential units in a certain section of the community known as the “Liner Buildings,” which were mixed-use buildings containing residential apartments and commercial spaces. Among other things, the amendment imposed a minimum lease term of 30 days. The court ruled that the restrictions were reasonable limitations on use.
Another important case to note is Santa Monica Beach P.O.A. v. Acord, 219 So. 3d 311 (Fla. 1st DCA 2017), in which the court reasoned that a rental, even rentals for a profit, in and of itself does not transform a home’s use from residential to either business or commercial. The court stated that in determining whether short-term vacation rentals are residential uses of the property, the critical issue is whether the renters are using the property for ordinary living purposes such as sleeping and eating, not the duration of the rental.
Florida Legislature Steps In
After the Woodside case, the Florida Legislature passed Section 718.110(13), Florida Statutes, for condominium associations, and Section 720.306(1)(h), Florida Statutes, for homeowners’ associations.
Condominium Associations
Section 718.110(13), Florida Statutes, was created in 2004. Originally the statute stated that any amendment “restricting unit owners’ rights relating to the rental of units” applied only to unit owners who consented to the amendment and unit owners who purchased after the effective date of the amendment.
However, the statute was amended and currently provides that an amendment “prohibiting unit owners from renting their units or altering the duration of the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of that amendment.”
Therefore, in the condominium context, a condominium association could arguably adopt an amendment requiring all leases to be approved by the association and enforce the amendment against all owners regardless of when the owner purchased the unit. However, if the amendment (1) prohibits owners from renting their units; (2) alters the duration of the rental term; or (3) specifies or limits the number of times that owners are entitled to rent their units during a specified period, the amendment can only be applied to future owners and those owners who vote in favor of the amendment. This would include an amendment prohibiting rentals during the first year of ownership and an amendment setting a maximum number of units that can be rented in the condominium.
Homeowners’ Associations
The Homeowners’ Association Act was amended during the 2021 legislative session to address a homeowners’ association’s authority to adopt amendments to its governing documents pertaining to rentals. The new law, Section 720.307(1)(h), Florida Statutes, became effective on July 1, 2021. In summary, any amendment to a governing document enacted after July 1, 2021, that prohibits or regulates rental agreements applies only to a parcel owner who acquires title to the parcel after the effective date of the amendment, or to a parcel owner who consents, individually or through a representative, to the amendment. Notwithstanding, an HOA may amend its governing documents to prohibit or regulate rental agreements for a term of less than six months and may prohibit the rental of a parcel for more than three times in a calendar year, and such amendment shall apply to all parcel owners.
Therefore, if an HOA adopts, for example, an amendment requiring all leases to be at least 12 months or prohibiting owners from renting during the first year of ownership, the amendments would only be effective against future owners or owners who vote in favor of the amendment. However, an amendment to an HOA governing document that requires, for example, all leases to be for a minimum of six months, or that prohibits rentals more than three times in a calendar year, may be enforced against all owners, regardless of whether they vote in favor or against the amendment and regardless of when the owner purchased in the community.
Note that the HOA statute is broader than the condominium statute. The HOA statute restricts amendments that “prohibit or regulate rental agreements.” The condominium statute is only concerned with amendments that prohibit rentals, alter the rental term, or limit the number of times that an owner can rent. It does not address amendments that “regulate” rentals as does the HOA statute.
Summary and Conclusion
If your association is considering restricting rentals, it is important to consult with the association’s attorney to obtain legal advice regarding the vote required to adopt the amendment and the association’s authority to enforce the amendment. Setting aside the issues involved in amending the governing documents, rental violations sometimes are not easy to detect or confirm. The association may wish to consider some kind of registration or approval requirement in conjunction with setting minimum lease terms. Also, some owners may have guests in their absence, which are sometimes hard to distinguish from short-term rentals, and additional restrictions related to guest usage may also be beneficial.
Yeline Goin, Shareholder, Becker
Yeline Goin, a shareholder with Becker, concentrates her practice on the law of community associations, primarily representing condominium, cooperative, and homeowners’ associations. She is one of only 190 attorneys statewide who is a board-certified specialist in condominium and planned development law. Ms. Goin previously served as the Executive Director of our Community Association Leadership Lobby, or CALL, which represents the interests of the firm’s 4,000-plus community association clients by monitoring and responding to legislation emerging from Tallahassee, which can significantly impact common ownership housing communities.
