Tuesday, March 22, 2016

How many unintended consequences can you find in this proposed bill about short-term rentals and HOAs that will likely be law in Idaho?

Idaho is close to enacting a piece of legislation that purportedly is meant to restrict homeowner's associations (HOAs) from regulating short-term rentals (STRs), such as Airbnb, but only to those that are new purchasers within HOAs.  Well, that is what I am told the proposed legislation is trying to do and that is what leading law firms in Idaho are saying this is about.  However, the proposed legislation is so bizarre and ill-worded to the stated purpose, I had to post it to the blog to see how many unintended consequences of the legislation people could identify.  Here is the proposed additional language:

No homeowner's association may add, amend or enforce any covenant, condition or restriction in such a way that limits or prohibits the rental, for any amount of time, of any property, land or structure thereon within the jurisdiction of the homeowner's association, unless expressly agreed to in writing at the time of such addition or amendment by the owner of the affected property. Nothing in this section shall be construed to prevent the enforcement of valid covenants, conditions or restrictions limiting a property owner's right to transfer his interest in land or the structures thereon so long as that covenant, condition or restriction applied to the property at the time the homeowner acquired his interest in the property.

See the language in the context of the existing statute here.  The legislative history of Idaho HB 511 is here.  The bill is currently on the Governor's desk and it is presumed he will sign it.

Now for the fun part:  how many ways is this a completely incomprehensible piece of legislation that has nothing to do with STRs?  I will get us started:

  1.  Um, there is no limitation on "rental."  So, this wouldn't govern just short-term rentals, but ALL rentals.
  2. Because this applies to all rentals, would this also mean that the HOA could not govern what a renter does with a property, which might include subletting and assigning of the lease?
  3. What about commercial uses of a "renter," such as daycares in HOAs?  Seems to me that the HOAs could not regulate such commercial uses that are otherwise permitted by local zoning.  
  4.  Presumably the second sentence is meant to mean that existing CC&Rs apply to existing owners.  However, what are we to make of the fact that the first sentence speaks of "property land or structure" while the second sentence speaks of just "right to transfer his interest in land or the structures thereon"?  Is there some aspect of "property" to which the first sentence applies that is not implicated by the second sentence?  
  5. "Rental," "property," "structure," "interest in land," "homeowner," and "owner" are all undefined terms.  Litigators...go nuts!
  6. What's with the gendered pronouns? 

Well, I could keep going, but I'm curious what others think of this bill.  What unintended consequences do you see?  

If nothing else, this bill is a clear indication of how efforts to fix one problem--what to do about short-term rentals in HOAs--can open up a host of new problems.  To my eyes, this is a field day for real estate litigators in the making.



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