Micro-Rentals and Their Impact

Anyone in the community association industry knows that technology has a powerful effect on community.  The impact ranges from the good (virtual meeting software, the ease of email communication, electronic voting) to the bad (social media harassment, online misinformation campaigns, the ease of email communication).  The purpose of this article is to highlight the emergence of a new type of rental which, like short-term rentals before it, is made possible through technology and has the potential to be incredibly disruptive to a community.  The companies that offer the platform for these rentals vary, but the purpose is the same:  to allow an Owner to rent their yard, pool, or even their home for events that typically do not even last a full day.  

In practice, we have so far seen this in the form of owners renting out their backyard swimming pools for parties.  As with any rental, the impact of the usage itself will depend on the people and the event.  Unfortunately, because of the incredibly transient nature of these rentals (the renters do not even have to deal with the fallout of waking up in the same place they spent the night), it appears to result more often than not in events that give no consideration to the neighbors and the community.  In addition, as with any activity that potentially brings non-members into the community, the additional travel and usage increases the risk of a lawsuit against the Association for harm or damage occurring during the party.  The good news is that many associations will already have the tools in their governing documents to fight this type of behavior.  The following are ways that an Association may already be able to prevent this type of use should it occur:

Residential Use Only/No Business Use

Many covenants restrict owners from utilizing their dwellings for purposes that do not align to the residential nature of the community.  These provisions often have criteria to distinguish an allowed business use, like a home office, from a disallowed business use including a use that increases traffic or brings non-members to the community in heightened numbers.  Party space rentals, which is what this type of rental is at heart, would likely be construed as a restricted business use depending, of course, on the facts and circumstances of each individual rental.

Short Term Rental Restrictions

This may be the easiest provision to utilize to prohibit micro-rentals of this nature.  These provisions typically prohibit use of a dwelling for “short term” use and the rental of a swimming pool or yard for an afternoon event would seem to fall squarely within the definition of “short term.”

Leasing Restrictions

It is possible that even a traditional leasing restriction might be sufficient to combat rentals of this type.  Many such provisions prohibit partial rentals or subleasing of a property, and what is a rental of a pool for two years but a partial lease of the property.  Keep in mind that there may be as of yet unanswered questions about whether this kind of use actually constitutes a “lease” as that term is typically used.

Nuisance Provisions

Nearly every set of covenants in Georgia contain some language prohibiting the use of property in a way that causes embarrassment, undue distress or discomfort to neighboring Owners.  The “nuisance” complained of cannot be “fanciful” and the behavior alleged must be sufficient that any reasonable person would find it disruptive to the use of their own property.  To the extent the rentals result in a loud party that snarls parking and traffic, a few pictures and eyewitness accounts can often be sufficient to show that the Owner of the property has violated the nuisance provision.

As with any enforcement action, each association’s individual covenants play an important role.  While some of the provisions above may work well for one association, another’s specific language may be just different enough to prohibit use of one or more provisions in enforcement.  In addition, it is important to remember that not all communities may oppose this type of use – it can certainly be a great way for owners to maximize their investment if the use can be performed in a way that is not disruptive.  If an association intends to allow this type of micro-rental, we strongly recommend contacting the association’s master insurance carrier to ensure that it is adequately insured against possible harm arising from the same.  And, as always, if an association runs into issues arising from micro-rentals, it is important to consult with legal counsel to ensure that any enforcement action taken is done in compliance with Georgia law and the governing documents.