The Republican National Convention: Community Associations Should Keep An Eye On The Short-term Rental Market

By: Amanda A. Barreto, Esq.

The Republican National Committee’s announcement that Cleveland would be the site for its 2016 Republican National Convention was great economic news for the City and its surrounding communities. The Convention is estimated to bring in more than 50,000 visitors to the area and the week-long event will require housing for those visitors. With a limited number of hotel rooms available close to the Convention Center in downtown Cleveland, there has been a boom in the private housing market to offer short-term housing.

To fill the housing gap, many homeowners are willing to rent their homes for that week in mid-July, 2016. The market for private housing is growing. For example, an 1,800 square foot, two-bedroom home in Cleveland’s near west side is going for $7,200 for the week. A 3,000 square foot, four-bedroom home near downtown is going for $14,500 for the week. Homes as far south as Brunswick are being marketed to visitors who want to stay further away from downtown.

With potential incomes like these, many of the owners in your community may be looking to cash in for the week of the Convention. Now is the time for your association to review the governing documents and notify owners of any short-term rental restrictions that your community may have.

If your association’s governing documents prevent leasing completely, the enforcement of that provision will not change. Of course, if exceptions to the prohibition exist, the association will need to go through the proper process to consider a valid exception.

Even if your association’s governing documents allow leasing, there may be language prohibiting short-term rentals, sub-leasing, and/or renting for transient or hotel purposes.

Governing documents that allow leasing typically require that a lease be for a term of a certain amount of time, usually at least six (6) months or one (1) year. A lease for one week would be an obvious violation of this term requirement.

Sub-leasing allows a current tenant to transfer some of his or her rights to occupy the unit to another. In theory, sub-leasing may allow a tenant to take advantage of the Convention and rent out the unit for only one week; however, even if governing documents allow leasing, they may specifically prohibit sub-leasing. Additionally, the lease between the owner and the tenant may very well prohibit this.

Finally, many governing documents provide that, in no event, may a unit be rented for “transient or hotel purposes,” which is usually defined to mean a rental for any period less than six (6) full months or any rental where the occupants are provided customary hotel services, such as room service, maid services, etc.

After a review of your association’s documents, if it is determined that there is no prohibition against short-term rentals in your community, there are still steps you can take to make sure that the week-long convention does not turn your property into a hotel.

The Ohio Condominium Act requires that any change in occupant information be communicated to the Board in writing. Communicate with your association’s owners about their intent to rent their units for the Convention and make sure they provide your Board occupant contact information.

Remind owners of any requirement that leases be in writing and presented to the Board prior to occupancy. If there are requirements that the lease reference the governing documents and/or the rules and regulations, make sure those provisions are in the lease. Owners must also understand that they are still responsible for the actions of their short-term tenants and to ensure that all occupants comply with the association’s covenants and restrictions.

Given that most rentals will be for only a week’s time, enforcement of the association’s covenants and restrictions may be difficult. Essentially, the association’s most powerful enforcement tool—eviction—does not exist for a week-long rental. The Board may want to consider, if it has such authority, to adopt a special policy for short-term rentals that identify specific enforcement fines that an owner may face for his occupant’s improper actions.

While the Convention will sure bring great economic benefits and welcome exposure to Northeast Ohio, community associations should be on the lookout for potential violations and take the proper steps to ensure the governing documents are complied with. Please contact one of our attorneys if you would like a review of your leasing provisions.

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