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AIRBNB: PLEASE STAY AWAY FROM CONDOS

It is estimated that over one million visitors came to Washington for the innauguration - some to applaud and some to protest our new President.

Where did all these people stay? Some were in hotels, although room rates in downtown places were astronomical; others stayed with friends.

And many signed up for lodging with AIRBNB, which had expected more than 10,000 renters would be staying for the long weekend in over 6,000 listed lodging.

One area of interest: the many condominium buildings in the vicinity of the White House and Pennsylvania Avenue. A condo unit owner can make a lot of money just renting out her unit for the three day festivities.

But there is a problem. Condo owners must honor and abide by the Bylaws of their association, and the Bylaws in every condominium here in the Washington metropolitan area contain restrictions on leasing. A typical language reads: "no unit shall be rented for less than (6 or 12) months, and under no circumstances can a unit owner permit Unit to be used for a hotel or transient purposes."

Why is this language found in condo legal documents all over the United States? There are two basic reasons. First, the Federal Housing Administration (FHA) -- the predominant mortgage lender in this country -- imposes restrictions on the number of renters that a condominium can have. Currently, there can be no more than 50 percent tenants in any one complex, although based on recent legislation that number can go down to 35 percent if the association meets certain guidelines.

Right or wrong, FHA believes tenants are not good for condominiums. Personally, however, I have met many tenants who actually take better care of the property than unit owners.

A second reason: if you live in a large building in an urban area, you want to make sure your building is safe and secure. If people -- like AIRBNB customers -- come and go at will, and keys are widely distributed, there can be problems.

Accordingly, many condo boards of directors are taking strong steps to ensure that owners will not be renting out their unit - whether for the inauguration or any other time of year. What can the association do? If a unit owner is violating the community rules, it can fine the owner. Some associations have actually implemented rules that require the owner to turn over all of the AIRBNB rent received to the association.

It must be noted that before a unit can be fined, the Board must hold an informal hearing, at which time the unit owner can present his case and try to get the fine abated or reduced.

If a fine is imposed and not paid within a reasonable period of time, the board can file suit against the owner or in some cases can actually foreclose on the unit based on the unpaid fine.

We are a litigious society and law suits involving condo law are no exception. Recently, a case -- known in Canada as the "AIRBNB DECISION -- was handed down from the Ontario Superior Court of Justice. The court ruled that an AIRBNB short-term lease violated the condo documents which restricted the use of units to that of a single family dwelling. The court's language is instructive: "Single family use cannot be interpreted to include one's operation of a hotel-like business with units being offered to complete strangers on the internet on a repeated basis for durations as short as a single night. Single family use is incompatible with the concepts of ‘check in' and ‘checkout' times, ‘cancellation policies', ‘security deposits', ‘cleaning fees', instructions on what to do with dirty towels/sheets and it does not operate on a credit card payment."

Although this is a Canadian decision, I suspect that Judges here in the United States will pick up on the quoted language as more an more lawsuits are brought involving AIRBNB.

In a recent Washington Post editorial entitled " A neighborly approach", AIRBNB was complimented based on its willingness for work with local governments. Condominium associations are often called a mini (or quasi) government, and condo boards may be willing to bend the rules on special occasions such as Super Bowl weekend, Navy graduation and even Inauguration day, to allow unit owners to make a few extra dollars. Thus far, however, it does not appear that AIRBNB has been willing to work with the vast number of community associations throughout the nation.



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