Zoning for More Long Term Rentals

Visitor Question: How would a commercial zone condo association change its zoning laws to be more of a subdivision with longer rentals (no short term) and more rules like a private subdivision?

Editors' Reply: Your question has a few imprecise terms, but we will try to clear those up while answering what we think you want to know.

We think you mean that your residential condo association was assigned commercial zoning by your city. Readers, there are such things as commercial condos where businesses own the interior of their business spaces, but because of the later comment about subdivisions, we do not think this is what our original visitor means.

We will assume in our answer that this is a residential condo association.

The first part of the question is how a condo association can change its zoning laws. The answer is simple: it cannot. Only the city can change zoning laws.

So we think that our visitor means that he or she would like the condo association to change its covenants, also called deed restrictions. These are privately enforced requirements that stay with the land forever in most states.

Certainly if this is a residential condo development, it is usually desirable to have more long-term rentals than short-term rentals.

There is one important exception to this generalization. In very popular resort areas, some condo developments may have a large number of units owned by people who rent them out for short terms, meaning a week or less. But those are specialized condo developments, where buyers should be made aware of the short-term rental possibility before purchase.

So in the more typical situation where condo purchasers intend to make their condo their permanent residence, and expect the same from other owners, it is a good policy goal to limit or forbid short-term rentals.

There are really two possible solutions if the majority of the condo owners want to reduce or eliminate short-term rentals.

First, the condo association could act to change its covenants to prohibit short-term rentals. To understand whether this would be relatively easy or quite difficult, you would need to read your master deed to see how covenants (the term for individual rules) are changed. If the covenants are silent on the issue of short-term rentals, it is still a master deed modification that will have to go through the procedure for a change.

We have corresponded with owners whose covenants do not say how they can be modified; if that is the case in your situation, you will need to find an attorney immediately.

Sometimes changing the covenants is as simple as the homeowners association board voting to make the decision. At other times a majority or a set percentage of super-majority of current owners can vote to make the change. And on still other occasions, it is more complex, requiring the agreement of the original owner or developer of the land, or of their heirs if they are deceased. So understanding how to change covenants is a matter of reading how the original deed was set up. That is the first option.

The second option is to ask the city government to change the actual zoning of the property. This is a far different procedure, requiring probably two public hearings and a precise notification process on the part of the city. You say that you have commercial zoning, but here again you would have to read the actual regulations pertaining to your zoning district to see what is allowed or not allowed right now.

If most of you want the city to take the action, the first step should be detailed conversations with both a city staff member and your elected city council person. (In most but not all places, the city council is elected on a geographic basis, so your condos would be located in a particular ward.) There would be a filing fee, and if you have an active HOA, the association would be the petitioner who files for rezoning.

A potential problem with the rezoning approach is that there may be other properties in the city that have the same zoning classification as you, so if the city changes the rules of that zoning district, other people would be affected. The city may be very reluctant to do that. This is the reason for the conversations before trying to file for rezoning.

Another consideration about rezoning from commercial to residential is that appraisers who think in a conventional way might say that this would decrease your property value. You might want to check out that implication in your locale.

Please understand this key point. The chief difference between zoning and covenant-based regulation is that zoning is imposed by and enforced by the city, while covenants and condo association rules are imposed by and enforced by your HOA.

Usually we are big proponents of publicly enforceable regulations imposed by zoning, but in your case, it may make perfect sense to address the issue internally by changing your covenants if that process is not too difficult. You say you would like your condo development to be like a private subdivision with more rules, so that might be the approach that you find most comfortable. (Whether private subdivisions have more rules is very specific to cities and regions, but that situation may be common in your area. We cannot really comment on that aspect of your question without knowing much more.)

It is possible that you would want to pursue both solutions. If you are saying that your condo is zoned commercial, and that this is why short-term rentals are allowed, you could ask your city council to downzone your condo development to residential. This would be easier if you have other condo developments in your city that are zoned residential. Then you also could amend your covenants to prohibit short-term rentals if you want your HOA to be able to act to enforce the covenants with a particular owner as well.

This brings us to one final important point, which is that property owners must abide by both zoning and deed restrictions. In theory you should not have to make both changes.

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