SHORT-TERM RENTALS CAN BE COSTLY FOR OWNERS
Rule-breaker had to pay HOA $106K
San Diego Union Tribune By Jonathan Horn Oct. 25, 2014
If you own a luxurious condo in downtown and want to make some easy money, you can rent out your unit for a weekend via popular sites like Airbnb, Craigslist and Vacation Rentals By Owner.
Just don’t let your homeowners association find out — you could be writing them an even bigger check.
That’s what happened to Thomas Stevens, who in July paid The Mark Condominium Association more than $106,000 after a Superior Court judge ruled that he continually violated the opulent downtown building’s regulations by renting out his 19th-floor unit on a nightly and weekend basis, something Stevens says he did only once. After he wrote the check, The Mark’s association posted notices in the elevators, informing residents of the victory as a tacit reminder to resist any temptation to list their units for leases shorter than the 90 days the complex requires.
With the skyrocketing popularity of sites like Airbnb and VRBO.com providing travelers an alternative to hotels, homeowners associations across downtown are taking steps to ensure their residents don’t get tempted to take advantage of the opportunity.
Some municipalities also regulate short-term rentals.
This week, the San Francisco Board of Supervisors voted to make the use of Airbnb legal for the first time in several years, a measure that moves to Mayor Ed Lee’s desk for signature. In New York, it’s still illegal to rent out a residence to someone for fewer than 30 days, rendering Airbnb moot for short-term stays. The city of San Diego doesn’t ban short-term house rentals, but requires a minimum seven-day stay for condos in some areas. Those who rent out their units are required by the city to obtain certification and collect transient occupancy taxes.
“Owners don’t want weekenders or other short-term stays because it turns their home atmosphere into a hotel atmosphere with visitors who can be loud, disruptive, rude and simply not use the care required to help keep the community clean, safe and free of damage,” said Laurie Kendrick Coxworth, general manager for ICON, a complex on 10th Avenue, which requires at least 30-day leases of its units.
Kendrick Coxworth said each year around Comic-Con, the complex sends out reminder notices to residents not to list their units for the international event. She said the board is considering raising the fine for an initial offense from $250 to $1,000. Across downtown, at the 43-story Electra complex off Harbor Drive, the board two years ago increased the fine from $50 for a first offense to a maximum $5,000, although general manager Jim Jennings said most first-timers are fined $500.
Jennings said he checks sites like Airbnb every two weeks to see if people are advertising their units, and even more frequently around Comic-Con. If there’s a listing, he sends the owner a notice, as the building requires a minimum one-year lease. Jennings said he also finds out about short-term rentals through word-of-mouth.
“You’re not going to keep anything secret in a vertical village,” he said.
David Peters, attorney for The Mark’s association, said visitors tend to get caught because they ask doormen and other workers at the buildings for services more akin to those in a hotel.
“I’ve had them order food from security, and they don’t understand it’s not a hotel and that it’s not their concierge,” he said.
The ruling against Stevens came three months after he sold the two-bedroom unit for $774,000, which was $175,000 more than he and his parents paid in December 2009. The $106,059 payment to The Mark took away any sort of profit.
“It was kind of a wash,” said Stevens, 49, who owns a demolition company in Orange County. “I had to pay my attorney, and all my time wasted. I really didn’t want to sell the unit.”
Leases at The Mark have to be at least 90 days to comply with the building’s regulations, which owners agree to when they buy a unit. Stevens said he only violated the rule once, when he said there was a lack of clarity in the requirement. He said he rented his condo out to a teacher visiting from Ohio for a week, pocketing $2,500. He said he received a violation letter after she commented on the building to someone at the front desk. He eventually paid a $350 fine, and then adjusted his advertisement on VRBO.com to a reflect a minimum 90-day stay.
“I turned people down all the time because I didn’t want to violate the HOA rules,” he said, speaking by phone from Orange County this week.
Peters, The Mark’s attorney, said that Stevens continued to rent out his unit for short terms, despite warnings to stop.
“He was basically bringing people in, and claiming they were his friends and his guests,” Peters said. “They were not his friends and his guests.”
Stevens said they actually were his friends. That includes Tunch Ilkin, a retired member of the Pittsburgh Steelers who stayed in the condo during visits to San Diego to care for his wife, who died in 2012 after a battle with cancer. A spokesman for the Steelers confirmed to U-T San Diego that Ilkin did stay at the property. Stevens said otherwise he and his wife and children would come down from Laguna Niguel for weekends, visiting places like SeaWorld, or that his parents would use it to escape the heat in Scottsdale, Ariz.
In the end, Superior Court Justice Jay Bloom found for The Mark, awarding $16,059 in costs and $90,000 in attorneys fees for breach of contract.
Seth Kaplowitz, a real-estate attorney and finance lecturer at San Diego State University, said homeowners associations are aggressive about enforcement because they want to sustain quality of life and property values. He said other parts of the county aren’t as strict on short-term rentals, noting there’s a large market in North County during Del Mar racing season.
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