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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