Last week, a Miami-Dade County Court struck down Miami Beach’s ban on short-term rentals, which prohibits rental periods of less than six (6) months and one day in single-family and multifamily residential buildings located in certain areas. Specifically, 11th Circuit Court Judge Hanzman ruled that the City’s ordinances regarding short-term rentals are in direct conflict with State law and are therefore illegal and unenforceable. If the Third District Court of Appeals upholds this decision, the City of Miami Beach may lose its grandfather status, which would prevent it from enacting another law banning short-term rentals. 

 

Such a decision would also affect condominium associations in Miami Beach that currently rely on local law as the basis for prohibiting short-term rentals. Associations that do not have explicit restrictions or rules in their governing documents prohibiting or limiting short-term leases (rentals) may no longer be able to rely on the City’s ordinance. These associations should consider adopting amendments to their governing documents prohibiting short-term leases (rentals) outright, or implementing reasonable and clear restrictions on rentals.* Associations should not rely on a theory that short-term rentals violate restrictions regarding commercial use of units. In most cases, when an association’s governing documents are silent or ambiguous, courts generally resolve disputes in favor of an owner’s free and unrestricted use.

 

Prior to the ruling, Miami Beach still allowed short-term leases in a few sections of the City. However, associations located in a zoning district that prohibited short-term rentals could not allow owners to lease on a short-term basis. Now, these associations have the option to allow short-term leases provided the owners abide by city code, which includes obtaining a business license and paying certain taxes. This means that if the City’s ordinance is illegal, other buildings may be able to compete for buyers who want to own a building that expressly allows short-term rentals in the governing documents. 

 

These Associations should review and strengthen governing documents and rules to ensure adequate enforcement provisions. Examples of short-term rental restrictions that Associations should consider include the following:

• Standard application process for all tenants/residents (including any proposed residents or authorized family members over the age of 18 but not on the lease as a “tenant”)

• Adopting a standard lease agreement addendum with provisions granting the Association certain enforcement, eviction, and other protections against the tenant and unit owner/landlord 

• Minimum lease term and, if desired, a limitation on the number of times a unit owner can rent his/her unit in a calendar year
• Specifying the minimum duration (term) for leases and, if desired, a limitation on the number of times a unit owner can rent his/her unit in a calendar year
• Strict and express rules regarding noise and nuisance issues  

 

Vigilant Associations should periodically audit the key-cards, parking passes, and/or access devices issues to owners to see if an excessive number of key-cards have been issued to one or a few units – – this may be indicative of short term rental or improper transient use at the unit. Associations should also monitor short-term rental websites, forums, and mobile booking apps to see if any owners are listing units in violation of the Association’s rules. 

 

Actually enforcing the rules and restrictions against short-term rentals can be tough for associations as some owners often find creative ways to around the rules and procedures. Associations should consult with their legal counsel to ensure they are complying with the procedures and requirements in their governing documents for issuing violations, holding hearings with the violation committee, and levying the actual fines. 

 

About the Authors: Partner David T. Podein and Associate Josephine Jorgensen concentrate their practice in the areas of condominium and community association representation, and complex business and commercial litigation. To get in touch with our professionals, you may fill out the form here.

 

 

* A unit owner may vote against proposed leasing restrictions in order to be grandfathered in and therefore any new amendment to the governing documents regarding leasing restrictions would not apply to that unit owner until the unit is sold. See § 718.110, Florida Statutes (“An amendment prohibiting unit owners from renting their units or altering the rental term or specifying or limiting the number of times unit owners are entitled to rent their units during a specified period applies only to unit owners who consent to the amendment and unit owners who acquire title to their units after the effective date of that amendment”).