Florida community associations versus Airbnb and VRBO in Florida.

• Author: Sklar, William P.
• Position: Vacation rentals by owner

The internet has spawned yet another market disrupting concept. Airbnb and VRBO, relying in part on "I own it and can use it as I wish," a traditional real property belief, collide in numerous battlegrounds across the state with another traditional belief, the ability of communities to restrict perceived disruptive uses. Florida law has consistently upheld community covenants and restrictions regulating the level of occupancy and limiting an owner's ability to transfer a condominium unit. Most often found in a declaration of condominium or covenants, conditions, and restrictions (CCR), leasing restrictions, leasing approval requirements, and, more often than not, restrictions on the frequency and duration of leases and guest occupancy of units reflect a general discord existing between resident owners and nonresident owners and their lessees because of what is perceived as differing interests in the use and maintenance of property. As a result, many communities have attempted to strengthen their ability to control occupancy of condominium units by promulgating regulations to further restrict, if not completely prohibit, an owner's ability to lease or rent that owner's parcel within an association-governed community. (1) These restrictions have been adopted by either boards of directors exercising their rulemaking authority or by parcel owners amending their CCRs and declarations.

Restrictions on leasing units, whether contained in the original declaration or in subsequent declaration amendments, are reasonable indirect restraints on alienation, which are not violative of the unit owner rights that are subject to the restrictions. (2)

Unfortunately, associations in non-resort communities are now administratively burdened to undertake resort or hotel-type burdens as a result of the frequency of such reservations and implementation of regulations seeking to protect the community, its residents, and its property. The convergence of an association's right to regulate unit occupancy and the frequent short-term rentals at the center of the business models of Airbnb, Inc., and Vacation Rentals by Owner (VRBO) squarely presents concerns for community associations seeking to enforce residency and occupancy restrictions. Those who oppose Airbnb and VRBO can utilize zoning laws, restrictive covenants, land use ordinances, and tax laws to target these companies and others that share a similar business model. Notwithstanding these methodologies, F.S. [section] 509.032(7)(b) (2016) provides that a local law, ordinance, or regulation, adopted after June 1, 2011, may not prohibit vacation rentals or regulate the duration or frequency of rental of vacation rentals. This restricts the ability of local governments to regulate short-term rentals. However, Florida's First District Court of Appeal in Bennett v. Walton County, 174 So. 3d 386 (Fla. 1st DCA 2015), presented a means to potentially and significantly legally impair the Airbnb and VRBO business model.

The Business Models of Airbnb and VRBO

Airbnb collects money by providing a matching service online for property owners and short-term renters. (3) Airbnb generally does not own or operate the properties. (4) Rather, Airbnb collects a fee on each transaction for acting as an intermediary. (5) Airbnb offloads responsibility for cleaning, maintenance, repairs, insurance, and compliance with regulations and laws to the property owners who act as independent contractors. (6) What are Airbnb's responsibilities? It handles advertising, owner-renter communications, booking, and payment processing in exchange for commissions from both the renters and the property owners. (7)

VRBO operates its business somewhat similarly to Airbnb. VRBO also acts as an intermediary between property owners and short-term renters. (8) However, VRBO acts similarly to the classified pages in a newspaper by allowing property owners to advertise on its site for a flat fee, rather than collecting a commission and involving itself in the transaction like Airbnb. (9) VRBO also only lists entire homes whereas Airbnb lists anything from entire homes to single rooms. (10) That said, Airbnb's and VRBO's business models are both essentially built around acting as middlemen between property owners and short-term renters.

The Potential Implication of the Bennett v. Walton County Interpretation of Zoning Laws

The Bennetts rented out beachfront property for weddings and other events approximately 30 times in 2009, 13 times in 2010, and 20 times in 2011 and 2012. (11) The property was in a residential preservation area under Walton County's Land Development Code, (12) which meant that nonresidential uses were not allowed. (13) Complaints from neighbors caused Walton County to investigate and bring enforcement proceedings against the Bennetts for violating the code, since the weddings and events amounted to prohibited nonresidential uses. (14) After initial uncertainty over how many events were enough to constitute a prohibited nonresidential use, Walton County eventually decided that any event held by a renter on the Bennetts' property would result in a code violation. (15) Following this, the Bennetts' sued, alleging substantive due process violations under the U.S. Constitution and the Florida Constitution. (16)

The First District Court of Appeal held that the code's prohibition on nonresidential uses was not unconstitutionally ambiguous on its face. The code conveyed a clear and sufficient standard as applied to the Bennetts, and the county's enforcement of the code was not arbitrary. (17) The court's focus was on the frequency and intensity of the Bennetts' rentals. (18) On the topic of frequency, the court explained that "[t]he rate and scope of the Lawn's rental usage--up to 30 weddings per year on the Bennetts' lot--isn't typical residential usage as measured by common practice." (19) By intensity, the court meant that the events often extended for days, involved drinking, and were raucous enough for neighbors to complain and for the Bennetts' to hire an off-duty police officer to remain on the site for the events. (20) In fact, one neighbor complained of guests at the events urinating under his building, pulling the breakers on his air conditioning unit, and even giving him "one finger salutes." (21)

This case materially affects companies, such as Airbnb and VRBO, that rely on residential property owners frequently renting their property to short-term renters. The first issue presented is the court's focus on frequency. Property owners who use Airbnb often rent out their properties frequently for short periods of time. Additionally, the court explained that the Bennetts essentially introduced a wedding event business into their residential preservation area-zoned neighborhood, attracting renters who might otherwise rent churches, meeting halls, parks, country clubs, or other venues to stage their events. (22)...