Banning Short-Term Rentals

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A Court in Louisiana recently tackled the issue of short-term rentals (New Jax Condominium Association, Inc. v. Vanderbilt New Orleans, LLC, 219 So.3d 471). A Condominium Association adopted an amendment to its bylaws during its annual meeting prohibiting short term rentals. When a Unit Owner continued to engage in short-term rentals, the Association sued and received a permanent injunction, preventing the Unit Owner from continuing to engage in short-term rentals. The Unit Owner appealed, alleging that the amendment to the bylaws was invalid because certain board members had conflicts of interest, and because one board member changed his vote during the voting.

The appeals court upheld the trial court’s ruling, enforcing the ban on short-term rentals. Though certain board members were involved in separate litigation against the Unit Owner, the court found that there was no conflict of interest because the board members were elected at the same meeting the amendment was proposed, and therefore didn’t participate in the decision leading up to its enactment. The court further held that no state law prohibited a member from changing his vote during voting.

If your Board is looking to prohibit short-term rentals, you need to do the following:

  1. Review your existing documents and your state’s law to see what they provide relative to the rental and leasing of the units and amending your documents;
  2. Draft and have properly approved amendments to the appropriate documents to restrict short-term rentals; and
  3. Enforce any restriction you place on short-term rentals.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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