Community associations are familiar with the challenges associated with long-term home rentals and have become well acquainted with short-term rentals over the past few years, but a new trend in the sharing economy has been making waves recently: rentals for residential components such as swimming pools.
Financial pressures and the potential monetary gain are causing Americans to think more creatively about how they can supplement their income through unused or underutilized assets. Some homeowners are turning to alternative short-term use digital platforms like Swimply, which allows hosts with underutilized or idle pools to list their private pools for rent by the hour.
Since October 2020, Swimply has raised $62.8 million in funding. Swimply hosts appear to be cashing in on these possibly lucrative rental arrangements as well. One purportedly made $177,000 in less than two years by listing his luxury private pool for rent. In the past two years, Swimply expanded beyond coordinating the renting of private pools into allowing host property owners to rent out private sport courts, gyms, large backyards, golf and putting greens, and docked boats on an hourly basis.
When it comes to the sharing economy and its effects on community associations, the results can be summarized as “more people, more problems.” As seen with short-term vacation rentals, complaints about excessive noise, increased traffic, trash, and other governing document violations are likely to increase.
What can community associations do when owners begin to monetize their underutilized or idle property assets via the sharing economy?
Governing documents. Typically, community associations will have language in their association’s declaration of covenants, conditions, and restrictions that prohibits general categories of nuisance. Usually, boards have some discretion on how to regulate behavior that interferes with other owners’ reasonable use of their property and within the association’s common areas. Additionally, it is quite common in declarations to see a prohibition against using one’s residence for business purposes.
Rules. Community associations also can generally adopt rules to provide specific guidance or reasonably restrict activity that impacts the community or neighboring residences. Moreover, drafting a rule with related fees affirms that the board anticipates the community will be suffering unbudgeted costs of trash collection, increase need for patrol services, overcrowded streets, and potential health and safety challenges when owners exceed their share of community resources.
Fines. In conjunction with rules violations, a financial penalty should be comparable to the amount the host is receiving for the unpermitted use. Reducing the net benefit of the violation by decreasing the owners’ expected income from that violation should minimize the incentive for future violations.
Courts. When the above options fail, boards should consider the effectiveness and expense of external options. Seeking court assistance to restrain violations of the declaration is always an option, especially if the language in the declaration is clear enough to allow the court to determine the violation and the appropriate outcome. However, some boards may be unwilling to commit to the length and expense of litigation unless it is clear the number and scope of violations are growing, and fines will be ineffective in eliminating the incentive for future shared amenities.
Local partners. Finally, community associations also may want to look toward local options with city, code, or law enforcement as partners in enforcement. In some cases, those enforcement options may be more sympathetic to services being offered in piecemeal, or when those services directly conflict with the tourist offerings of surrounding communities.
Contributed by Dea C. Franck, Esq., Matthew A. Gardner, Esq., and Maria C. Kao, Esq.
Dea C. Franck is an attorney with Epsten in Indian Wells, Calif. dfranck@epsten.com. Matthew A. Gardner is an attorney with Richardson | Ober in Pasadena, Calif. matthew@roattorneys.com. Maria C. Kao is an attorney with Briscoe Ivester & Bazel in San Francisco. mkao@briscoelaw.net
>>This article was adapted from the authors’ presentation at the 2023 Community Association Law Seminar. An on-demand version of their session, “Can I Rent Your Pool? Practical Strategies in the Ever-Evolving Gig Economy,” is available for purchase.
Sharing Economy Survey
Are homeowners in your community renting out their private pools? Take our short survey about the sharing economy.
