CHICAGO — Condominium associations are generally favorably disposed toward regulations, like those being proposed in Chicago, that would require condo owners renting their units through online "sharing" services like Airbnb to register with the city or pay a licensing fee - even though most associations already prohibit such rentals, said a Chicago condo association attorney.
Kelly Elmore, an attorney with Kovitz Shifrin Nesbit who represents condo and homeowners associations and works with many condo associations in Chicago, said most condo owners are already prohibited from listing their units on Airbnb and other sites - even though many still do.
“Most associations’ declarations already contain a provision that if leasing is even allowed in your building, if you’re going to lease your unit, then you are required to lease for a minimum of one year,” Elmore said. “So by the very nature of a vacation rental, an owner who seeks to rent out a unit for a weekend or even a month is already going to be in violation of the association's governing documents. Whether or not the city imposes an ordinance may not have an effect.”
Earlier this month, as part of an effort to lobby the city to strengthen regulations on short-term rentals, the American Hotel and Lodging Association issued a report that claimed about 96 percent of the revenue Airbnb generates in Chicago comes from locations that are rented more than 30 days per year.
An ordinance is already in place requiring all rental properties in the city to be licensed, and Mayor Rahm Emmanuel has proposed that people who rent their properties more than 90 days each year should be required to pay for a license, while people renting out their properties for less time should simply have to register with the city.
Condo associations prohibit vacation rentals for a number of reasons, with security being the most important.
“Oftentimes access to (high-rise buildings) requires a key fob, a key and things like that,” Elmore said. “In many situations that we have seen, unit owners are freely handing over key fobs and keycard access to essentially unknown strangers, who have signed up just to use a unit for the weekend or for a few days.”
If unit owners are caught listing their units on vacation rental sites, they can face stiff penalties. And because many high-rise buildings use door staff and require signed permission forms for non-residents to enter, it’s fairly easy for associations to catch violators, Elmore said.
“Typically, the way associations treat these vacation rental situations is they issue a notice of violation to the owner, and the fines can be very hefty for people who violate the rules,” she said. "Most associations will actually assess a fine in excess of whatever the nightly rate someone received.“
The high fines are to discourage future listings, because otherwise people might simply consider them the cost of doing business, she said.
Elmore said associations are facing these issues in the city and the suburbs, but the disputes in the city have been more high-profile.
“I don't know that the problem is greater or lesser than in the suburbs, she said. "I think maybe people are more aware of it downtown because it's easier to spot violators.”