Super Bowl LII: An Update on Short-Term Rentals

Nancy Polomis

By Nancy T. Polomis

Super Bowl LII hosted in Minnesota will impact just about every area of our economy, including real estate. In a prior article (see See Volume 3 Number 7 of Real Estate Agent Magazine), I discussed issues surrounding short-term rental of homes to accommodate the influx of members of the media, spectators, team members and staff to the Twin Cities. As kickoff approaches, I wanted to provide both a refresher and an update to the information in that article.

Most cities currently do not prohibit such short-term rentals. However, owners should contact their city staff to verify whether any city ordinance exists to prohibit or restrict such rentals or if any licensure or other documentation is required. At its Oct. 17, 2017, meeting, the Minneapolis City Council adopted an ordinance specifically permitting short-term rentals (rentals for a period of fewer than 30 consecutive days), but imposing licensing requirements for short-term rentals. The city will begin accepting short-term rental registration and license applications Dec. 1, 2017. St. Paul followed suit, and approved its own set of regulations in its Oct. 25, 2017, meeting. Some cities require that owners desiring to engage in short-term rentals adhere to the same requirements for inspection, tenant notifications, fair housing training, etc., as owners who engage in long-term rental of their properties. Although the Minneapolis and St. Paul ordinances regarding short-term rentals do provide lower license fees for short-term rentals, they do not appear to provide exemptions for short-term rentals with regard to other requirements related to rental property.

However, simply because a city may allow short-term rentals does not necessarily mean an owner is “home free.” If the home is part of a homeowner’s association, the owner needs to determine whether his association permits short-term rentals. Associations are entitled to adopt occupancy restrictions more stringent than those allowed under city ordinance.

Every homeowner’s association has a declaration recorded against all property in the association, which outlines various rights, responsibilities and restrictions that apply to the property subject to the declaration.

• Many declarations include language prohibiting use of homes in the association for transient purposes. “Transient” may be defined as less than seven days or even less than 30 days. Many declarations require a minimum lease term of six months or more.

• Some declarations require that rental of a home in the community be rental of the entire unit – not just a room or two.

• Some declarations allow only a certain number of units to be leased at a given time or only under certain circumstances outlined in the declaration.

• Some declarations prohibit leasing entirely.

Associations are concerned about short-term rentals’ impact on security and safety. Some associations are concerned that association grounds and common areas might be damaged by short-term tenants or that short-term tenants may not be vetted as carefully as longer-term tenants may be. While there may be safeguards that an owner can try to put in place to minimize those concerns, those concerns remain.

If an association has restrictions or prohibitions against short-term rentals, an owner who opts to ignore such restrictions and rent his unit anyway would be subject to a fine. Most associations with occupancy restrictions impose significant fines for violations of those restrictions: fines of $1,000 or more are not unheard of. The cost to repair any damage proven to have been done by a short-term tenant (or any tenant, for that matter) is the responsibility of the unit owner. What seemed like a “no-brainer” in the beginning could end up being a costly endeavor for the unit owner.

Of course, some associations have enthusiastically embraced the opportunities short-term rentals may offer their members. Some associations have adopted amendments to their declarations that specifically allow short-term rentals under certain circumstances. In some cases, the allowance of short-term rentals is limited to a period of time that corresponds to Super Bowl LII. Some associations have agreed to allow the association’s board of directors to declare certain periods of time (often related to special events) as periods in which short-term rentals are permitted.

With just a few months before the big event, it’s unlikely (though not impossible) that associations will make significant changes to their existing short-term rental policies aimed at Super Bowl-related occupancy. Of course, that certainly doesn’t mean that once the Lombardi trophy is awarded, the issue is dead. The Twin Cities will continue to host major sporting events, conventions and other significant activities. It’s important for real estate agents to be familiar with the complexities involved in any rental of a home – especially a shortterm rental.

Skol!


Nancy T. Polomis is a partner with the law firm Hellmuth & Johnson. She has an indepth understanding of the real estate market, which enables her to provide direct and proactive counsel to builders, developers, individuals, and entities involved in real estate transactions, as well as to condominium and townhouse associations. Nancy brings considerable insight to all stages of community association development and functioning, including entity formation, the creation and interpretation of covenants and bylaws, and collections. Nancy can be reached at npolomis@hjlawfirm.com or at (952) 746-2105.