We Want Our Neighborhood Back: A North Carolina HOA's Guide To Regulating Airbnb-Style Activity

Lively weekend crowds, overloaded parking areas, and unfamiliar visitors coming and going—these are some of the most common concerns in communities experiencing an influx of short-term rentals ("STRs"). Platforms like Airbnb, VRBO, and HomeAway have made it easy for owners to rent out homes for a few nights at a time, but these frequent turnovers can disrupt the quiet character many residents expect from their neighborhood.

Because of this, homeowners often look to their association to "get the neighborhood back."

But short-term rental regulation is legally complex in North Carolina, and homeowner associations ("HOAs") must tread carefully. This best practices article focuses specifically on what HOAs can and cannot do when addressing STRs.

The Fundamental Issue: Renting Is a Protected Property Right

In North Carolina, the right to rent is a strongly protected legal right. Courts view STRs as part of that right unless a community's original Declaration clearly and unambiguously restricts them.

This creates three challenges for HOAs:

1. New, complete bans on STRs when the community had no prior rental restrictions will be challenging to uphold.
2. Restrictions imposed only on new owners after they buy their properties may be difficult to enforce.
3. Ambiguity in the governing documents is interpreted in favor of allowing rentals.

Because STRs are considered a use of private property, attempts to eliminate or drastically limit them face a higher level of legal scrutiny in the courts.

What Has Not Worked

When HOAs attempt to regulate STRs, some approaches are consistently struck down:

1. New, total prohibitions on renting in restrictive covenants when rentals were not previously regulated in any way.

In several cases, courts have found new, total bans on rentals too burdensome on ownership rights. The lack of prior rental restrictions makes the imposition of new total bans on rentals far too different from what the owners came into when they joined the community.

2. Rules adopted by the Board that single out short-term tenants for different treatment, when the restrictive covenants are silent.

Boards of directors often adopt rules and regulations that are separate from the community's restrictive covenants, but which are enforced just like the restrictive covenants. Even when rules are permitted to be adopted generally, rules that target renters when the restrictive covenants provide no foundation for those rules have been found to be invalid. Examples of rules that may be invalid in this context would be rules permitting owners to park on the street, but not STR guests, and rules requiring only STR tenants to pay special fees.

How HOAs Can Effectively Address Short-Term Rentals

While blunt restrictions may not succeed, HOAs may have several viable tools, when implemented correctly, to minimize STR impacts. An HOA should consult with an attorney prior to implementing any of the strategies below, as the nature of the community and the restrictive covenants for the community may impact the validity of these actions.

1. Use the Declaration (Original or Amended) to Set Minimum Lease Terms

A Declaration provision requiring minimum lease terms (e.g., 30 days, 60 days, 6 months) may be enforceable because it regulates how renting occurs, not whether an owner can rent at all. Minimum lease terms can effectively eliminate weekend STRs without "banning rentals." Amending the Declaration requires proper procedural steps and may still face challenges.

2. Require Use of an HOA-Approved Lease Form

This form can include:

• A clause requiring tenants to follow all community rules.
• Owner acknowledgement that violations by tenants are treated as violations by the owner.
• Disclosure requirements for contact information of the tenant and all of the tenants guests

This approach gives the HOA more control and sets expectations up front.

3. Hold Owners Accountable for Their STR Tenants' Behavior

Even if the HOA lacks direct authority over the renter, it can enforce rules against the owner. Owners may be hesitant to continue STRs if they:

• Accumulate fines.
• Lose amenity privileges.
• Become subject to violations due to guest behavior.

4. Adopt Rules That Apply Equally to Owners and Renters

Without a foundation in restrictive covenants to treat people differently, rules should apply to owners, guests, and tenants in the community equally, even if the motivation is STR concerns.

Examples of such rules:

• Community-wide parking restrictions.
• Guest registration requirements applied to all residents.
• Pool or amenity schedule rules applying to owners and tenants alike.

Owners may feel inconvenienced, but equal application can help with enforceability.

Before proposing any new STR regulation, the HOA should:

• Identify any rental or leasing provisions already in the Declaration.
• Determine whether existing language restricts short-term use.
• Confirm whether an amendment is needed (and whether one is legally feasible).

Original provisions are far more likely to be upheld than later-added restrictions because buyers took title knowing about them.

Conclusion

Short-term rentals pose growing challenges to community stability and harmony. But North Carolina's strong protection of rental rights means HOAs must use targeted, legally sound strategies to respond to those challenges.

With careful drafting, consistent enforcement, and legal guidance, HOAs can reduce disruptive STR activity, maintain the neighborhood's character, and protect the rights of all owners.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.