One of the topics on HUD’s agenda for the round table session last month was that of “Airbnbs”. We have to admit that even with all of the condominiums that we have worked with, this was a new concept for us. None of the legal documents of our condominium clients had any such language in them.
In case this is new to you, Airbnb is when unit owners allow overnight guests or trading of units on a temporary basis. We understand that this is more common in areas where unit owners can provide an alternative to hotels in resort areas or for large events such as a university graduation.
Airbnb is a topic for discussion for HUD because this falls into the category of transient leasing, which is prohibited by the National Housing Act. A home, whether it be a single family home, 2- to 4-family home or condominium unit, may not allow leasing for a period of less than 30 days. Therefore if the condominium consists of Airbnb units, the project is not eligible for FHA project approval or FHA-insured loans.
The obvious dilemma here: how can it be determined if unit owners are offering their units in this manner? Tracking this would become a nightmare.
HUD has not formally released an update to guidance for project approval to spell out how it will handle Airbnb.
The linked article above regarding transient leasing provides how HUD ruled on that issue. Basically, if the legal documents are silent on transient leasing or set a minimum lease term of greater than 30 days, the condominium is acceptable. If the documents allow for lease terms of less than 30 days or provide exemptions for anyone to the minimum leasing period, HUD will require additional documentation for the condominium to acquire approval.