Earlier this summer, Tressler LLP obtained dismissal of a source of income discrimination claim filed by an owner against a Chicago condominium association. On June 23, 2018, the City of Chicago Commission of Human Relations issued a lengthy written opinion holding that a condominium association’s restriction on leasing forbidding owners from renting their units via Airbnb did not constitute discrimination based on “source of income.”
The dispute arose after the condominium association imposed fines against an owner for violating the association’s declaration due to the owner’s rental of the owner’s unit on Airbnb.com [1]. Airbnb is an online community that is used for short-term vacation rentals. The Association’s declaration specifically restricted the leasing of units for hotel or transient purposes or terms less than six (6) months. The rental restriction also provided that “no portion of the Unit which is less than the entire Unit shall be leased.”
As a result of the fines and the owner’s inability to continue renting the unit on Airbnb, the owner filed a complaint with the City of Chicago Commission on Human Relations against the association, alleging that the association violated the Chicago Fair Housing Ordinance by discriminating against the owner based on the owner’s “source of income” in connection with the owner’s efforts to “host” guests through Airbnb. The owner argued that her source of income was rental income derived from hosting temporary guests in her unit via Airbnb. Accordingly, the owner contended her actions were lawful and the association’s actions were discriminatory. In response, Tressler argued that the association’s actions were not in any way motivated by discriminatory intent, and rather, the association, through its board of directors, was merely acting within its authority to address conduct that was in violation of the association’s declaration.
The Commission noted that this issue is one of first impression for it. However, after a full briefing on the matter, the Commission ruled that the owner’s complaint did not constitute discrimination based on source of income and dismissed the owner’s complaint.
Since the subject dispute arose, the Chicago City Council passed the Shared Housing Ordinance which regulates short-term leasing through Airbnb and other similar vacation rental services. One of the provisions of the Shared Housing Ordinance allows condominium associations whose governing documents prohibit short-term or transient rentals, or both, to register with the City of Chicago as a prohibited building. Under the ordinance, in order for Airbnb to maintain their right to operate in the City, Airbnb is required to consult the Prohibited Building List and remove any listings for rentals in buildings on the list. While a crucial tool for helping condominium associations combat Airbnb rentals in their units, the Shared House Ordinance only applies to associations located within the City of Chicago.
In order to avoid challenges from owners wishing to rent their units on Airbnb or other similar vacation rental services, it is crucial that associations review their declarations to ensure that short-term rentals and/or rentals for hotel or transient purposes are specifically prohibited. If these restrictions are not specifically stated in an association’s declaration and an association would like to restrict Airbnb rentals, then the association should formally amend their declaration to provide for such restrictions. Amendments to declarations require owner approval and must be recorded against title to all units within the association in order to be enforceable. Associations should be cautious of adopting rules and regulations, which do not require owner approval, to restrict short-term rentals and/or rentals for hotel or transient purposes, as taking this approach subjects an association to major challenge.
Please contact a Tressler attorney [2] if you would like Tressler to work with your association in restricting short-term rentals, including Airbnb rentals.