Two Sides to Rental Questions
by Buz Whelan
At the open meeting of the board on Saturday, April 26th landlord David Samad read aloud a letter he had written to the Emerald Lakes Board of Directors. In it he makes the case for rentals. He states that it is his belief that rental properties are important to the health of a community for a variety of reasons. This is in contrast to the position of several members of the Real Estate Committee who believe strict limitations, including establishing a minimum rental period, are needed to correct intolerable conditions that exist near some short-term rental properties.
So we have two very different positions, one that says we need rental properties and another that says we would be better off without them. How do we reconcile these oppositional attitudes?
The Real Estate Committee was re-established after repeated complaints by homeowners near rental properties, one in particular, that had become serious nuisances. I know personally several of the most vocal complainants, and I have found them to be reasonable people. If they tell me they have a situation that is ruining the quality of life in their area, I take them at their word. But I also have contrasting experience. I live two houses away from a short-term rental that has never once given me a problem. I live across the lake from another rather large short-term rental property that has only occasionally produced loud parties, mostly in the summer, and I can live with that. The tenants have also shot off fireworks every so often, usually around a summer holiday, but I remind myself that this is a fireworks state that out-of-staters are not used to. The temptation to take advantage of the opportunity is difficult to resist. I can live with that as well. So, while some properties produce nuisance periods, others rarely do.
If we are to accept what Mr. Samad’s research seems to have revealed, there is little we will be able to accomplish by attempting to regulate short-term rentals out of the community. Perhaps our efforts would be better served by better enforcement of various behavioral rules and regs we already have. Rather than waste a great deal of time and effort in a futile attempt to prevent short-term rentals, let us develop a forward-looking policy for maximizing the potential of these properties. Money shortage is a constant source of difficulty in maintaining our amenities, and therefore our quality of life. If we become a landlord-friendly community, we may be able to turn foreclosed and abandoned structures into revenue sources, while at the same time turning eyesores and squatter magnets into neighborhood assets. The vast majority of renters in this community are good citizens. Let’s send the message to landlords and potential landlords: investing in Emerald Lakes and renting to responsible tenants, whether long- or short-term, will be rewarding. And those who cannot follow our simple rules and be good neighbors will pay a price.
Editor’s note: The following is the letter sent by David Samad to the Board of Directors. It is reprinted with his permission.
David & Johanna Samad
April 15, 2014
To: ELA, Inc. Board of Directors:
Alex Leslie, President
Daniel Glasgow, Vice President
Carmen Brodnax, Exec. Secretary
Earl Frank. Treasurer
Millie Bishop, Director
Margaret Fitzgerald, Director
June Solla, Director
Re: Home Owners Rental Policies and Procedures in Emerald Lakes
Dear Directors of the Emerald Lakes Board,
The problems I have experienced as a property owner in Emerald Lakes whenever I rent my homes have pushed me to get proper legal advice. I am told that, in general, an owner of property is entitled to use his property in any way he desires, “provided he does not (1) violate any provision of the Federal or State Constitutions; or (2) create a nuisance; or (3) violate any covenant, restriction or easement; or (4) violate any laws of zoning or police regulations which are constitutional.” Parker v. Hough, 215 A.2d 667, 669 (Pa. 1966). I am also told that whenever a deed restriction or covenant limits the use of my real estate, the limitation is narrowly construed in my favor as the owner.
I also received specific information on renters and rentals that is based on a very recent court decision, which I believe is also very important to Emerald Lakes because of important similarities. The Holiday Pocono private community is run under a common set of restrictive covenants much like Emerald Lakes. And also like Emerald Lakes, because the Holiday Pocono development is located in the Poconos market, many of the homes there are second homes used as vacation properties by their owners. The most important similarity is that lots at Holiday Poconos must be used for ‘residential purposes’, just like the lots in Emerald Lakes. I am told that the meaning of that restriction was tested in state court quite recently.
The court found that “common sense dictates that the right to lease these vacation homes, especially on a short-term basis, is very important to all owners”. To relinquish the right to lease a home, the court said a deed covenant must state in a clear statement that the right to rent does not exist. The court found that the words ‘residential purposes’ must be interpreted to include occupancy by renters, and do not preclude rentals.
And the court said further that an association’s bylaws or the rules and regulations cannot contradict or override that meaning because deed covenants are more important legally than the bylaws or the rules. The court specifically refused to enforce such bylaws or rules which attempted to prohibit rentals because the bylaws or rules conflicted with the meaning of ‘residential use’ as determined by the court. This court decision should end the legal discussion on this point, and confirm that rentals are allowed here as well. Truth be told, not only are they allowed, rentals are actually essential to our future success here at Emerald Lakes.
The fact is that one fundamentally important issue about rentals in particular, and our future in general, has been missing in all our discussions. The problem is that the Association has never developed a winning vision and a strategy about the future of the community. Today we really do not know what our vision of the future is and we do not know how to make that future happen. One result is that our community will actually endanger its future if it chooses to attack vacation rentals and renters. Doing so is not only shortsighted and misguided; it also polarizes the community. We are in an emotionally driven state of affairs, where we have no other plan on the table other than to police perceived problems from so-called problem renters, and somehow drive the so-called problem renters out. In fact, doing so is just the opposite of what we should be doing in the best interest of the community.
Use of rentals to our advantage really is a fundamental strategic marketing issue. Properly qualified renters who are attracted to a successful, strategically driven community become the future owners in that community.
In stark contrast to that very successful strategy, any community that polarizes itself and mistakenly attacks rentals and renters, and fails to reinvest in itself, will eventually face continuing economic decline and failure.
There is compelling proof of the positive results of vision and reinvestment just down the road a bit, not far at all from Emerald Lakes. It is the Lake Naomi community. That community was started at about the same time as Emerald Lakes, and had similar lot prices and similar amenities at the beginning. Lake Naomi, however, has always chosen to be strategic about its future and it has reinvested in itself for decades: and it still has a wide range of house prices in the community. As a key part of Lake Naomi’s vision of the future, the community long ago decided that vacation rentals would be the key to a successful long-term marketing plan and the community’s continuing economic success.
We seem destined to do just the opposite here at Emerald Lakes, and if we do, we are making a fundamental, even fatal, error. Such a choice must be reversed. If we do not, we will continue to spiral down economically, with property values falling even more. We must wake up, and decide to market and fund the community so it attracts “qualified renters” as a matter of highest priority along with providing higher levels of service.
I have taken the time to do my homework carefully on these issues and I am prepared to work hard to be part of the solution in this situation. If necessary, though, I am also prepared to stand behind my words and do what is necessary to protect the future of my properties here and the future of Emerald Lakes generally. That said, I believe that the Board can quickly re-learn that its primary role is to be smart and strategic, and that continuing to act without a proper vision and strategy for the future is a formula for failure. Rentals are essential for us all to thrive here.
David & Johanna Samad