Chicagoland

Buildings Environments &

$ AUTUMN 2016

by Nicholas Bartzen and Howard Dakoff, Levenfeld Pearlstein, LLC

For more information, contact nbartzen@lplegal.com, 312.476.7581 or hdako@lplegal.com, 312.476.7556.

Chicago Council Adopts

Airbnb and VRBO Regulations
Protecting Condominium and Homeowners Associations and creates the Prohibited Building List

On June 22, 2016, the City of Chicago adopted an ordinance that establishes containing five (5) or more dwelling units,
regulations and bolsters protections for condominium and homeowners asso- along with co-ops, condominium build-
ings or any building governed by a home-
ciations affected by the recent surge in home-sharing and vacation rentals via owner's association regardless of the
platforms such as www.airbnb.com and www.VRBO.com. number of dwelling units in those build-
ings, which prohibit any short-term rental

T he ordinance requires companies

such as VRBO and Airbnb to be li-
censed as a short-term rental intermediary
or advertising platform. It also requires
individuals who wish to list their town-
home or condominium unit as a tempo-
rary or transient rental to register the unit
with the City (any individual owning and
operating more than two units as short-
term rentals will be required to not only
register, but also obtain an operators li-
cense). This will better allow the City to
track units made available for lodging, re-
spond to complaints and penalize those
who break the rules.
The ordinance sets a great number of
protections to address the quality of life is-
sues in community associations where
transient rental is popular. These protec-
tions include: designating a set number of
allowable units within a building which
may be rented, requiring all those who
wish to rent their units to register with the
City, and requiring those who reside in
community associations, when registering,
to sign an attestation that the association
has no prohibitions in its by-laws on vaca-
tion or transient rentals. Buildings with
more than five units will be limited to
one-quarter of the total number of
dwelling units, or six rental units
(whichever is less) that may be rented at
any given time.
Prohibited Building List
Most importantly, the City will main-
tain a Prohibited Building List (the
List) that, at the discretion of the associ-
ations board of directors, will allow for a
blanket prohibition on short-term rental
activity within that particular building.
The List may include apartment buildings
activity (i.e., rental or occupancy of a
dwelling unit for 32 or fewer consecutive
days). The Department of Business Affairs
and Consumer Protections ("Department")
is in charge of overseeing the List and tak-
ing appropriate enforcement action to en-
sure that dwelling units in the building on
the List are not rented through intermedi-
ary platforms like Airbnb.
In order to have a property included
on the List, an authorized agent of the as-
sociation (which could include a manag-
ing agent or the association's attorney)
must submit a notarized affidavit to the
Department certifying the association has
a valid ban on short-term rental activity
in the governing documents. A copy of
the affidavit is included here or can be
found on the Business Affairs and Con-
sumer Protection website at www.city-
ofchicago.org/bacp.

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25 C H I C A G O L A N D B U I L D I N G S & E N V I R O N M E N T S AUTUMN 2016


Two items the Board must consider
before taking action to include a property
on the List:
1. The Board must be authorized to put
the association on the List.
A simple rule within the association's
rules and regulations banning short-term
rental is insufficient for the board to in-
clude the building on the List. A board of
directors must be authorized by the associ-
ation's declaration or by-laws to include
the association on the List. The authoriza-
tion would come in the form of a ban on
short-term vacation rentals within the
declaration or by-laws. A recent case from
the Illinois Appellate Court (Stobe v. 842-
848 West Bradley Place Condominium As-
sociation) held that a condominium board
may not simply adopt a rule restricting
unit leasing if the declaration recognizes
the unit owner's right to lease. Accord-
ingly, should the board wish to include
the association on the List and no such
prohibition on short-term rental is con-
tained in the declaration or by-laws, then
the board must consider amending its dec-
laration to prohibit such rental activity.
2. Owners and Lessors must disclose that
the association appears on the List.
Once the association is included on
the List, any unit owner selling or legiti-
REPRINTED WITH PERMISSION OF MCD MEIDA / FOR MORE INFORMATION ON BUILDINGS & ENVIRONMENTS... PLEASE VISIT WWW.CONDOLIFESTYLES.NET OR CALL 630-932-5551
AUTUMN 2016
mately leasing their units (i.e. long-term
leases) must disclose the fact to the buyer
or potential tenant that the association is
on the List. The seller or lessor must re-
ceive a written receipt of acknowledge-
ment from the buyer or tenant that such
information has been disclosed.
Enforcement
The City will enforce the ordinance
by seeing to it that buildings that appear
on the List are immediately removed from
any rental or home-sharing intermediary
or online platform. The City will also take
action against individuals renting units
without a license or in buildings that ap-
pear on the List. Complaints will be made
via the Citys 311 non-emergency line or
the City of Chicago website (i.e. filing a
complaint against an individual for oper-
ating a business without a license or oper-
ating an illegal business). Platforms such
as Airbnb and VRBO will be required to
consult said lists and remove any listings
in order to maintain their right to operate
in the City. Those selling or legitimately
leasing their units (for non-transient pur-
poses) within buildings that appear on the
Prohibited Building List must disclose
that information to (and receive a written
receipt of acknowledgment from) the
buyer or tenant.
CHICAGOLAND BUILDINGS & ENVIRONMENTS
L E G A L U P DAT E
Finally, the City of Chicago has man-
dated that cites such as Airbnb establish a
24-hour hotline that can be reached by di-
aling the Citys 311 non-emergency line
to report any violations or quality of life
issues that may be related to transient or
vacation rental.
Conclusion
With the passage of this ordinance,
Chicago becomes the first City in the
United States to establish a requirement
for uniformed operations between vaca-
tion rental platforms and for the removal
of listings from a companys platform for
violation of a Citys ordinance.
If your community associations gov-
erning documents contain prohibitions
on short term and/or transient rentals, the
board of directors should consider register-
ing as a Prohibited Building.
We understand that you may need
help navigating these news rules and regu-
lations. You should consult an attorney to
assist your board or association in deter-
mining whether inclusion on the List is
permitted by its governing documents,
preparing amendments to the governing
document to permit inclusion on the List,
and to assist your board in ensuring that
the affidavit is completed correctly. $
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