Chicago Releases "Prohibited Building List" Affidavit and Instructions for New Home Sharing Ordinance

July 21, 2016

As we previously posted, the City of Chicago adopted an Ordinance that establishes regulations and protections for condominium and homeowner associations affected by the recent surge in home-sharing and vacation rentals via platforms like Airbnb and VRBO.  The Ordinance includes rules by which individuals within associations wishing to offer their units or homes for short-term rental must register with the City.  Moreover, the Ordinance includes the option for the association to be included on a "Prohibited Building List" ("List") which is a public record of associations and rental buildings that prohibit short-term rentals.  

On July 15, 2016, the Department of Business Affairs and Consumer Protections ("Department"), which is in charge of overseeing the List and ensuring that all individuals offering their units for short-term rental are registered with the City, released the rules by which a building can be included on the List.  The List is a compilation of buildings containing five or more dwelling units, along with co-ops, condominium buildings or any building governed by a homeowner's association regardless of the number of dwelling units in those buildings, which prohibit any short-term rental activity (i.e., rental or occupancy of a dwelling unit for 32 or fewer consecutive days).  After the building is placed on the List, the City will take appropriate enforcement action to ensure that dwelling units in the building on the List are not rented through intermediary platforms.

In order to have a property included on the List, an authorized agent (which could include a managing agent or the association's attorney) must submit a notarized affidavit to the Department certifying the association has voted to prohibit short-term rental activity in the entire building.  A copy of the affidavit can be found on the Business Affairs and Consumer Protection website at www.cityofchicago.org/bacp or we’ve included it here.

Two items which must be carefully considered before taking action to include a property on the List:

 

  1. Your board of directors must be authorized. A simple rule within the association's rules and regulations banning short-term rental is insufficient for the board to include the building on the List.  A board of directors must be authorized by the association's declaration or by-laws to include the association on the List.  The authorization would come in the form of a ban on short-term vacation rentals within the declaration or by-laws.  The recent case from the Illinois Appellate Court (see,Stobe v. 842-848 West Bradley Place Condominium Association) 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 without restriction. Accordingly, should the board wish to include the association on the List and no such prohibition on short-term rental is contained in the declaration or by-laws, then the board must consider amending its declaration to prohibit such rental activity. 
     
  2. Unit owners must disclose inclusion on the List. The board must understand that once the association is included on the List, any unit owner selling or legitimately 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 board should receive a written receipt of acknowledgement from the buyer or tenant that such information has been disclosed. 

 

We understand you may need help navigating these news rules and regulations. LP is available to assist any board or association in determining whether inclusion on the List is permitted by its governing documents, preparing amendments to the governing document to permit inclusion on the List, and assisting any board in ensuring that the affidavit is completed correctly.

Should you have any questions, do not hesitate to contact us.

 

CONTACT:
Nicholas Bartzen
nbartzen@lplegal.com  |  (312) 476-7581

 

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