Homesharing and Insurance What Your Board Should Know

In a city like Chicago, where even the most profligate among us may shed a tear or two at hotel room prices, the homesharing trend has grown by leaps and bounds, with more co-op and condo owners than ever renting out their units to short-stay vacationers—and pocketing more than a few extra bucks in the process.

Led by Airbnb, homesharing has had a steady ascent over the last eight years or so since the company’s founders stumbled on the idea of renting out residential units in popular vacation destination cities to travelers in town both for business and recreation. As lucrative as the business can be for homeowners, it is also fraught with huge risks, including breaking proprietary leases, breaking state and city law and facing significant uncertainty with regard to issues of insurance and liability.

If you're unfamiliar with services like Airbnb, this is how it works: homeowners and tenants alike can create a profile on the Airbnb website, much like a hotel on sites like Priceline or Expedia. The “bnb” in the name denotes the idea that users can rent a room in someone's home for a few nights in the style of a bed-and-breakfast.

Rather than shell out for a cookie-cutter room from a non-descript hotel chain, users opt for the more personal, entrepreneurial spirit of homesharing. Some Airbnbers may have an extra bedroom or pool house they rent out while they stay and play host for their guests. Others in very desirable high-rent parts of the country, like New York or downtown Chicago, may rent out their entire one-bedroom apartment for a few nights a month to help with their own rent, and simply stay at a friend's place in the meantime.

The Federal Housing Administration (FHA) and Fannie Mae place “owner occupancy” lending guidelines on communities, says Bo Bond, senior sales executive at Associations Insurance, which serves the Chicagoland area. There are “guidelines that can hinder a lender’s decision to process a loan for a client if the community is less than 50% owner-occupied, or if the community allows short-term unit rentals—30 days or less.” Airbnb would certainly fall under the latter.


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  • We had a unit owner in our building renting out his unit through this service. As soon as the Board found out, they took swift action by enacting a heavy fine, required immediate removal of his listing on this or any other site and followed up with a letter from the Association's legal counsel reiterating this illegal action.