Illegal Asheville Airbnb owners say residents owe $60,000 monthly

ASHEVILLE – Downtown apartment owners who were sued in March by their neighbors for listing their apartments on Airbnb and other rental sites without city permission have filed a motion to dismiss the lawsuit, arguing that the city’s ordinance restricting short-term vacation rentals is illegal because Financial penalties were also imposed for violating the regulation.

The motion to dismiss and filed June 10 in Buncombe County Superior Court seeks $60,000 in monthly lost rent damages for each month they were prevented from renting the property at 17 N. Market St. since February. Despite this claim, apartments in the building received more violation notices from the city this month related to unauthorized rentals, according to City of Asheville Development Services Department employees.

The lack of enforcement has left some of the building’s full-time residents feeling disillusioned with the city and looking for answers. These residents reported unauthorized activity that they believed was not part of the original sales contract, including loud parties and frustrating interactions at night, and are now facing prosecution for such activities.

“The city is not siding with residents who choose to follow their laws,” said Christian Oliver, who along with other residents of the building reported on the short-term rentals in February. – Now we’re being sued for it.

In 2018, the city limited the use of STRs – rentals for a period of less than 30 days – to areas marked as a “recreation district”, while allowing the use of private accommodation – this type of rental properties can apply for owners who live in this area. the property they are renting. The Market Street building consisting of 13 units is located in the Central Business District.

The city also requires zoning permit approval for short-term rental operations, although it had to abandon the use of annual permits following a 2022 legal battle in Wilmington that found annual permits illegal, the Citizen Times previously reported reported.

Although the lawsuit is between private entities, it also challenges the legality of the city’s STR ordinance. The city believes that it is what it is.

“The city’s short-term rental ordinance was challenged and upheld by the Buncombe County Superior Court, and since that time, Court of Appeals case law has upheld the validity of the city’s regulations,” the City of Asheville Law Department said in a letter. June 17 email to Citizen Times in response to the lawsuit.

The motion to dismiss was filed after the HOA amendments

The motion to dismiss, filed June 10 in Buncombe County Superior Court, comes months after a group of homeowners at 17 N. Market St. sued the owners of the remaining 10 units for violating city zoning regulations, which they claimed also violated the building’s HOA agreements.

The Citizen Times reporting, cited in the lawsuit, began in early January when a group of homeowners at 17 N. Market St. received notices. submitted an application to transform its properties – approximately 75% of the premises in the building – into a hotel. violations related to prohibited activities related to short-term rentals. City officials said they will receive further notices, which will ultimately lead to fines of $500 per day if the application is granted.

In February, the Citizen Times reported that of the 13 units in the building, the owners of 10 had been renting out the units as short-term rentals for years for unauthorized purposes, which are listed on sites such as Airbnb, Vrbo and a local property management website. Current full-time residents of the building expressed frustration with the rents, saying they had not been told about the hotel application. Despite being reported to the city by a former resident of the building in 2022, the practice continued for two years.

The motion to dismiss states that homeowner association covenants do not restrict short-term rental activities. The change came only after the landlords – who make up the majority of the building’s owners – voted June 5 at the Buncombe County Register of Deeds to modify the building’s HOA agreements to change the building’s rules to allow rentals.

The HOA amendments indicate that homeowners voted to change the language regarding landlord violations of laws and regulations, stating that “the length of time for which the premises may be rented shall not be considered a violation of any local, state or federal law.” The amendments also changed the wording of HOA agreements to reflect developers’ original intent to use apartments as short-term rentals.

The city authorities indicated that the change does not have a significant impact on whether rents violate the law.

“HOA rules have nothing to do with city ordinances,” Department of Development Services compliance coordinator Todd Justice told the Citizen Times on June 10.

Lawyer says amendments make arguments ‘moot’

Derek Allen, with the Asheville-based law firm Allen Stahl and Kilbourne, represents 14 defendants, including building developers Brett Krueger and Charlie Caputo, who filed a motion to dismiss and counterclaim in the case.

Because homeowners modified their HOA agreements to include language allowing short-term rentals, Allen believes that “plaintiffs argued that the building’s restrictive covenants prohibited rentals for periods of less than 30 days.” It’s simply not true,” he said. – wrote in a June 14 email to the Citizen Times.

Zoning attorney Brian Gulden of the Van Winkle Law Firm – which is located next to the apartment buildings on Market Street – represents the plaintiffs. Asheville Mayor Esther Manheimer is an attorney at the Van Winkle Law Firm but is not working on the case.

Gulden says they plan to file a motion to dismiss the counterclaims and that the case remains an issue of honoring the HOA agreements even if they are modified.

“We will 100% file a motion to dismiss the complaint along with our counterclaim response,” Gulden said. “We will be filing a motion to dismiss on each of these grounds because we simply do not believe they have any factual or legal basis.”

Gulden also said that part of the next steps in the case will be to determine whether “we want the city to be involved in the lawsuit.” Gulden previously noted that the case would enforce HOA agreements that limit violations of local, state and federal laws, including local zoning laws that prohibit downtown apartment rentals without permits.

Allen said his clients “do not intend to challenge the city’s short-term rental regulations,” but that the claim is granted “because the North Carolina Rules of Civil Procedure technically require that all potential ‘affirmative defenses’ be included in the response to the complaint.” intercession.”

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Will Hofmann is a growth and development reporter for the Asheville Citizen Times, part of the USA Today Network. Got a tip? Email him at [email protected]. Please support this type of journalism by subscribing to Citizen Times.