PostHeaderIcon SFS President Question and Answer

Greetings, SFS Owners,

Several owners have contacted me, the Board, and Cynthia Reid, the Suites’ General Manager, regarding the proposed amendment to the CC&Rs. When the Board framed the amendment with the assistance of the Suites’ attorney, we tried to anticipate any questions that owners might have before voting, and in my introductory letter to owners I attempted to answer those questions. Even so, some concerns eluded us, and I would like to address them below. I hope that the format below will provide you with more information, and if you have not voted yet, will convince you to do so before the June 11, 2017, deadline.

What is the background to the amendment? The controversy over vacation rentals is not limited to property owners renting their primary and secondary homes short-term in the open market; it is even affecting time-share properties. Unlike other time-shares, San Francisco Suites has a relatively small owner base, a very small facility, and an intimate atmosphere with close relationships between staff and owners and, in many cases, between owner and owner. Some SFS owners are renting their shares exclusively on the open market, with apparently no intention of ever using them for themselves or their families or friends. The Board and General Manager as well as many owners believe that if this practice continues without restriction it will change SFS from a “home away from home” into a virtual hotel.

Why not change the Rules and Regulations instead of amending the CC&Rs? Admittedly, changing the R&Rs would be easier since doing so does not require a vote of the ownership, just an announcement of the Board having passed a motion to its effect. Amending the CC&Rs, however, means that a majority of the owners approve of the change, and thus would validate the Board’s efforts. However, by voting down the amendment proposal, the owners would be telling the Board that they would prefer to continue the unrestricted commercial renting of shares.

Can the Board or an owner-approved amendment restrict the rights of property owners? Yes. In common interest developments, such as condominiums and time-shares that share similar characteristics, Boards can restrict the “rights” of owners to serve the best interests of the community by adopting rules and regulations. Amendments approved by the membership may also restrict the “rights” of owners.  For example, many Associations limit the number of rental units or place a minimum number of days for short-term rentals; they may also control other aspects of the community such as pets, parking, and outdoor furniture or decoration. Keep in mind that the Board at the Suites is not unilaterally imposing restrictions on existing owners. Instead, the Board is asking owners to approve something that it believes is to their benefit.

How can the amendment legally apply retroactively to all owners instead of just future ones? At common interest developments, such as condominiums, under California Civil Code Section 4740, amendments to the CC&Rs that restrict rentals would normally apply only to new owners; however, registered time shares such as SFS are exempt from Section 4740 under Business & Professions Code Section 11211.7.  Therefore, a new amendment to a time share’s CC&Rs that restrict rentals can apply to all owners, existing and new.

What is the difference between owners, their family, or friends occupying a suite and a commercial renter? Even though there seems to be no apparent difference between occupants, the experience at the Suites has been that renters create more problems and cause more damage than do owners and their family members and friends. It may be that the former, due to their unfamiliarity with the Suites’ rules and traditions as well as their inclination to treat the Suites as a better sort of hotel, are more likely to flaunt the rules or be unconcerned about them since they probably will never return. On the other hand, owners and their invited family members and friends seem to be more respectful of the staff, the facility, and the rules; and their accountability is more direct.

Will owners still be able to exchange their share time though RCI, Interval International and SFX if the amendment passes? Will they still be able to “gift” their time to family members and friends? Yes and Yes. The Suites maintains contractual agreements with the three exchange agencies, and owners who join them are able to deposit and exchange their time with them. Even though the proposed amendment prohibits owners from advertising their share time on commercial websites, such as Airbnb or VRBO or eBay, these exchange agencies are allowed by the Suites to make arrangements for owners who join them. (By the way, if an exchange agency’s guests continually create problems at the Suites, the Board can cancel the agreement with that agency. There is no such recourse against owners whose commercial renters create similar problems.) As for “gifting” time at the Suites to family members and friends, such privileges will not be affected by the amendment’s approval. And those owners who donate their share time to charities for fund-raising efforts can continue to do so.

Also, some owners who are unable to use their share time exchange can sell that time to other owners via the Message Board at the Suites’ website. The amendment does not apply here since the site is non-commercial and accessible only to owners.

Do commercial renters affect the ability of owners to reserve time at the Suites. The answer here is a bit complicated since reservation availability is subject to so many factors – time of year, weekends versus weekdays, type of ownership (parlor or master). It does seem clear, however, that commercial renting will reduce the flexibility of the front desk to reserve time when owners want it for themselves or their family or friends. Renting owners frequently reserve their time far in advance to ensure they have the best dates, for advertising and subsequent booking. Other, non-renting owners typically are less far-sighted about their travel plans.

Why is Section 2.10 defining and controlling nuisance being added to the CC&Rs? A section on nuisance – describing it, prohibiting it, and limiting its legal ramifications – was suggested by the Suites’ attorney since the current CC&Rs do not address nuisance as a potential or real problem.  Most, if not all, associations have nuisance provisions in their CC&Rs to help maintain a peaceful community should the need arise with respect to owners or others they may allow onto the property.

The above series of questions and answers do address, I think, most of the general concerns of the owners who have contacted me directly or through the General Manager although they may not be so exhaustive as to answer your specific question. If so, send me or Cynthia Reid a message, and we will respond promptly.

Thank you for reading this follow-up to my earlier letter, and please vote. Your participation is crucial, whether the amendment passes or not, to determining what kind of “home away from home” San Francisco Suites will become in the future.

Best wishes,

Geoffrey Bellah
President of the Board of Directors
San Francisco Suites on Nob Hil

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