South Dakota HOA Rental Restrictions: No Statutory Limit, and a Two-Thirds Vote to Change the Covenants

The enabling statute is old and broad. SDCL 11-5-1, on the books since 1925, makes it lawful for the owner or owners of real property in a first or second class municipality to regulate and restrict by declaration or contract the height, number of stories and size of buildings, the nature of other improvements, the percentage of the lot that may be occupied, the size of yards, courts and other open spaces, the density of population, and the location and use of buildings, structures, and land for trade, industrial, residence, or other purposes. A covenant that says lots are for single-family residential use only, that no unit may be leased for fewer than thirty days, or that no more than a set share of units may be rented at one time is an exercise of that use power. South Dakota has enacted nothing that trims it back. Under SDCL 9-2-1, the municipalities where the declaration mechanism operates are those of five thousand people and over, and those between five hundred and four thousand nine hundred ninety-nine.

So an owner facing a new leasing restriction in Sioux Falls, Rapid City, Aberdeen, Brookings, or Watertown has no statutory argument that the restriction goes too far. What the owner does have is a procedural argument about how it was adopted. SDCL 11-5-11 supplies the default the state lacked before 2024: where the declaration or contract fails to provide a provision permitting a modification, a vote of two-thirds of the owners of real property governed by the declaration is required to modify it. The threshold counts owners of real property governed by the declaration, not the members who show up to a meeting, and it applies only when the document itself is silent. A declaration that sets its own amendment threshold, whether a simple majority or seventy-five percent, keeps that threshold, so the first question in any South Dakota rental amendment fight is whether the recorded document contains a modification clause at all.

Two other timing rules shape what an association can do. SDCL 11-5-4 caps the life of the restrictions authorized by SDCL 11-5-1 and 11-5-2 at the period prescribed in the declaration but not exceeding forty years from its date, so a rental ban recorded in the 1970s or early 1980s is running against that outer limit. And SDCL 11-5-6 makes revocation deliberately hard: a declaration may be revoked and canceled only by a recorded deed of revocation executed by the persons who signed the original, with a copy filed with the city auditor, and where an original signer has died or parted with an interest the deed of revocation is not valid until executed by all successors in interest. The revocation does not take effect until it has been approved by a resolution duly adopted by the governing body of the first or second class municipality where the land sits. Wiping out a subdivision's covenants in South Dakota therefore requires the city council to sign off, which is unusual among the states.

SDCL 11-5-5 preserves the city's own zoning authority over the same ground, providing that the power granted by SDCL 11-5-1 and any declaration made under it is subject to the municipality's right to exercise the powers conferred by SDCL ch. 11-4 whenever it elects to. That is the layer where South Dakota short-term rental rules actually live: the state has no vacation rental or short-term rental statute of any kind, so a bed and breakfast style operation is governed by the municipal ordinance, by the covenants, and by the bed and breakfast provisions of SDCL 34-18-9.1 to 34-18-9.4, under which an establishment registers with the Department of Health, pays a one-time thirty-eight dollar registration fee, re-registers on any change of ownership or location, and maintains a guest list and smoke detectors. A covenant and a permissive city ordinance can point in opposite directions, and the covenant still binds the owner.

One modern convenience is in the chapter. SDCL 11-5-10, also from 2024, makes it lawful for an owner exercising the power conferred by SDCL 11-5-1 to use an online management and communication platform for the purpose of voting online, notwithstanding SDCL ch. 47-22 and ch. 47-23. That matters to a two-thirds vote in a subdivision with absentee and seasonal owners, since it removes the argument that the nonprofit corporation statutes require a paper ballot or an in-person meeting.

An owner who leases in violation of a valid covenant is exposed to the enforcement mechanism in SDCL 11-5-3, an action at law or a suit in equity brought by any person possessing an interest in the land affected, or by the first or second class municipality in which the land is situated. In practice that means an injunction to stop the tenancy, and a fine or lien only if the declaration itself authorizes one, since South Dakota has no statutory association fine or assessment lien.

Running the other way, an owner who believes a rental amendment was adopted without the two-thirds vote required by SDCL 11-5-11 raises that in the same forum: there is no state agency with authority to review an association vote, no ombudsman, and no administrative appeal. Because a suit on a recorded declaration is an action upon a contract, obligation, or liability, the six-year limit in SDCL 15-2-13(1) is the outer bound absent a shorter period in the documents. Keep the recorded declaration, any recorded amendment, the notice of the vote, and the tally, because the recorded instruments at the register of deeds office are what a circuit court will read.