The clause that mattered to associations

SB 112 closed with this:

“This section shall not be construed to affect, prohibit, preempt, or render unenforceable any property or use restrictions contained in the properly enacted rules or regulations of a homeowners association, condominium association, or other similar property owner association or cooperative.”

Had SB 112 passed, a Kentucky city would have kept a registration form and a $150 permit, and lost nearly everything else — while the recorded declaration kept every power it has. In a covenanted subdivision the association would have become, in practical terms, the only body able to say no.

That is not a hypothetical about drafting preference. The same sentence appeared in HB 617, in HB 530, and in Section 18(8) of the House Committee Substitute to SB 9 — the omnibus that carried a fuller version of the same preemption and died in conference on the last day of the session on a report marked “Cannot agree.”

What Kentucky law is today, which is the practical answer

Because both bills failed, Kentucky has:

• No statewide short-term rental statute. No definition, no licensing scheme, no state registry.
• No preemption of local regulation. Cities and counties regulate short-term rentals under their general zoning and licensing powers, and Kentucky's larger cities do so quite differently from one another.
• No state limit on an association's authority to restrict rentals. Neither the Kentucky Condominium Act nor the Horizontal Property Law constrains it, and the Planned Community Act does not address rentals.

So the answer to “can our association restrict short-term rentals” remains what it has been: whatever your recorded declaration says, adopted the way your declaration requires.

The harder question the courts just answered

The covenant has to reach the lot. On 21 August 2026 the Court of Appeals held, in the one published Kentucky community-association decision of the year, that a no-commercial-use covenant appearing in 168 of a subdivision's 174 deeds did not burden the lots whose own chain of title omitted it — and the owner's short-term rental listings therefore could not be stopped. The court never reached whether short-term renting was a commercial use.

Two related points from the same period. A pre-emptive declaratory-judgment action against a rental that had not yet started was dismissed as unripe in January 2025. And an association or neighbour who brings a covenant claim in good faith and loses does not thereby expose itself to an abuse-of-process counterclaim.

Practically, for a Kentucky board: confirm the restriction is in the burdened lot's chain, wait until the use is actual and ongoing, and then enforce.

Why the legislature deadlocked

It is worth noticing that the two bills came from the same chamber in the same fortnight, and that SB 54's sponsors included Senator Neal, who also sponsored the session's only bill written specifically about property owner associations. This is not a partisan split so much as a city-versus-state one, and Kentucky's local-government lobby has a standing published position opposing state mandates and preemption that override local decision-making.

The sponsor of the omnibus that carried the preemption said afterwards that housing, including short-term rental regulation, would continue to be discussed through the year, and that “sometimes it takes multiple sessions to pass something.”

What to watch next

The 2027 Regular Session convenes in January for 30 days. Kentucky abolished bill pre-filing in 2022, so there are no 2027 bill requests to read and no successor bill to point at — anyone offering a 2027 Kentucky bill number today is describing something that does not exist.

What a board can do in the meantime is the thing that is within its control regardless of which way Frankfort goes: establish that its rental restriction is recorded in the chain of title of every lot it means to bind, and that it was adopted the way the declaration requires. Both of those questions are answerable now, and both decide cases.