Posted:
It's somewhat more complicated than initially presented, but we passed an amendment to our CC&R's last year by 7-2 vote to limit the number of renters to 3 of 9 units as a fourth owner was trying to lease out their unit. That owner's unit subsequently has been empty for six months after they were relocated, which is another story, but that amendment was passed because another owner's unit was for sale at the time, which has since sold (and two more are now in escrow), and nobody wanted to limit the pool of potential buyers by dropping below 2/3 owner occupancy in our building. The problem was we never dealt with a mechanism in the event that three units were being rented and a fourth owner wanted to rent their unit out.
In the second amendment that was just passed, there were two sections. The first section was passed 9-0 and is not in question:
"Owners may lease or rent their Unit only after owning the Unit for at least one (1) year and providing written notice to the HOA of such intent; provided that no Owner shall be able to lease or rent their Unit for transient or hotel purposes and no such lease or rental shall be for a period of less than one (1) year. Any such lease or rental shall be in writing and shall require the tenant to comply in all respects to the CC&Rs, By-laws and HOA rules and regulations and must state that any failure by the tenant to comply will be considered a default of said lease or rental agreement subjecting tenant to possible eviction."
The second section was passed 7-2 and is causing problems. The two minority votes were by two owners who are currently renting out their units. The third owner currently renting out his unit presumably didn't care because his unit is for sale and his tenants are moving out soon. The owners who relocated will be leasing out their unit shortly as the third of three renting owners. The biggest issue is if a tenant moves out of a renting owner's unit, who then should get the first chance to remain in or enter the rental pool of three owners (i.e., the renting owner who just lost a tenant or the owner who's been waiting to rent their unit?). I might be biased as a non-renting owner, but it seems to me that out of fairness, if nothing else, the owner who has been waiting should get his or her turn first. This obviously didn't sit well one of the renting owners, but quite frankly, nobody could come up with a solution that would balance (i) the rights of owners to sell their units without restriction, (ii) the rights of non-renting owners to enter the rental pool and (iii) the rights of renting owners to remain in the rental pool. If somebody has a solution, I'd be curious to hear it. Also, while this may seem lengthy, I drafted it to be as clear as possible, and 5.b was included to appease one of the renting owners.
"RENTAL POOL –
1. Size of rental pool. At no time shall more than three (3) Units be rented (which includes the term “leased” for purposes of these CC&RS’s) in accordance with Section 3.02 of the CC&R’s.
2. Intent of Owner to rent. An Owner wishing to rent his or her Unit must provide written notice of intent to the HOA prior to listing the Unit for rent.
3. Entry into rental pool. If the rental pool is not full when an Owner provides notice under Section 2, then upon renting the Unit, the Owner shall also provide a copy of the relevant portion of the lease agreement to the HOA that indicates the term of the lease so that the HOA can track the expiration dates of the leases in the rental pool.
4. Process with full rental pool. If the rental pool is full when an Owner provides notice under Section 2, then that Owner shall be placed in line for the right to rent his or her Unit behind those Owners in the rental pool and any other Owners already in line to enter the rental pool.
5. Opening arises in rental pool.
a. Expiration of lease resulting in vacancy. If the tenant of a Unit in the rental pool gives notice to the Owner of his or her intent to terminate their lease, then the Unit’s Owner shall give notice to the HOA of the same (which should be consistent with the lease agreement previously provided to the HOA) and may make a written request to have the Unit placed in the rental pool as of the date that the Owner’s tenant moves out of the Unit (the “Vacancy Date”).
i. If there are any Owners in line to enter the rental pool on the Vacancy Date, then the Owner whose Unit was just vacated is placed at the end of the line to enter the rental pool, and the first Owner in line to enter the rental pool, based on the earliest date entered in the line, shall have ninety (90) days following the Vacancy Date to rent his or her Unit and thereby enter the rental pool. If that Owner is unable to rent his or her Unit within the ninety (90) day period, then that Owner shall be placed at the end of the line to enter the rental pool and all other Owners in line to enter the rental pool, based on the earliest date entered in the line, shall have the right to rent his or her Unit under the same terms and conditions. This process shall repeat itself as long as there is more than one Owner in line to enter the rental pool.
ii. If there are no Unit Owners in line to enter the rental pool on the Vacancy Date, then the Owner whose Unit was just vacated has ninety (90) days to rent the Unit. If after ninety (90) days, the Owner has not been rented the Unit and the Owner wishes to continue to try to rent the Unit, then the Owner can request additional ninety (90) day periods to rent the Unit as long as no other Unit Owners are in line to enter the rental pool. However, if another Owner provides notice under Section 2 to enter the rental pool, then the Owner whose Unit was just vacated would go to the end of the line if the Unit was not rented after the latest ninety (90) day period had expired, and the terms of Section 5.a.i would be followed.
b. Unexpected expiration of lease resulting in vacancy. If the tenant of a Unit in the rental pool is evicted through no fault of the Owner as a result of an unlawful detainer action (i.e., the tenant has breached the lease by failing to pay rent or otherwise and action is taken to remove the tenant from the Unit), then the Owner shall give notice to the HOA of the same (the “Vacancy Date”).
i. If there are any Owners in line to enter the rental pool on the Vacancy Date, then the Owner whose Unit was just vacated is placed at the front of the line to enter the rental pool and shall have ninety (90) days following the Vacancy Date to rent his or her Unit and thereby remain in the rental pool. If that Owner is unable to rent his or her Unit within the ninety (90) day period, then that Owner shall be placed at the end of the line to enter the rental pool and all other Owners in line to enter the rental pool, based on the earliest date entered in the line, shall have the right to rent his or her Unit under the same terms and conditions. This process shall repeat itself as long as there is more than one Owner in line to enter the rental pool.
ii. If there are no Owners in line to enter the rental pool on the Vacancy Date, then the Owner whose Unit was just vacated has ninety (90) days to rent the Unit. If after ninety (90) days, the Owner has not been rented the Unit and the Owner wishes to continue to try to rent the Unit, then the Owner can request additional ninety (90) day periods to rent the Unit as long as no other Owners are in line to enter the rental pool. However, if another Owner provides notice under Section 2 to enter the rental pool, then the Owner whose Unit was just vacated would go to the end of the line if the Unit was not rented after the latest ninety (90) day period had expired, and the terms of Section 5.a.i would be followed."