AlisonP2 (California)
Posts: 4
Posts: 4
Posted:
Hello.
I searched the forums for some answers to my predicament and couldn't find the info that I need, so forgive me for posting if this type of issue has been previously addressed.
My husband and I purchased our California condo (the complex contains 166 units total)in 2003. My husband was active military and we were living out of the area, but knew we wanted to return to the area permanently a few years later. We took advantage of a good deal and purchased a unit in a condo complex. Because we were not living in town, we rented out the unit to a tenant for 2 years. In 2005 we moved into the unit. We slowly outgrew it as our family grew and we bought a second home in 2006. We began renting out the unit again. During this time, while our unit was a rental, the Homeowner's Board decided to amend the Declaration of CC&Rs by a vote to limit rentals and impose a rental restriction Article in the CC&Rs. However, they didn't receive enough votes (67%) so they petitioned the court to reduce the percentage of affirmative votes to amend the CC&Rs. The court granted their request and the Article was added and recorded in 2007. Because we had a rental at the time that the lease restrictions were implemented, we were "grandfathered in" and allowed to continue renting the unit. The CC&Rs state that "at no time shall more than 48 or the 166 total units, initially excluding Grandfathered Units, be leased, rented or otherwise not Owner Occupied". It is my understanding that there were 66 units that were current rentals at the time that the CC&Rs were amended. That number is finally now at 48.
Last year, we decided to do a shortsale on our second residence as we were severly underwater in our mortgage and had taken a significant pay cut. Without any other option, we decided to move back in to our condo unit. We have been here now for over a year and have realized how much our family of four has outgrown our small 2-bedroom unit. We wish to move to a house and lease our unit again, but we are now being told that we can no longer rent out the unit because we gave up our "grandfathered" status when we became owner occupiers again. We are now on the waiting list to rent it out again, and are #28 on this list!
There is a section in the amended CC&Rs that deals specifically with "Grandfathered Units", which states:
...Units shown in the ASSOCIATION'S records as rented or leased on the date of the recording of this instrument shall be definied as "Grandfathered Units." Grandfathered Units shall be permitted to conintue to be rented or leased until such time as title to a Grandfathered Unit is transferred. Upon transfer of title, the affected Gradfathered Unit shall be subject to all provisions of this Article XVII, including but not limited to, the requirement for an initial period of 12 months as an Owner Occupied Unit. Provided, however, for puroses of this Article, transfers of title shall not include a gratuitous transfer from the Owner to a living trust for the benefit of said Owner.
Another Section contains language regarding "Reduction of Number of Grandfathered Units Over Time" and states:
...It is anticipated that upon the recording of this instrument, the total number of Grandfathered Units will exceed the 48 Leased Unit maximum of non-Owner Occupied Units. The Grandfathered Units over the 48 Leased Unit limit shall be reduced over time as Grandfathered Units are sold or transferred. The Leased Unit Eligibility List of the 48 Leased Units authorized for non-Owner Occupancy shall not have any Units added thereto until the number of Grandfathered Units is reduced to less than 48 Leased Units. Pending that, other Units may only be listed by Owners to await the opportunity of eventual opening(s) in the first 48 Leased Unit Eligibility List.
There is also a Preamble to the Article that states: "The membership finds and declares that promoting owner occupancy of Units is in the best interest of the Association's membership as a whole because"...and goes on to list these 9 reasons:
(1) Lenders may refuse to lend, or refuse to lend on preferred terms, for mortgages and deeds of trust in communities with a high percentage of renter occupancy;
(2) Owner occupants are more likely to respect the reules, regulations and other governing documents of the Association;
(3) Owner occupnats are more likely to maintain and care for both their individual Units and the Association's Common Area;
(4) Owner occupants are more likely to volunteer to serve the Associations as officers, directors, committee members and in other capacities;
(5) Owner occupants are less likely to default on the assessment obligations owed to the Association for their residences;
(6) Maintaining a high level of long-term residency by owner occupants with substantial investments in the community while limiting the number os short-term, transient occupancy by tenants will help preserve property values within the Assocation for the benefit of all members;
(7) Owner of leased Units are more likely to understand the Association's role and appreciate the importance of tenant compliance with the governing documents if the landlord has lived within the Association him/herself;
(8)Diligent Owner oversight of his/her tenants will benefit the entire membership and other residents; Owner oversight be encouraged by giving the BOard the authority to mandate Owner termination of the tenancy of any occupant who fails to respect the Association's governing documents; and
(9) FAIRNESS REQUIRES THAT THE OWNERS OF THE EXISITING UNITS CURRENTLY BEING RENTED OR LEASED BE PERMITTED TO CONTINUE TO DO SO UNTIL TITLE TO SUCH UNITS IS TRANSFERRED OR THE UNITS CEASE BEING RENTED OR LEASED
In our opinion, item #9 doesn't belong as a reason. This is the only language in the entire document regarding the unit ceasing to be rented or leased. This is the language that the Board is hanging on to tell us that we have waived our right as a grandfathered unit.
I have done some heavy research and am drafting a letter to our HOA. I am citing the following case to try to prove that a Preamble is not legally binding and cannot be held up in a court of law: Jacobson v. Massachusetts, 197 U.S. 11, 25 S. Ct. 358, 49 L. Ed. 643 [1905]. This case ruled that the Preamble of the Constitution was not judicially enforceable.
It is our position that a āGrandfathered Unitā as defined by Article XVII maintains its status as such until the unit is sold or title to the unit is transferred. The āGrandfathered Unitā should not give up its right to be rented or leased if it becomes Owner Occupied again at any time.
Do to the current housing crisis and economic climate, we are now underwater in our condo mortgage and thus, can't sell it to break even. Foreclosure is not an option for us. We would like to be able to purchase another home and put our family in a much better long-term financial position. This HOA restriction is severely impacting our upward mobility.
We will be consulting with a Real Estate Attorney and exploring the legalities of this Article and the interpretation of what it means to have a "grandfathered unit" as defined in the amended CC&Rs.
Also, there is no provision for a hardship exclusion.
Can anyone offer some personal experience, advice, regarding the situation of rental restrictions? How to get out of them? How they hold up in today's tough economic times? What the liklihood of fighting it is if it wasn't originally passed with 67% of membership approval, etc...
Thank you!
I searched the forums for some answers to my predicament and couldn't find the info that I need, so forgive me for posting if this type of issue has been previously addressed.
My husband and I purchased our California condo (the complex contains 166 units total)in 2003. My husband was active military and we were living out of the area, but knew we wanted to return to the area permanently a few years later. We took advantage of a good deal and purchased a unit in a condo complex. Because we were not living in town, we rented out the unit to a tenant for 2 years. In 2005 we moved into the unit. We slowly outgrew it as our family grew and we bought a second home in 2006. We began renting out the unit again. During this time, while our unit was a rental, the Homeowner's Board decided to amend the Declaration of CC&Rs by a vote to limit rentals and impose a rental restriction Article in the CC&Rs. However, they didn't receive enough votes (67%) so they petitioned the court to reduce the percentage of affirmative votes to amend the CC&Rs. The court granted their request and the Article was added and recorded in 2007. Because we had a rental at the time that the lease restrictions were implemented, we were "grandfathered in" and allowed to continue renting the unit. The CC&Rs state that "at no time shall more than 48 or the 166 total units, initially excluding Grandfathered Units, be leased, rented or otherwise not Owner Occupied". It is my understanding that there were 66 units that were current rentals at the time that the CC&Rs were amended. That number is finally now at 48.
Last year, we decided to do a shortsale on our second residence as we were severly underwater in our mortgage and had taken a significant pay cut. Without any other option, we decided to move back in to our condo unit. We have been here now for over a year and have realized how much our family of four has outgrown our small 2-bedroom unit. We wish to move to a house and lease our unit again, but we are now being told that we can no longer rent out the unit because we gave up our "grandfathered" status when we became owner occupiers again. We are now on the waiting list to rent it out again, and are #28 on this list!
There is a section in the amended CC&Rs that deals specifically with "Grandfathered Units", which states:
...Units shown in the ASSOCIATION'S records as rented or leased on the date of the recording of this instrument shall be definied as "Grandfathered Units." Grandfathered Units shall be permitted to conintue to be rented or leased until such time as title to a Grandfathered Unit is transferred. Upon transfer of title, the affected Gradfathered Unit shall be subject to all provisions of this Article XVII, including but not limited to, the requirement for an initial period of 12 months as an Owner Occupied Unit. Provided, however, for puroses of this Article, transfers of title shall not include a gratuitous transfer from the Owner to a living trust for the benefit of said Owner.
Another Section contains language regarding "Reduction of Number of Grandfathered Units Over Time" and states:
...It is anticipated that upon the recording of this instrument, the total number of Grandfathered Units will exceed the 48 Leased Unit maximum of non-Owner Occupied Units. The Grandfathered Units over the 48 Leased Unit limit shall be reduced over time as Grandfathered Units are sold or transferred. The Leased Unit Eligibility List of the 48 Leased Units authorized for non-Owner Occupancy shall not have any Units added thereto until the number of Grandfathered Units is reduced to less than 48 Leased Units. Pending that, other Units may only be listed by Owners to await the opportunity of eventual opening(s) in the first 48 Leased Unit Eligibility List.
There is also a Preamble to the Article that states: "The membership finds and declares that promoting owner occupancy of Units is in the best interest of the Association's membership as a whole because"...and goes on to list these 9 reasons:
(1) Lenders may refuse to lend, or refuse to lend on preferred terms, for mortgages and deeds of trust in communities with a high percentage of renter occupancy;
(2) Owner occupants are more likely to respect the reules, regulations and other governing documents of the Association;
(3) Owner occupnats are more likely to maintain and care for both their individual Units and the Association's Common Area;
(4) Owner occupants are more likely to volunteer to serve the Associations as officers, directors, committee members and in other capacities;
(5) Owner occupants are less likely to default on the assessment obligations owed to the Association for their residences;
(6) Maintaining a high level of long-term residency by owner occupants with substantial investments in the community while limiting the number os short-term, transient occupancy by tenants will help preserve property values within the Assocation for the benefit of all members;
(7) Owner of leased Units are more likely to understand the Association's role and appreciate the importance of tenant compliance with the governing documents if the landlord has lived within the Association him/herself;
(8)Diligent Owner oversight of his/her tenants will benefit the entire membership and other residents; Owner oversight be encouraged by giving the BOard the authority to mandate Owner termination of the tenancy of any occupant who fails to respect the Association's governing documents; and
(9) FAIRNESS REQUIRES THAT THE OWNERS OF THE EXISITING UNITS CURRENTLY BEING RENTED OR LEASED BE PERMITTED TO CONTINUE TO DO SO UNTIL TITLE TO SUCH UNITS IS TRANSFERRED OR THE UNITS CEASE BEING RENTED OR LEASED
In our opinion, item #9 doesn't belong as a reason. This is the only language in the entire document regarding the unit ceasing to be rented or leased. This is the language that the Board is hanging on to tell us that we have waived our right as a grandfathered unit.
I have done some heavy research and am drafting a letter to our HOA. I am citing the following case to try to prove that a Preamble is not legally binding and cannot be held up in a court of law: Jacobson v. Massachusetts, 197 U.S. 11, 25 S. Ct. 358, 49 L. Ed. 643 [1905]. This case ruled that the Preamble of the Constitution was not judicially enforceable.
It is our position that a āGrandfathered Unitā as defined by Article XVII maintains its status as such until the unit is sold or title to the unit is transferred. The āGrandfathered Unitā should not give up its right to be rented or leased if it becomes Owner Occupied again at any time.
Do to the current housing crisis and economic climate, we are now underwater in our condo mortgage and thus, can't sell it to break even. Foreclosure is not an option for us. We would like to be able to purchase another home and put our family in a much better long-term financial position. This HOA restriction is severely impacting our upward mobility.
We will be consulting with a Real Estate Attorney and exploring the legalities of this Article and the interpretation of what it means to have a "grandfathered unit" as defined in the amended CC&Rs.
Also, there is no provision for a hardship exclusion.
Can anyone offer some personal experience, advice, regarding the situation of rental restrictions? How to get out of them? How they hold up in today's tough economic times? What the liklihood of fighting it is if it wasn't originally passed with 67% of membership approval, etc...
Thank you!
