Rental Restriction Question: Vague hardship clause

Started by SamsonW • 2 replies • 2350 views

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SamsonW (California)
Posts: 1

Posted:

I'm an owner in a CA condo, there are only 12 units in our complex and we have a leasing restriction limiting the amount of rental units to three. The same three units have been for rent since the rule went into effect in 1991, and there is no mechanism for other units to enter the rental pool unless the owners of the three rentals decide for whatever reason that they no longer want to rent.

My family has to relocate due to a temporary job training program for 2 years. With the market the way it is, we would pretty much have to walk away from our property if we cannot rent it to at least cover the mortgage. Even though the HOA's rules and regulations have a hardship clause, it is very minimal. Basically all it says is that the board will consider hardship appeals. It has no details on what factors they will consider, or even what percentage of the board must be in agreement to grant a hardship exception.

I just joined the board this year, and there are only two other owners on the board. One is sympathetic to my position, the other is not. The latter owner denied my hardship request unilaterally, but i can find no clause anywhere in the rules saying that the board must be in complete agreement, nor can I find a clause saying I must disqualify myself from being involved with a decision because my unit is at issue.

Another owner was recently put on active duty and he was granted a hardship clause. While I am not moving due to military service, I think I am in a somewhat similar situation.

Thanks for bearing with me on the facts. Here are my questions:

1) Is the hardship clause as written vague enough that it could be challenged in CA court?
2) Is there a case to be made that the HOA is administering the clause in a non uniform matter?
3) Is the fact that the same three units have been renting the unit for nearly 20 years, with no procedure for other owners to enter the rental pool itself a situation in which the HOA is administering its rules in a non-uniform matter?
4) Do courts even care whether HOA boards enforce rental restrictions in a uniform matter? And even if they do, would they just defer to the board's decision that two situations are "different enough" for the outcome.
5) Any idea what my legal options are? Would I have to sue for an injunction on the HOA trying to enforce the lease restriction rule? I'm not looking for legal advice, just wondering what I could expect to hear from a lawyer if and when I seek one out.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By SamsonW on 04/29/2012 4:07 PM

Thanks for bearing with me on the facts. Here are my questions:

1) Is the hardship clause as written vague enough that it could be challenged in CA court?
2) Is there a case to be made that the HOA is administering the clause in a non uniform matter?
3) Is the fact that the same three units have been renting the unit for nearly 20 years, with no procedure for other owners to enter the rental pool itself a situation in which the HOA is administering its rules in a non-uniform matter?
4) Do courts even care whether HOA boards enforce rental restrictions in a uniform matter? And even if they do, would they just defer to the board's decision that two situations are "different enough" for the outcome.
5) Any idea what my legal options are? Would I have to sue for an injunction on the HOA trying to enforce the lease restriction rule? I'm not looking for legal advice, just wondering what I could expect to hear from a lawyer if and when I seek one out.

1. Perhaps I missed it but I didn't see any language of the hardship clause provided. You only provided your paraphrasing of the clause "Basically all it says is that the board will consider hardship appeals." not the actual language. That said, you can challenge anything if you have the time and money. The question is, would you win?

With "hardship" not being defined, it would be left to the boards interpretation.

2, Military personnel are also covered under other laws (solder and sailors civil relief act comes to mind). Although it seems similar, military personnel do not have the option of refusing an order to move where, technically, your family does. I'm not saying I agree with your board and, granted, it probably wouldn't be smart to refuse the job training, I'm just pointing out the technicality involved.

If you can find a non-military family who was offered the exemption, you may have a stronger argument.

3. Possibly. This is an issue that needs to be addressed when boards choose to have rental restrictions. If challenged, a court might rule in your favor. Realistically, it could also take years for the challenge to be ruled on by a court. If you are looking at this as an option, you should consult a local attorney to see if it is a good option. They may be able to phrase the issue to the board to allow you to be granted a two year waiver - which will allow the training to be completed.

4. Courts care. Legal challenges cost time, energy and money. Then there are the unintended consequences (like having to pay your fair share of the Associations legal fees to fight your challenge in addition to paying your own legal fees). It's best if the issue can be settled without a legal challenge.

5. For legal advice, you need to ask a local attorney who has access to all your documents. A lawyer (and I am not an attorney and I do not work in the legal profession) will probably say that you have a chance. Mind you this isn't saying you would win or that it will be decided before you need to move for the training. It's saying that valid arguments can be made.

Since your on the Board, I would suggest that the Board consults with it's attorney on how to rotate the rental option (probably on a yearly basis). I would also encourage the board to settle the issue - perhaps by allowing a variance for x years based on receiving additional documentation from the company. If I were on your Board, I would be wondering about:

1) if the training is required doesn't the company pay for the housing?
2) Is the training required to keep the current position the individual is currently in?
3) What happens after the training (i.e. will the family be working in the same location)? If not, then why not sell vs. rent? If you are, why move the whole family vs. just the individual (after all this is what happens to military who are in training programs)?

For me, these questions help define if it's an actual hardship vs. a personal choice.

Hope this helps,

Tim

MelissaP1 (Alabama)
Posts: 13,836

Posted:

What is the punishment for renting? Is there a fine or something if you rent out? The only true damage rental does in the long run is that less loan packages are offered to potential buyers. FHA, Freddie Mac, or Fannie Mae have a limitation on rentals in a HOA. There is a form the HOA fills out if these type loans are offered. We have discussed this issue on other forums so look that information up there. I believe there is a recent one this is discussed in.

My opinion is that a HOA can't limit an owner's use of their property only mortgage companies can. However, there are a few states out there that some laws have been created to allow HOA's to limit rentals. You will have to look up if it's your state or not.

I say rent the place out if you can. It's better occupied than empty. Just be aware when you write the rental agreement up that it should be modified to reflect the tenant must obey the HOA's rules or they can get kicked out by you. Your still responsible for the dues payments and NOT your tenant. The good news though is that the dues are now tax-deductible since the property is now considered rental.

Former HOA President

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