Informing HOA of new resident intention

Started by IgorV • 28 replies • 1994 views

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IgorV (Pennsylvania)
Posts: 13

Posted:

Good afternoon,

My name is Igor, and I own small condo (apartment type) in Philadelphia area.

I have resided in this condo for about 7 years, and I am planning on moving out to a house. I will be letting my parents reside in my unit. They will not pay me anything, and there will be no lease.

The problem is: my condo requires that I submit an application of leasing intention (or occupant other than owner) and $1000 deposit to condo escrow account when I lease my unit so someone else (or not owner occupied).

I don't want to make my parents pay $1000, nor do I want to submit an application of any type. They are my parents and I will not charge them anything for rent.

Do you think I can just move them in without informing condo? I mean - they won't cause no issues, and I will be visiting like almost every day....What would be the consequences?

An recommendations? Personally, I think that we have many units that have someone else other than owner. HOA does not really know who lives where, as they constantly mis-deliver notes, and spell names incorrectly....

I will probably get some "right" comments here; but I thought it would be worth trying asking on this forum...Maybe I will get some good feedback...

Thanks in advance!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Igor

One part of me says this is not a lease/rental thus no need to submit an application.

Another part of me says it would be best for all to notify the association that your parents will be moving in with you.

Hope this helps.

IgorV (Pennsylvania)
Posts: 13

Posted:

Yes,
This is what it says:
" Enclosed are the forms that must be completed by the owner and the tenant for renting a unit in our condo. There is a requirement of $1000 that is put into a escrow account. We would like the owners to rent to good, responsible tenants who will comply with our rules.
1. The association must be notified prior to owner's intention to initiate new lease, renew a lease, sublease, or have someone other than the owner as the principle occupant of their unit.
2. Each owner and renter or principle occupant must sign an Approved Lease Addendum binding both to the rules and regulations in the governing documents.

But what would happen if I do not inform? I mean I will not draft lease, and I will not receive payment for rent...They will just leave there...They are very quite, well behaved, and organized couple...My parents.

when it comes to violations: look at this:

When I purchased condo, I followed all of the rules and contributed 1% from sale price....
I personally know 2 other residents who purchased recently and although they did pay full price, they somehow managed to do this transaction as $1 sales price - gift - lol

Also, it specifically says do not store in the basement due to insurance violation,,, and some senior owners have the key for the basement (don't know who gave them the key), and they store stuff there.... That's ridiculous...

EllieD (Vermont)
Posts: 446

Posted:

IgorV,

Could you post the exact wording from your Documents re submitting an Application, and the $1000 deposit requirement. ( I see you just did ) But in which Document or Documents are these requirements.

Also have you looked closely to see if there are any words such as:

This Section does not apply to occupancy of a Unit by a child if the Owner is the parent, by a parent if the Owner is the occupant's child, by a . . . or any other similar arrangement for which rent or lease payments are not made by the occupant to the Owner.

Also, you wrote to the effect that the Association does not seem to have an up-to-date list of all occupants. That seems strange to me, as I would think that any Association would want to keep their list of Owners and Residents current.

Who will be paying the monthly Association Maintenance Fee? You or your Parents?

Approximately how large is your Association, how many Units? Is the Association self managed or is there a Management Company?

FredS7 (Arizona)
Posts: 927

Posted:

You are not renting the unit. (You're not charging your parents rent, are you? They're not signing a lease, are they?).

I would write a short note stating that your parents will be living in the unit, and that you have transferred the keys to amenities, parking lot spaces, etc. to them.

Don't make it a question, keep them informed.

IgorV (Pennsylvania)
Posts: 13

Posted:

Yes, no lease, but they still require $1000 deposit?

maybe you guys can help me draft a letter of some sort explaining the circumstances and asking to bypass $1000 deposit?

I will try to get the document (rules) scanned and post here in a few hours for you to examine.

I greatly appreciate any assistance I might receive on this forum.

Thanks!

IgorV (Pennsylvania)
Posts: 13

Posted:

I will be paying the condo fee. The HOA is 78 units (1 and 2 bedroom units, 3 floors). Self managed.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Why not add your parents names' to your deed? This will avoid the whole leasing issue as they will be owners along with you.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

All

Igor posted:

1. The association must be notified prior to owner's intention to initiate new lease, renew a lease, sublease, or have someone other than the owner as the principle occupant of their unit.

Sorry, I say the $1,000.00 is due based on the, or.....

FredS7 (Arizona)
Posts: 927

Posted:

>Enclosed are the forms that must be completed by the owner and the tenant for renting a unit in our condo. There is a requirement of $1000 that is put into a escrow account. We would like the owners to rent to good, responsible tenants who will comply with our rules.
1. The association must be notified prior to owner's intention to initiate new lease, renew a lease, sublease, or have someone other than the owner as the principle occupant of their unit.
2. Each owner and renter or principle occupant must sign an Approved Lease Addendum binding both to the rules and regulations in the governing documents.

OK I missed that text. But now reading it carefully: (by the way, it is not well written and misspells "principal")

The form must be completed by the owner and tenant. Parents are not tenants. The requirement for $1000 is associated with the owner and tenant sentence.

NOTIFICATION is required for EITHER leasing OR a principal occupant other than the owner.

It does not say clearly that "principal occupants other than the owner" must post $1000. It can be read that way but it could also be read the other way.

The last sentence muddles things, because it seems to require "principal occupants other than the owner" to sign a lease addendum. This doesn't really make sense if there IS no lease. If all the document does is to state that the occupant is aware of the rules and will abide by them then I guess there is not a problem.

Now making parents an owner also...I think it is best not to go there.

IgorV (Pennsylvania)
Posts: 13

Posted:

Spoke with the president today....Told him that I will be leaving for a long period, but temporary, and my parents will move in with some furniture.....He said --- considering the circumstanses I described, he will make an exception, and if anyone asks, he will say that there is no lease, no profit.

So, am I ok? Of course, this could also be permanent.......I just did not want to say that....

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Igor

Happy it all worked out for you.

Often the best approach is a personal, off the record conversation versus pi$$ing rules.

John

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Igor

Sorry no edit...I wanted to add:

The jump up and bite you later questions might be were you honest with the guy and do you have what he said in writing?

I might just send him a hand written/signed thank you note..and vaguely refer to the conversation...and be sure to keep a copy.

I would also explain to your parents about Covenants and Bylaws. You do not want them to be the unit occupiers from Hell.

Hope this helps.

IgorV (Pennsylvania)
Posts: 13

Posted:

so, I should mail a Thank You Card? Is this common practice?
If so, could you guys help me word it?

Thanks!

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Do not send a thank you card. Its likely the president does not want this documented. Your parents are moving in with you. Period.

IgorV (Pennsylvania)
Posts: 13

Posted:

but I won't be living with them. At least for a year, as I told him.....

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I don't get the $1k escrow deposit. That's a bit illegal to me. The HOA can't interefere with the contract of a homeowner. There's no real purpose for gathering this fee but to allow them to deter people from renting out their condo's. If it's in escrow then they can't have it either. Plus what are the conditions you don't get the money back? Seems good intentions but enforceable? Probably not.

It's really none of the HOA's business if you rent, lease, or move your parents in. Their contact is to go to YOU and hold you to the owner feet to the ground. However, they may not send your information to your second address. It should go to your HOA residence. Your parents should be receiving that correspondence and forward it to you.

How are you going to handle the HOA fees? Your not charging your parents rent. However, your responsible for paying the HOA dues. Dues are tax deductible IF your property is rental. So is the repairs/maintence costs. Your problem is that without a lease agreement, this may not be tax deductible. Even though you may never evict your parents out of this home, for legal purposes you need to show a rental agreement. I had to show one to my bank that I had a 1 year lease on my property before I was allowed to get my second home. Your bank or the IRS may require you do the same. A consideration you need to look into for the legaliities for this and insurance...

Former HOA President

IgorV (Pennsylvania)
Posts: 13

Posted:

The HOA dues are delivered by USMail directly from my bank, even though I reside 5 steps from the office, so delivering payments won't be an issue. I already drafted lease that I will give to my parents, because they will need it for bank, SSI, etc.... I will just tell them not to show it to neighbors or condo members....

I will just leave my homeowners insurance for them....

The only issue that I am thinking off is how will I deduct property tax from my annual return? Can I still deduct them although, I will not be living at this address?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You have to claim the property as rental use. That is why you still need a rental agreement and label the property as rental with the BANK. The HOA shouldn't need a copy of anyone's rental agreement in my opinion as they can't do anything with renters.

Former HOA President

IgorV (Pennsylvania)
Posts: 13

Posted:

claim property as a rental use when there is no rent/lease? IRS will want money from the rental property, but I do not receive any profit.....Very confusing situation...

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The IRS should not be taxing you on this. There is no real profit in renting out a second home if you are NOT in the business of renting property. Rent on a second home usually is set at the amount to cover the house payments. Utilities or other related expenses (cable, water, etc...) is negotiable/optional to be part of rent. In your case since your making the house payments and dues then there is no profit to claim. Just tax deductions for maintenace, taxes, and dues.

the bank may require you to claim this house to be rental when you buy the second home. You need a primary residence and can't list two. One has to be classified as something else. Plus you may need to show them a 1 year signed lease so they approve your loan for the second home. I had to show a copy even though I could afford both homes. I don't think I was pentalized by the IRS for having the rental property. Just had to recognize one home was rental.

Former HOA President

IgorV (Pennsylvania)
Posts: 13

Posted:

So, I can still deduct HOA, mortgage, and property tax from my annual return, although I will not technically reside there?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Yes you can. You can NOT claim HOA dues if you live in the home. It has to be rental/investment property. It is considered part of the maintenace. You can claim repairs and maintenace items used on the rental property. So save all your receipts for maintenace and repairs. You can't claim things like cable, utilities,insurance or water etc...

I am not sure about the property taxes in your state/city. Don't want to mislead you on that. However, I believe I was able to deduct my normal property taxes just like my main residence. It's been awhile and had really bad tenants...So had issues with eviction costs too.

You don't want to acknowledge this is rental but where it counts it matters. The 1K escrow requirement I don't think is enforecable. Plus it's escrow. It should be paid back once you sell or move back in.

Former HOA President

CarolR11 (Colorado)
Posts: 2,563

Posted:

I don't see how the IRS fits your situation at all, Igor. You aren't receiving any income from your parents. So what does the IRS have to do with you letting your parents living in your home for free??

I'm not sure, but I think that Melissa has muddied the waters. It seems that she's creating some confusion, but maybe I'm wrong.

IgorV (Pennsylvania)
Posts: 13

Posted:

Hello! Thank you for your reply guys!

Here is the confusion that I have:

When I occupied my property, I used to deduct property tax, and mortgage payments from my annual return, and it was very good for me.

Now that I am planning to move out, lease apartment out of state, and let my parents occupy my condo, I am not sure how deductions will work out. Would I be able to still deduct condo tax/mortgage? I would think so, because there is no lease, and it's like I am still occupying my condo.... But the addres I provide will be in different.....That's what so confusing.... Of course, I will prepare a lease and will write some monthly $$$ that my parents "pay", but this would only be for their use (change address with bank, DMV, etc)

If someone could help, I would greatly appreciate it!

Thanks!

CarolR11 (Colorado)
Posts: 2,563

Posted:

Igor, re: the IRS: You can still deduct taxes, etc. as you have been doing. About 10% of our owners rarely occupy their condos here as they are 2nd homes. These Owners reside elsewhere and use that residence as their address.

But why do you want to prepare a lease for your parents with $$ paid you when they aren't paying you rent?? That could catch IRS's attention because it'll seem like you're getting income. I do not think they will need to show a bank or DMV a lease. Or do I misunderstand something?

IgorV (Pennsylvania)
Posts: 13

Posted:

Can I deduct mortgage as well (as I have been doing during my occupancy) ?

They are receiving SSI, and they are required to show a lease in order to change the address.....

MelissaP1 (Alabama)
Posts: 13,836

Posted:

They need a lease for many reasons...One would also be for renters insurance. Hate to tell you but if they move in their stuff may NOT be covered by your owners insurance. A serious consideration for your parents. Need a lease for change of address for them. They need to show proof of residence.

In general it is good to have a record of a lease for everyone. The terms of which are defined by both parties. It's just good record keeping and practice. Just do not think the HOA needs to see it.

Former HOA President

IgorV (Pennsylvania)
Posts: 13

Posted:

Exactly! Thanks!

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