$100 non refundable application fee for renters

Over the years our 6,400 property HOA has averaged about 350 violations per year, exclusive of Fire Safety issues of which average about 1,500 per year. Approximately 90 to 95% of the violations involve rentals. From your description of your properties I would suggest you take every precaution possible in reviewing potential renters.

Paul T

But dont you think that nobody is more interested in having a good tenant than the owner of the unit? Or that the owner has experience renting? that knows what to require to select a good tenant? That the owner the last thing wants is a trouble tenant??? I dont know what is happening to our society? that needs people to tell them how to do things?

Thank you I appreciate your view.

While it is uncommon to have such a high fee and background checks when speaking about all rentals, its not uncommon for high end properties to do this. They want to keep the "known" scumbags out. This is no way guarantees the good renter never turns into a future scumbag, which I have seen happen. I agree, as a landlord, its a crappy policy, but it is what the majority of the owners want and that is why it is a policy. You could work with other homeowners to get the policy changed if they agree with you. Its not set in stone.

I understand and agree,many of the owners already complained because not only they are asking for the $100 non refundable but a first and last month? I think that's for the owners to handle dont you think. But I appreciate your suggestion.

Larry, people and children are murdered hundreds daily and who can avoid it, the police, the schools, the teachers, the parents? I have owned and rented property for 30 years and have seen it all, so I know the problems of renting, why should I pay somebody else to assume they are better at choosing or screening a renter? I would agree to pay a lot more if their work is guaranteed but is never the case.

Thanks,
.

In addition to my experiences mentioned above I helped my parents manage their 8 unit apartment building which was in excellent condition in San Francisco, as in "rent control". I couldn't believe the pure grief they went through with many tenants, not all, but plenty. Any thing that can be done in the screening process, assuming it is legal, would be to your Member's benefit. Granted, nothing is perfect but at least you can use all the tools available to you and your fellow Members. You may be very effective at screening your own unit but others may not be as diligent?

Paul T

Melissa,

You said: " I just don't believe it is the correct form of action". I would be interested in knowing what the correct forms are. One can always learn from other's experiences.

Thanks, Paul T

Oh, if people have such a policy of what basis to deny a tenant to enter into a lease (other than total number of units rented) I'd be interested in a discussion on that topic (that is if anyone cares to share).

To burst many bubbles out there...There is only one state that has the right to enforce any kind of rental restrictions. It just past within the last year or so. Plus it can only effect HOA's from that year on. Everyone else is grandfathered under the old rules from what I understand. That state is California. Which I believe can limit the number of rentals in a HOA. Otherwise even if there is a policy in place in your HOA, it can be challenged in a court of law...

What do I suggest? For one people understanding what a HOA is...It is NOT an "Entity" or stand alone committee. It is YOU and your neighbors. It is ALL the owners bunched together in your community as a club. The ONLY qualification to be in that club is that you are a homeowner. So when you reference a HOA understand that it is a reflection of you and your community. The BOD in place is supposed to be doing that as why they were elected from your general group of owners.

Now that is out of the way, you may then understand why a HOA has no real rights to involve itself in rental agreements between owner and tenant. Kind of a bunch of nosy neighbors getting into your personal and financial business isn't it? They can't control your property for you. They just can report it to your or put on fines if written against you for violations the tenant does. It is really up to you to write in that your tenant follows the HOA rules and you can evict them if they don't.

What can HOA's do as it does effect them in ways not related to "Property noise/damage". It effects the type of loans and loan rates available in that area. The higher the rental rate the more interest or less loan packages are offered. FHA really frowns upon high rentals as do many other mortgage companies using the same HUD data report. This is the area where the rubber really does meet the road when it comes to rentals.

A HOA isn't completely helpless in this area but many go about it in the wrong way. Such as this non-refundable rental charge. Like Tim state earlier, your HOA has to have POLICY. Without a policy and defined punishment, it does no good. I think there should be notification to the HOA that a property is now rental. The owner should notify the Secretary of the BOD and give them their proper contact information. The HOA will still send notices to the HOA address for legal reasons, but they do need to know contact information so they may address issues to the right person. The HOA holds the owner feet to the ground NOT the tenants. The owner should want to know if their property is being taken care of properly. So notification works both ways. This the only real rental restriction I would have when dealing with rental in a HOA overall. Just notification and a way to contact the owners. All else is just putting the HOA up for failure and frustration.

Mellisa, you said:

"What can HOA's do as it does effect them in ways not related to "Property noise/damage". It effects the type of loans and loan rates available in that area. The higher the rental rate the more interest or less loan packages are offered. FHA really frowns upon high rentals as do many other mortgage companies using the same HUD data report. This is the area where the rubber really does meet the road when it comes to rentals."

I am not quite sure what the above means or how it may effect what the HOA can / should do?

Otherwise, I think we are on the same page, the OWNER is responsible for the use of their property. As mentioned earlier many of our owners , not living here, allow their property to be used in a way to create a negative impact on the rest of the Members. Yes, our Committee takes action with fines but it is always after the fact.

Thanks for your reply, Paul T

Interesting info.

I could not locate the outcome of the case but even if the Association was vindicated, they still incurred legal costs to defend themselves.

It is a little know piece of information that many people don't know about how rental really does effect a HOA. It is not necessarily the damage or the noise the tenants may bring. That stuff can be controlled, limited, or addressed. The situation just creates a bad taste in the HOA's mouth and alot of heartburn. That really doesn't effect one's home values if the rental property is a mess as that property isn't for sale. It just creates a bad curb appeal issue.

The real issue with rental property is having too many homes being rented out. There is a form from HUD that HOA's must fill out for certain loan closings. Usually FHA type loans do this the most but all may use this form one way or another. It is basically a 25 questionaire on the health of the HOA. It ask things such as if it is Fee simple? How many homes and how many are current in dues? How many are rental? How many outstanding liens/foreclosure by the HOA? (Not bank). It is basically an Appraisal form geared toward the HOA conditions. It is that form that many banks refer to when they decide to extend a loan. The number of houses used as rental raises a red flag to them. I forget the number but it's got to be way less than 50% in order for them to offer the best rate and loan options.

This does NOT effect a home's value whatsoever. It effects the loan programs and potential buyers who qualify to buy. There is a less of a pool of people who can meet the requirements of certain loan types and they will be turned down. Kind of like people with bad credit can't buy cars at some dealerships. They can still buy a car, just not at Mercedes...Your HOA may just become Mercedes instead of a "No Credit/No problem" auto dealer. Just to put this in perspective.

Only Mortgage companies truly can limit rental if you still have a loan out. Some will not let you lease your home out for a few years and must be used as a primary residents for a time period. It depends on the loan type. HOA's would like to regulate this as well similar to what banks do, but in the long run just not set up to do so. There are legal reasons for requiring term and residency requirements. Mostly stemming from bad condo flipping deals in the 90's in Florida for which a few are doing time in prison for. But that is another story... Just know that rental bottom line in a HOA, is that they can't always regulate it, enforce it, but can keep an eye on it...