Board Ligation

Started by DuaneR • 7 replies • 1507 views

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DuaneR (Washington)
Posts: 35

Posted:

Can the residents end the Boards current ligation that's costing the HOA to fight a suit against the 'Board induce' rental cap for the HOA that the residents did not vote on? This seems to be a personal thing for some Board members then facing the problem and putting Reg's in place to monitor the program.

TimB4 (Tennessee)
Posts: 21,059

Posted:

The way to do this would be to recall the board and elect new Directors who will do what is in the best interest of the Association (which may or may not be to continue the legal fight).

One thing you should be aware of is the likely reason why the Board put a cap on rentals. FHA/HUD guidelines are used to decide which loans to purchase. These guidelines now have the cap for rentals at 50% (it used to be 30%). If there are too many rentals Banks and other lenders may not approve a loan to a potential buyer.

There have been many threads on this forum about rental restrictions. I would suggest that you use this forum's search tool (upper right - looks like a magnifying glass)and read a few of them. This way you will have more information about the issue when you make a decision if you want to recall the board or not.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Follow Tim's advice...There are many topics on this subject. I believe even the one below this one covers the issue for the most part. Think it's labelled "Litigation" or similar.

Who is bringing the lawsuit? Who is it against? Is the Board just trying to establish a rule or is there someone challenging it? Need more details on that. However, my opinion a HOA can't really limit rental property. So it probably is not a good lawsuit to pursue. You can all get together and request at a meeting the board act in the owner's best interests for what they were elected for and end the suit. Present the facts and hope they decide to stop the suit.

Former HOA President

BradP (Kansas)
Posts: 2,640

Posted:

Duane

the only way to do this is to recall the board...or kidnap them but that is probably not adviseable

LarryB13 (Arizona)
Posts: 4,099

Posted:

Duane,

By rental cap I assume you mean some sort of rule to limit the number of units that may be rented.

A restriction on whether an owner may rent his unit belongs in the CC&R's. There is ample case law that says the association may not apply restrictions on the property merely by adopting bylaws to that effect. If that is the situation, then the board's action is likely to fail and the owners will be stuck with all the costs of litigation for both sides.

In addition or instead of a recall election, the owners may be able to repeal the rental cap rule by means of a special election. Whether you can do this will depend on the bylaws of the association.

DuaneR (Washington)
Posts: 35

Posted:

The old Board let some of their freinds in after the cap was in place(secretly) some-one on the waiting list found out and was denied when he requested to rent(we found this out recently) thus the law-suit. It appears to be a policy of "protectionism" by the " In-Crowd" with-in the community to not allow anyone else into the community for rental purposes, plus they also gave themselves a free ride on the rest of us by doing away with the $80 application fee($40 for background check,$40 revenue raiser). The low limit of 15% with no fine for no reporting the rental to the HOA in the rental policy that they wrote(it showed up in the mail with the Board's endorsement) leads me to think this. Now their are more poeple on the waiting list(2-3yrs.) who are thinking of joining the suit just because some Board Members are aligned with the " In-Crowd". I've read some posts about this rental thing and I have to agree that we can't stop it but we can monitor it for bad Landlords and CC&R violations to protect the HOA. In reguards to FHA limiting rentals for mortgages that only refers to Condos not PUD's. Does any-body know where I can reach MATT DILLON or WYATT ERPE we need a need law-man in town!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Rental caps/limitations in any way shape or form are a hotly debated subject.

I believe the following:

1. If in place in the Covenants from the get go, meaning all agreed to upon purchase, then they are enforceable. Ours say no rentals within the first 6 months of purchase.

2. If put in place later, it will require all owners (meaning 100%) to agree to.

2A. There is no way the BOD alone can put them in place.

3. Usually the way to get owners (100%) to agree to put them in place later is to "grandfather" the existing owners in.

I could be wrong.....LOL

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By JohnC46 on 11/07/2012 6:23 PM

I believe the following:

1. If in place in the Covenants from the get go, meaning all agreed to upon purchase, then they are enforceable. Ours say no rentals within the first 6 months of purchase.

2. If put in place later, it will require all owners (meaning 100%) to agree to.

2A. There is no way the BOD alone can put them in place.

3. Usually the way to get owners (100%) to agree to put them in place later is to "grandfather" the existing owners in.

I could be wrong.....LOL

No, you hit the nail on the head.

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