HOA trying to change Bylaws to prohibit renters

Started by StephanieB8 • 10 replies • 6855 views

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StephanieB8 (Virginia)
Posts: 1

Posted:

Hi,

We live in a brand new community that had 73 or so homes built last year. We switched the HOA from the builder to the elected people in 2012. Since then, the HOA is trying to get all sorts of crazy things passed into the community, and I am curious how to go about fighting some of the proposed future items to be voted on.

The major issue is renters. As our bylaws currently state, there are no bylaws written about renters not being allowed, or limiting the number of renters per the community.

The HOA is trying to create a bylaw to only allow a certain percentage of renters.

I understand their stand point: renters bring potential for riff-raff. But, so do home owners! We have plenty of people here who do crazy things to their yard, or don't mow from time to time. Renters are no different. We have a densely military populated neighborhood here, and I can't imagine not having the right as a home owner to rent our home if we are told by the military we can't move.

My questions are:
1) Aside from going door to door with a petition, how do I prove this prohibiting renter idea is ridiculous?
2) Are there any military laws/rules that supersede HOA when it comes to being able to rent your home?

Thank you so much for your help!

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Renters are a sticky situation in a HOA. However, to be quick about this as there are many many other posts on this issue, your HOA can't really do it. The bottom line is the HOA does NOT own the property that is to be rented. They can't interfere with the contract of an owner. So limiting rental is kind of a falacy that in theory would be great to apply if possible. Legally you have to look at your STATE laws to find out what they allow. The ONLY state that now has any kind of real rental restriction is California and it came into play in 2012.

May I add that changing the By-laws is the WRONG thing to do. You all need to change your CC&R's. By-laws are just the internal workings of the HOA it is NOT on the deed restrictions. The CC&R's are on the deed restriction. So you all need to get your duck in a row and understand what your paperwork is and what it's responsible for.

So go and find out the Virginia law about rentals as you documents can NOT supercede any State laws. Your HOA may indeed try to put in restrictions and they may work. However, in the long run if someone challenges them, they may not hold.

Former HOA President

JeanneK3 (Maryland)
Posts: 562

Posted:

In Maryland, there are no laws preventing HOAs and Condos from doing bylaw amendments restricting rentals. Limiting rentals tends to be good for the community but bad for individual owners. Since you can't get FHA financing if you have too many rentals, limiting rentals might be, in the long run, a good idea.

Since changing bylaws requires a vote from your community, you need to write up your views and either deliver them door-to-door or mail them to each of your neighbors and ask that they not vote for the amendment.

However, it might even be good if you ask for a general meeting of the membership to discuss this idea openly before the amendment is even written.
Jeanne

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Limiting rentals tends to be good for the community but bad for individual owners. Since you can't get FHA financing if you have too many rentals, limiting rentals might be, in the long run, a good idea.

As others were trying to explain, if you make a rule and limit renters, and a homeowner brings the HOA to court challenging the rule to not allow renters, the HOA could loose and pay all lawyer fees of their own, and more. The HOA likely does not have the authority to enforce such a rule.

For arguments sake, I could make a new rule saying "no black people" at our HOA. But if I tried to enforce that rule?? Yeah, you can guess what would happen. It would be very expensive, and the HOA would loose. Why? Because its unenforceable.

LauraR5 (Tennessee)
Posts: 220

Posted:

It is kind of a double-edged sword. (Maybe multi-edged sword is more appropriate?!)

I am the first to say that I'd much rather have a renter than a foreclosure next door to me. However, too many renters can affect your ability to get a bank loan in the community. Of course, too many foreclosures can do that too. But, I have seen communities that tried to limit the number of rentals in their neighborhood and now they have a whole bunch of empty, dilapidated properties waiting for the bank to take them over. And try selling your house in that climate.

From everything I have read, telling an owner of a property they can't rent their home violates their rights and it won't stand up in court. Of course, you'd have to pass the rule in your community, have someone realize that it was illegal and challenge it. I think most communities are banking on their neighbors not being swift enough to figure it out or not having the resources to challenge it.

The only rules we have in our community is that you have to file your lease with our property management company. That being said, after reading all the posts here about rentals affecting loans lately, I did email them today to get me a count on rentals so we can discuss the issue at our next board meeting. Not that I am sure we have any recourse if our percentage is getting high. I am personally not in favor of passing a rule, covenant or bylaw that violates homeowners' rights. But if you do put it to a vote and homeowners vote for it (my friend's neighborhood that I mentioned above with all the foreclosures did that and, because they were all fed up with a few certain renters, they passed it), then I wonder what right they have to come back and sue you over it.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

There are ways to make rental restrictions work but not by the method of which it's done now. I like the idea to require owners who are going to rent their places to send in a copy of the lease. That is a good start but NOT a restrictive action. It does allow the HOA to have an accurate monitor of the number of rentals they have and who to contact.

The issue really lies in the fact that owners most likely use a "boiler plate" rental agreement off the shelf. What really needs to happen is that rental agreements in HOA's need to include the renters are subjected to the HOA rules as well. The owner's feet is held to the ground by the HOA for the renters violations. The HOA can't enforce it's rules directly on the renter. It can just report it to the owner who has to correct the issue or pay the price.

HOA's also forget or are unaware of "Renter rights". A landlord can't just kick a tenant out. A renter can stop paying rent for up to a year and NOT be able to be kicked out legally. The landlord has to give notice and as long as the tenant keeps replying to that notice, they can stay. So no matter how many times the HOA threatens the owner, the owner only has so much power to kick a tenant out. Which in a perfect world is still 10 to 20 working days at the earliest before the sheriff's department can come in. Which is still another 2 weeks for that to happen. Just so we are all clear at the owner/tenant relationship and why removing a renter is NOT easy.

The above is why the owner needs to put in their rental agreement that IF the renter violates any HOA rules, this is a violation of the rental contracts. That then gives the owner the power to remove the renter due to them violating HOA rules. Which is what is not in 99% of rental agreements. If the HOA gets a copy of the rental agreement they may suggest that the owner has given the renter a copy of the rules and has added that caveat to their agreements.

Since a HOA can NOT interfere with the contracts of the owner, it can't make it a requirement to put in the contract to obey the rules. However, they may want to pass this information along as it will be helpful to the owner and the HOA in the end.

Former HOA President

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By LauraR5 on 01/07/2013 2:18 PM

From everything I have read, telling an owner of a property they can't rent their home violates their rights and it won't stand up in court. Of course, you'd have to pass the rule in your community, have someone realize that it was illegal and challenge it. I think most communities are banking on their neighbors not being swift enough to figure it out or not having the resources to challenge it.

Laura,

I have not done much legal research into this area but have found other case law regarding deed restrictions. I am unaware of any reason why covenants cannot be written or amended to prevent or limit property rentals.

The problem that I have seen was that the members of the association tried to implement deed restrictions by amending their association bylaws instead of the amending the covenants. Bylaws are the rules for how the non-profit corporation operates. They are not a substitute for the recorded property restrictions. The process for amending the property restrictions is usually set forth in the covenants themselves and must be followed.

The other potential problem I see is that rental limitations are too often so vague as to be unenforceable. For example, a rental limit of 20%. An outright ban on all rentals would probably be upheld in court. Allowing some owners to rent while prohibiting others from doing the same would probably not hold up. Requiring an owner to reside in his home for some definite period of time before renting it would likely hold up.

LauraR5 (Tennessee)
Posts: 220

Posted:

I think you could probably change the covenants. That's what they did at my friend's property. Of course, now they have a huge mess with foreclosures because no one can rent out their homes, so it's not a win-win by any stretch of the imagination.

The biggest issue with changing the covenants are the number of homeowners required to do that. We can't even get a quorum at most meetings to vote on anything, and you need a lot more people than that to change the covenants. Not that I want to change. I would never ban renting outright, and that's probably one of the few things that would stand up in court. I do like the idea of property being owner-occupied for so long before you can rent it. I just don't want our neighborhood to become an investment neighborhood.

I asked our PM and our rentals are only at 16 percent, which I find to be quite manageable. And almost everyone I know who rents their property does it because they are unable to sell right now.

MikeR16 (Virginia)
Posts: 1

Posted:

It sounds like you live in quite a crazy neighborhood. I also live in a fairly new community that is setting up. I happen to be one of the board members and I know that when contentious issues arise, our board discusses it to come up with some ideas and then takes them to the community to hear what they have to say. Does your board just institute policies without any discussion with members? If so you could probably try to call for a special meeting to vote on any issues that you may be opposed to. Although I have responsibilities as a board member to try and carry out and establish good practices, I also know that ultimately it is the community that has the real power. Anything that our board does can be overruled by our community in a vote. You might try that if the board is really that overbearing.

As far as restrictions to renters I think in Virginia that the HOA can establish rules that restrict the numbers of renters. What kind of restriction has your board put in place? Will those rules stand up in court. That I can't say. However know that when an HOA is sued (and they can be sued for anything), all residents pay unless they have some kind of insurance to cover for that.

PaulM18 (Virginia)
Posts: 46

Posted:

Before everyone goes crucifying us...

The board in question is not who instigated this discussion... It was brought to the board at our last board meeting by owners upset at the large wave of people that plan on putting thier house up for rent vice selling when they get military orders.

The board has not implemented a single CC&R change at this time... When ever a contensious issue comes up we always get a broad input from the community as they are the only ones that can implement changes to the CC&Rs and the By-Laws.

The chacterization that the board is trying to implement all kinds of crazy rules is insulting.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Please don't get insulted. Everyone on here gives advice in different ways. Just put a bit of a filter on and keep asking questions. We are here to help...

Former HOA President

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