Rental and Residency Restrictions

I am the general manager of a 570 units complex.
We are in the process of revising our CC&Rs.
A couple of sections are causing controvercy.

Most owners want to restrict the number of units one a person or corporation can own.
The current suggested limit is no more than 2 units owned.

The other section has to do with requiring a 1 year residency before someone can rent out their unit.
Example: After having just bought a unit, you would have to live in it for one year before you can rent it out.

I would appreciate the input of anyone who has similar restrictions in their governing documents and whether they have had either success or problems with them.

Thank you
Jesse Moreno

Welome to the forum, Jesse. As a property manager, do you work for a Management Company? Our MC updates our PM every year with new CA legislation, and our PM passes the info on to us directors.

There was major new Cali legislation concerning rental limitations that took effect 1/1/12 (I think). It didn't affect our highrise towers, so I didn't read it carefully. I think it will definitely affect yours.

Go to davis-stirling.com for starters; go to the Main Index.

But you want to advise your client's Board of Directors to ask for a written opinion fro their HOA attorney, which I hope they're doing anyway since you're talking revising the CC&Rs.

And Jon reminds me to point out to other readers that davis-stirling.com is mostly concerned with CA laws. The newish rental legislation is a good example. But it can come in handy for generic questions such as: What should we include in contracts?

Jesse:

From Davis-Sterling, it is apparent that an association can restrict who occupies a unit and for what purpose. (I could get no clear answer to the question of whether you can restrict who may own a unit.) The courts in California and other states have generally upheld occupancy restrictions provided that the restrictions are in the recorded covenants and the restrictions do not illegally discriminate against protected classes.

From previous threads, a rental cap seems like a waste of time. Limiting the percentage of units that may be rented does not work because it treats owners unequally; the guy who buys first can rent his unit but the next guy cannot. You will have a great deal of difficulty enforcing a rental cap.

Limiting rentals to those who have lived there for a year seems to be more manageable. There are several provisions that I would suggest you include in your rental restrictions:

Rentals require notice of name and address of owner, management company for owner (if any), and names of all tenants or other persons occupying unit for more than 14 days. A new notice is required whenever there is a change in the names of tenants or other persons occupying the unit for more than 14 days.

Rental agreements must contain a provision allowing the association to collect any past-due assessments or fines from the tenant as an offset to his rent. The lack of such provision will not prevent the association from collecting past due assessments or fines directly from the tenant as an offset to his rent.

An owner, his tenant, and his management company, if any, shall be jointly liable for any violations and shall be jointly liable for any fines or other monetary damages.

A unit owned by a trust will not be considered to be a rental if it is occupied by a trustee or beneficiary of the trust.

A unit owned by a corporation will not be considered a rental it is occupied by an officer or director of the corporation.

A unit owned by an LLC will not be considered a rental if it is occupied by a member of the LLC.

A unit owned by a partnership shall not be considered a rental if it is occupied by a partner.

I am sure others can offer more suggestions. This is just to get you started.

I love it.....