Definition of 'rental unit'

Started by JosephH2 • 7 replies • 1289 views

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JosephH2 (Pennsylvania)
Posts: 57

Posted:

I am HOA Board president for a development with 75 units (townhouses and semi-detached).

Our HOA Board has been getting questionnaires from mortgage banks regarding the number of rental units we have.

We have two cases in our development involving parents and children. In one case, the parents own two units. They live in one and their children live in the other. In the other case, the children own two units. They live in one and the parents live in the other. The Board has no idea in either case if any ‘rent’ payments are made.

My question is how should the Board count the units occupied by the non-owners when responding to the questionnaires?

Does the Board have the right to ask if the children/parents are paying rent?

BrianB (California)
Posts: 2,820

Posted:

the board should supply truthful answers.

In this case, you don't know if any rent is being paid, so the answer is "Zero".

Of course, I am not too inclined to go out of my way to make any bank's job easier. I figure if they are too big to fail, they are too big to need me to do their work for them.

MatthewW4 (Arizona)
Posts: 500

Posted:

I agree with Brian on this one. Why would anyone think the association knows who is renting out their units? If the bank wants to know this, let them get off their butts and start knocking on doors. You have no obligation to answer inquiries from a bank.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

We have at least two cases where we know parents bought units and their adult children are living in them. We have one case of a child buying a unit and the parent is living in it. We do not count those as rental units as we have not been informed that they are rentals.

If you do not know, do not guess. List what you know as fact.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

The problem doesn't occur until you hit a certain threshold. So I would report that it's possible 4 units out of your 75. No big deal...It's when you get towards 50% it has an effect. That just makes rates go up on refi's and harder to get loans.

Oh and I am sooo tired of you all saying it's because the bank is "Lazy" and should find out itself. Ever occur to you that YOU are the source of information and that is why they are asking you? It's like those people who the cops stop to question if they seen a crime take place and say "I don't know your the cop, do your job"... Really about ignorant...Sorry but a big pet peeve...

Former HOA President

MatthewW4 (Arizona)
Posts: 500

Posted:

I don't know how the big boys classify a property as a rental, but my own standard is that a rental is a unit where the only relationship between the owner and the occupant is that of landlord and tenant.

I would not consider any of the following to be rentals even if the occupant is paying the owner:
When the occupant is related by blood or marriage to the owner;
When the owner is a trust and the occupant is either a trustee or beneficiary of the trust;
When the owner is a corporation and the occupant is a director or officer of the corporation;
When the owner is an LLC and the occupant is a member;
When the owner is a partnership and the occupant is a partner;
When someone resides in the unit with the owner.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Quote:

Oh and I am sooo tired of you all saying it's because the bank is "Lazy" and should find out itself. Ever occur to you that YOU are the source of information and that is why they are asking you?

I believe in property rights, including the right to rent ones property. I also know the banks will penalize you by not offering financing or higher rates if you have too many rentals, therefore I don't track rentals. As far as I know they are all owner occupied. I dont ask, they dont tell

If they want quality information they can hire a consultant to knock on doors just like they would do for an appraiser, or title insurance, etc.

Otherwise, the banks get what they pay for. They are expecting the info for free, so I give them their money's worth.

MatthewW4 (Arizona)
Posts: 500

Posted:

Quote:

Posted By SteveM9 on 06/25/2013 8:18 PM

They are expecting the info for free, so I give them their money's worth.

Well said!

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