Long-term rentals

ChrisR5 (Texas)
Posts: 12

Posted:

I am on our HOA board and have asked that we discuss the need for a potential cap on long-term rentals. I am not opposed to rentals, but I have heard that they should be capped because too many can bring down property values. Anyway, I asked it be added to our next agenda. One of our board members wrote back saying she explored the idea a few years and was greeted with strong opposition, saying that the topic is taboo.

I do not think that emoition should determine whether we address this issue but it should be based on the facts. At a minimum, I think we should ask our management comoany to do an assessment of the number of rentals and the pattern (increasing, decreasing, stable, etc.)

How do other HOAs generally deal with this issue? What is generally the percentage of rentals that HOAs' should not exceed? What are some reasons to cap the number of long term rentals?

By the way, we recently tool action onn short term rentals, restricting the number of times a year homeowners can rent and the number of people per unit.

Thanks,

Chris

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By ChrisR5 on 12/20/2015 7:58 AM

I am not opposed to rentals, but I have heard that they should be capped because too many can bring down property values.

I do not think that emotion should determine whether we address this issue but it should be based on the facts.

Do you have facts that prove what you have heard or is your action just based on emotion?

Quote:

Posted By ChrisR5 on 12/20/2015 7:58 AM

How do other HOAs generally deal with this issue?

My Association, 130 lots with 30 known to be rented, does not get involved with rentals.

Quote:

Posted By ChrisR5 on 12/20/2015 7:58 AM

What is generally the percentage of rentals that HOAs' should not exceed?

Applicable only if your a condominium, to be HUD certified, the limit is 50%.

Quote:

Posted By ChrisR5 on 12/20/2015 7:58 AM

What are some reasons to cap the number of long term rentals?

By the way, we recently tool action onn short term rentals, restricting the number of times a year homeowners can rent and the number of people per unit.

Thanks,

Chris

Quote:

Posted By ChrisR5 on 12/20/2015 7:58 AM

What are some reasons to cap the number of long term rentals?

Personal stereotypical perceptions.
Minimize the potential of investors coming in and taking over the Association.

Quote:

Posted By ChrisR5 on 12/20/2015 7:58 AM

By the way, we recently took action on short term rentals, restricting the number of times a year homeowners can rent and the number of people per unit.

Cool.
Did your Association have such authority to take such action?

Typically, to withstand legal challenges, rental restrictions need to be within the CC&Rs.
Restrictions that are adopted by an amendment to the Bylaws or by policy resolution can be seen as being in conflict with the CC&Rs (which have no restrictions). When there is a conflict, the higher precedent document must be complied with. In this example, it would be the CC&Rs.

Having numerical rental restrictions (i.e. no more than x may be rented at one time) causes many issues that have to be dealt with. For example:
How will you rotate who may or may not rent?
Will hardships be allowed waivers, and if so - how will a hardship be defined?
How will the Association enforce the rental limit and will it be budgeted for?
How will the Association know if a unit is rented or simply a family member using the property (wink, wink)?

To eliminate or, at least, drastically reduce those issues, the best rental restriction I have seen has been:

No owner, who purchases after this amendment is adopted, may rent their property during the first x years (typically one or two) of ownership.

This wording will tend to keep out the investors and will likely gather the most support as it doesn't affect existing owners and is not that much of a hardship on new owners (unless they are purchasing for investment purposes).

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Chris

Rentals are a very hot subject. Unless there are rental restrictions in your Covenants it will take a majority of owners to add/change such and typically existing owners will be exempt (grandfathered in).

Many associations get into trouble by improperly/illegally installing rental restrictions. via Ruels and Regulations.

Bottom line is rental restrictions can be added, but it is not a simple task.

DouglasK1 (Florida)
Posts: 2,046

Posted:

My association has 65 lots, and I'd guess 7-10 rentals. We don't restrict or regulate rentals in any way.

Personally, my preference is to let people use their property as they see fit unless there is some compelling reason otherwise. Nebulous concerns about property values don't rise to that level for me.

Escaped former treasurer and director of a self managed association.