Board member vs rental units

I've owned my condo for 16 years and when I bought it the by-laws said you can rent your unit out. I lived there for 11 year and now have rented it out since that time.

Recently the association board voted and passed a motion to charge a monthly rental fee to all owners who rent their units. The amount will be 5% of the monthly lease. The board decided to begin the policy on June 1, 2016. This decision has several of us that rent our units feeling a bit blindsided. We cannot recall any Board meeting which addressed an issue of this magnitude, and then put the issue to a Board vote before sharing the essence of the issue and vote with the members of the Association. Has anyone ever heard of this? Association charging a fee to owners that rent their unit out. I think this is illegal.

They also are trying to get us to force close by using bullying tactics and making us feel like we aren't wanted. They said they will give us 4 years to sell our unit. After that time we cannot rent it. That would be a financial burden on us. Please help.

Thank you, Jodi

Thanks for your reply Jeff,

So your saying they cannot charge us a 5% monthly fee for our rental and it is not legal?

You say it is impossible for them to force me to sell my unit? After 4 years I won't be able to keep it without renting it due to the financial burden of not collecting rent.

Another point is the board didn't open up this meeting and discussion to all owners when creating this new policy. Don't they need to have an initial meeting and present it to everyone?

I agree this is likely illegal - if the board wants to have the renting rules changed, it will need to go to the homeowners and propose an amendment to the CCRs to that effect. That would have to be voted on by the homeowners, during which time you can debate on the renting issue.

As an owner-occupant myself (and former board member), my primary beefs with owners who rent their units (1) that they don't educate their tenants on the rules and rarely intercede on complaints. Second, renters can ultimately create more wear and tear on the common areas because of all the moving in and out (e.g. our community has a terrible problem with all types of junk landing in our dumpsters when people move out and it always seems to occur around this time of year). Third, it can cost the association twice as much to deal with a rental unit because you have to communicate with the owner AND tenant (you can't expect a tenant to rat out him/herself) and sometimes the owners live far away.

There could also be a problem with owner occupants who are trying to refinance or sell their homes - too many rentals can keep a bank from underwriting a mortgage to a new buyer. If you have too many rentals, the entire community might be seen as a rental community and then insurance costs can go up.

Having said all that, I understand there are times when people will have to rent the place out before it's sold, maybe because they've moved away or the owner has passed away and his/her heirs are trying to wrap up the deceased's final expenses before the place changes hands. For that reason, I don't have a problem with amending the CCRs to provide guidelines for hardship rentals.

I also like Jeff's suggestions about prohibiting rentals during the first two years of ownership, a rental cap (although those can be really hard to track) and required elements in lease agreements, such as the tenant being given a copy of community rules and agreeing to comply with them and carrying renter's insurance with liability coverage for damage to the common area from his/her neglect or abuse. I also think associations have to have a strong rules enforcement policy in place and hammer the owner/landlord if necessary if he/she fails to police the tenants.

All of this could help give the homeowner a way to rent the place out if there's a hardship while being sensitive to the rights of everyone else in the community and hopefully preserving their property values.

So, you may want to discuss your concerns with the board and see why they're trying to make this change and check the CCRs to see whether they really can. If not, you may want to suggest some of these alternatives or at least explain your situation - if they express concerns about renters, this could open up a valuable dialogue between the owner/landlords and the association as to what the problems have been and the best way to resolve them. Good luck!

Thanks SheilaH!

(1) I have a document that I give to all my new tenants. They need to sign and date it.
(2) My condo is furnished so, no wear and tear on carpet.
(3) I understand. My unit has not had a complaint for 2 years. It's the other rental. They live in Japan all winter and it's mostly the other unit that have complaints because it's larger and families usually rent it thus more things can happen.

We have 10 units total and 3 are rentals right now. 30%.

Great suggestions: I also like Jeff's suggestions about prohibiting rentals during the first two years of ownership, a rental cap (although those can be really hard to track) and required elements in lease agreements, such as the tenant being given a copy of community rules and agreeing to comply with them and carrying renter's insurance with liability coverage for damage to the common area from his/her neglect or abuse. I also think associations have to have a strong rules enforcement policy in place and hammer the owner/landlord if necessary if he/she fails to police the tenants.

I completely understand the other owners concerns but, I feel they are going out of bounds with the rental fee.

Jodi,

Laws vary by State.
If you need to determine if something is legal or not, read your State statutes and consult with a local attorney.

Typically, to be enforceable, rental restrictions need to be within the CC&Rs.
An argument can be made that this is a form of rental restriction.
However, the argument will need to be decided in the courts.

JodiH1 (Minn) (You say your community is condominium) Maybe your 10 unit condominium corporation is self-managed/follows no legal advice.

1- Your Board's problem may require you to hire competent legal advice given that - if what you say is true - it is trying to introduce a tithing or skim of unit rent not derived from the common expense formula contained within the Declaration.

Respectfully, read your condo Declaration alongside Minnesota's Uniform Condominium Act ch 515 A 1-101 to 515A4-117

https://www.revisor.mn.gov/statutes/?id=515A

515A.2-105 and -108 require a Declaration to specify - as the basis for funding common expenses - unit-specific percentages of common expenses, such totalling 100 %

515A.3 -114 empowers a Declaration - but not some voodoo Board resolution alone - to provide for segregated benefits & cost recovery thereof - associated with benefits delivered to less than the total number of units. ( eg fireplace cleaning for penthouses solely having such, the costs being apportioned separately from general services to all units).

But that would require entrenchment within your Declaration, which you should check thoroughly.

2- No idea what you mean by Board imposing 4 year deadline to sell. Are you saying you have been told that you can rent only for another 4 years ?