Rentals being banned completely

Started by SherrilH • 23 replies • 1774 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

SherrilH (Idaho)
Posts: 12

Posted:

Our development is approximately 2 years old, 40 homes. Our CC&R's currently state that a rental must have a signed lease of no less than a month. Our board has now presented a ballot where they would like to change the CC&R's to state that no longer can you rent out your home (unless there is a financial hardship) as long as the majority agrees. Those who currently rent their homes may be grandfathered in until the sale of that home. What about those of us who currently live in our homes, could we be “grandfathered” in, should we choose to rent our home at some point?There are currently 5 rentals.The lease must also be changed to a minimum of 6 months, for those who already rent out their homes. When I purchased my home, there was the understanding that I could rent it out, should I choose to do so at some point. I am not happy that the door could be shut on this option. What can I do, or should I do in this case? Suggestions/opinions please. Thank you.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I am of the opinion that a HOA can not ban rental. The HOA does NOT own your home. They can't tell you if you can or can not rent it. Your mortgage company can do so. Which some do have restrictions that you can't rent it for 2 - 5 years after purchase.

My question is: What is the punishment for doing so? Does the HOA have to have a copy of the lease? I find if your going to put rental restrictions in, it makes more sense to require the owner put in the lease the renter abide by the HOA rules. That is a much better option than restricting people from renting out. If the owner can put in their lease that if the renter violates the HOA rules, it's grounds for eviction. This wording requirement protects all parties involved versus just restricting the number of rentals.

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Sherril,

Contrary to what Melissa says (and it has been pointed out to her on several occasions), if there are rental restrictions within the CC&Rs, unless there is language that homes currently not rented are grandfathered, then you would not be able to rent (unless there is a hardship). It may be too late, but you may want to press the Board to define what a hardship is (as it can depend on the perspective the individual has about the issue).

My suggestion is to start gathering support to defeat this amendment and then make the suggestion that they propose a new amendment that specifies a property may not be rented during the first x years of ownership. This will keep out the investors and not require the Association to try and monitor rentals or define hardships.

SherrilH (Idaho)
Posts: 12

Posted:

Thank you, Tim. I appreciate your suggestions. What about my suggestion that we ALL (original owners prior to possible ammendment change) be grandfathered in, even if we don't currently rent out our homes. Could this be done? Afterall, when I purchased my home and signed the CC&R's nearly 2 years ago, renting my home out was a choice I knew I had, should I need it at some point. Thank you!

SherrilH (Idaho)
Posts: 12

Posted:

sorry, Tim, I just reread your comment and you did address my grandfather issue. However, I'm fairly new at this, do you see any reason why this would not be a good idea? Thanks again!

DonA2 (Arizona)
Posts: 170

Posted:

IF the CC&R's are changed to no rentals, then no, current owners should not be grandfathered and be allowed to rent their homes, unless you are currently doing so.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Basically, just as you are concerned about those already being able to rent and you are not (as the amendment is proposed), others will be upset seeing you rent when they could not. This can lead to legal challenges. Also, what is a hardship?

Military orders (likely)?
Job was transferred to another city/state (it's the same a military being transferred)?
Market crash (your underwater in your mortgage)
Loss of job combined with market crash
Need to move to take care of a parent but want to keep your own home
Inheritance (inherited the property but can't sell due to xyz)
Long probate (property owned by estate that is being disputed and need to rent to meet expenses)

Of course, don't forget the work arounds:

I'm not renting, that individual is family who I'm letting live in the property
I'm not renting, that family is house sitting while I'm at my 2nd home
I'm not renting, that is a family friend I'm allowing to stay on the property

Rental restrictions are difficult to enforce because of everything (plus more) I've listed above.
Remove the headache of trying to enforce, by identifying why you want to stop rentals:

If it's to keep out investors, then the proposed amendment (if x = 2 or 3 years) should do that.

If it's because the renters don't keep up the property, then the Association needs to step up their enforcement issues on the owner (including legal action when appropriate).

If it's because of the perception (not always a reality) that rentals decrease property values, then ban all of them period (but then you have the issue you are currently having and the issues I mentioned above).

SherrilH (Idaho)
Posts: 12

Posted:

Tim, Thank you. Very helpful.

GeorgeR8 (Arizona)
Posts: 182

Posted:

Quote:

Posted By TimB4 on 06/16/2016 3:56 PM
Basically, just as you are concerned about those already being able to rent and you are not (as the amendment is proposed), others will be upset seeing you rent when they could not. This can lead to legal challenges. Also, what is a hardship?

Military orders (likely)?
Job was transferred to another city/state (it's the same a military being transferred)?
Market crash (your underwater in your mortgage)
Loss of job combined with market crash
Need to move to take care of a parent but want to keep your own home
Inheritance (inherited the property but can't sell due to xyz)
Long probate (property owned by estate that is being disputed and need to rent to meet expenses)

Of course, don't forget the work arounds:

I'm not renting, that individual is family who I'm letting live in the property
I'm not renting, that family is house sitting while I'm at my 2nd home
I'm not renting, that is a family friend I'm allowing to stay on the property

Rental restrictions are difficult to enforce because of everything (plus more) I've listed above.
Remove the headache of trying to enforce, by identifying why you want to stop rentals:

If it's to keep out investors, then the proposed amendment (if x = 2 or 3 years) should do that.

If it's because the renters don't keep up the property, then the Association needs to step up their enforcement issues on the owner (including legal action when appropriate).

If it's because of the perception (not always a reality) that rentals decrease property values, then ban all of them period (but then you have the issue you are currently having and the issues I mentioned above).

We are a condo association but many of the same apply.

When we changed to no rentals people's current tenant was grandfathered. Once they left you could no longer rent your home out. Remember that over 2/3 of the people voted for this.

We have a hardship clause. Owners were also told from day one that a hardship will never be granted. That opens the door for too many problems since everyone will think their situation is worse than one that was granted. We are 55+ so most of your examples would never come into play here.

We covered work arounds. Our docs say "must be occupied by the owner." The person on the deed must live there. We do allow people to let relatives use their home if they are gone but we require in advance an address and phone number with their permanent address and a date they arrive and a date they will leave. I recently had a couple that bought for their mother to live in. Never checked with me first. The mother is now on the deed and we billed the couple for our legal fees.

If renters were ok why would people go through the time, expense, and voting to change the docs. Many of my people including myself were landlords in the past. We bought here because of the no rental restrictions. Renters are also more work for the board. Can't go through them for anything and have to get after the absentee owner.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

George

You seem to have a lot of one offs and what ifs. I would think this open a real Pandora's Box thus nearly unenforceable.

SherrilH (Idaho)
Posts: 12

Posted:

This is an update. As the annual August board meeting was approaching, and I am unable to attend, I continued to look into this. I was told I could present a 2 minute absentia "speech". I wanted to give the homeowners other options that I was hoping the homeowners and board would consider. The ballot is either A or Z (no in between)....either NO rentals period or keeping it the way it is... we currently may rent out our homes for no less than 30 days. I was even hoping to meet in the middle and was given some great advice from this board. To make a long story short, after weeks maybe even months of searching,just this week I found a newspaper article regarding a House Bill that had been passed and went into effect in March stating that the CC&R's may not be changed regarding HOA rentals unless a 100% vote by the homeowners. Interesting part? This went into effect in March of this year but yet it appears that the Property Management Company did not know about this, as they would have passed on this information to us when e-mails were going back and forth between some homeowner's and the property manager and the board. This was a huge waste of time for all of us. When I discovered this, the management company said it had just been made aware of this but said it was in effect in July.... nope, Governor's Office confirmed March. Just makes me wonder how many other amendments may have been pushed through that people will never realize were not legal?

Does anyone know, how are property management companies kept abreast of House Bills passed through the Legislature?

DanaT (Tennessee)
Posts: 214

Posted:

Quote:

Posted By SherrilH on 07/28/2016 9:38 AM
This is an update. Does anyone know, how are property management companies kept abreast of House Bills passed through the Legislature?

NEVER FORGET, PMC represent your BOD, they DO NOT represent your community! Most have no desire to help or please 300 home owners, when all they have to do is satisfy the 3, 5 or 7 people, that sit on the Board. Remember, PMCs have no vested interest in your community, and most are there, just to collect a paycheck.

All one has to do is look at the money they spend for lobbyist each year, to change the laws from homeowners having the power to make decisions, on how their communities are run, to BODs having the power, over the Members and the PMCs have the contract with your BOD, not you.

KerryL1 (California)
Posts: 14,550

Posted:

Our sizable MC (Mgmt. Co.) keeps up to date with legislation and informs their PMs (prop. mgrs.) when changes occur. At the end of each year, directors get a summary of current new legislation & what will takes effec the next year. The MC usually copies us directors or the MC does. Important especially in CA where there's so much legislation. This, despite our contract with them that states the Board is responsible for knowing state laws re: HOAs.

A small MC or a lone PM might not be able to keep up to date. So, look at your contract, Sheril. Your board may want to appoint someone, perhaps the board sec'y to arrange for updates in from ID.

SherrilH (Idaho)
Posts: 12

Posted:

Thank you, Dana. Appreciate your response and great advice.

SherrilH (Idaho)
Posts: 12

Posted:

Thanks Kerry. Great idea, think I'll present this suggestion to the board.

DanaT (Tennessee)
Posts: 214

Posted:

Quote:

Posted By KerryL1 on 07/28/2016 10:27 AM
A small MC or a lone PM might not be able to keep up to date. So, look at your contract, Sheril. Your board may want to appoint someone, perhaps the board sec'y to arrange for updates in from ID.

@Sherril, go to this site. It is for your State. Have someone sign up for their e-mail notification on proposed changes to your laws. You should be able to set up a filter, so all you get is notices, concerning HOAs, etc. https://www.legislature.idaho.gov/.

@KerryL1. Thanks for your suggestion, that is what led to my search. Now I will take the same advice I just gave to Sherril.

RogerB (Colorado)
Posts: 5,067

Posted:

Sherri H, It is wise to change your Declaration of CC&Rs to restrict investors from buying homes in your HOA and immediately leasing them. As management company we helped a townhome community revise their CC&R to:

1) The property must be occupied by the homeowner for the first 12 months.
2) The property may be leased and the term of the lease must be for at least 6 months.
3) Each lease must be provided to the association along with the names of all occupants, their relationships, and all vehicles and their identification - type and tag number.
4) They also considered putting a 30% cap on rentals but chose not to do so at this time since their rentals are still below 20%.

We think trying to restrict all rentals would create an administrative headache and a legal liability if the association took a presumed violator to Court.

DanaT (Tennessee)
Posts: 214

Posted:

Quote:

Posted By RogerB on 07/28/2016 11:25 AM
Sherri H, It is wise to change your Declaration of CC&Rs to restrict investors from buying homes in your HOA and immediately leasing them. As management company we helped a townhome community revise their CC&R to:

1) The property must be occupied by the homeowner for the first 12 months.
2) The property may be leased and the term of the lease must be for at least 6 months.
3) Each lease must be provided to the association along with the names of all occupants, their relationships, and all vehicles and their identification - type and tag number.
4) They also considered putting a 30% cap on rentals but chose not to do so at this time since their rentals are still below 20%.

We think trying to restrict all rentals would create an administrative headache and a legal liability if the association took a presumed violator to Court.

Our HOA has most of the requirements you mentioned, but as far as I know, the "Living in it a year" or the "Rental Cap", has never been discussed. At this time, 26% of our Community is made up of Renters. We have 300 Units. This is according to the PWC Tax Assessors Website.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By DanaT on 07/28/2016 10:14 AM

Posted By SherrilH on 07/28/2016 9:38 AM
This is an update. Does anyone know, how are property management companies kept abreast of House Bills passed through the Legislature?

Dana

As the owner of a management company I take offense to your reference that we don't care about the homeowners within a community but only the handful that sit on a Board. That is just plain nonsense.

I haven't spent one dime for a lobbyist nor will I contribute any monies through any association membership I might belong to. As far as being made aware of laws, I get daily emails about any laws affecting HOA's throughout the country.

This may come as a shock to you, but a few of us do care about what we do.

DanaT (Tennessee)
Posts: 214

Posted:

Quote:

Posted By RichardP13 on 07/28/2016 1:03 PM

Posted By DanaT on 07/28/2016 10:14 AM

Posted By SherrilH on 07/28/2016 9:38 AM
This is an update. Does anyone know, how are property management companies kept abreast of House Bills passed through the Legislature?

Please pay very close attention to the word "most" in my statement you are referring to. I used it twice. I feel the same way about MOST BOD Attorneys. They could care less about the Community, their job is to satisfy the needs of the BOD. I have no desire to offend anyone in this community. But, if you think that Property Management Lobbyist, are not behind the push of changing HOA Laws to give BODs more authority over their Members and Associations, then we will simply have to politely disagree! It aint the Members spending millions of dollars, to give THEIR RIGHTS away!

ShirleyC (California)
Posts: 117

Posted:

What do your CC&R's say, ours say 75% must be occupied by owners leaving 25% for rentals. If we wanted to change this we would have to change the CC&R's which would require a majority vote to do so.

RichardP13 (California)
Posts: 3,868

Posted:

Dana

If LAZY members got off their lazy asses and did something for a change, then there wouldn't be a problem.

Just saying.

DanaT (Tennessee)
Posts: 214

Posted:

Quote:

Posted By RichardP13 on 07/28/2016 3:45 PM
Dana

If LAZY members got off their lazy asses and did something for a change, then there wouldn't be a problem.

Just saying.

Ya, its always the Members. Like I said, we aint the ones spending millions, to lose our rights. Thank God, courts are giving back the power to most HOA Members, nation wide! It must be nice to make $68,000 a year, to get someone to cut our grass!!!!!! Just sayin.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By DanaT on 07/28/2016 4:50 PM

Posted By RichardP13 on 07/28/2016 3:45 PM
Dana

If LAZY members got off their lazy asses and did something for a change, then there wouldn't be a problem.

Just saying.

Then, there is nothing to worry about.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here