Rental Properties

Started by HollyR2 • 11 replies • 1671 views

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HollyR2 (South Carolina)
Posts: 4

Posted:

Hi,

I am Vice President of our HOA in Myrtle Beach, SC. Our Covenants read as follows: Prohibition of Commercial Use. No trade or business of any kind or character nor the practice of any profession, nor any building or structure designed or intended for any purpose connected with any trade, business or profession, shall be permitted upon any lot.

Our Board decided we could not do anything about the seven rentals we have in our 206 home community, because they have been rentals for over ten years. We have grandfathered them in, (apparently none of the prior boards ever made residents adhere to the rules) but as they are being or will be sold we are advising the realtors the homes have to be used as primary residences, not rentals. A house was just purchased by two couples explicitly for rental use even though they were advised of the HOA change before they purchased the home. Now they are trying to say it is illegal for use to arbitrarily change the meaning of the above covenant.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

That convenant has nothing to do with limiting rental property. It's in reference to using the residents as a business. Rental property isn't business property but investment. So it does NOT fall into your convenants list of violations. Now if they use the property as a TTDY and rent it out weekly like a long term stay for out of town business people, then it may be considered a business. Similarly as a Bed and Breakfast. As far as Rental, that's simply NOT a business in this scenerio.

You may NOT legally be allowed to limit rentals in your HOA. I would suggest reading other similar posts here on this topic as it is the Hottest topic here. I will warn you that limiting Rental property may be up to the banks/mortgage companies and NOT a HOA. Even if you did have that wording in your documents limiting rental, you may need to have some kind of punishment system to enforce it. That is a whole other ball of wax with it's own legal problems.

Former HOA President

DaneC (California)
Posts: 210

Posted:

Look at it this way - A building may be put to one of two uses, Commercial or Residential.
Within residential, you can have two types of users, owner occupied or renters.

Does any of your quote apply to the renters, I think not. - "No trade or business of any kind or character nor the practice of any profession, nor any building or structure designed or intended for any purpose connected with any trade, business or profession, shall be permitted upon any lot."

RobertR1 (South Carolina)
Posts: 5,164

Posted:

I think if you check the Statute of South Catolina governing HOA you may find there are certain restrictions involving rental units. Your HOA at this time could probably write changes in you Master Deed that would restrict renting if you got the necessary votes and went through making the changes. But don't celebrate yet for a couple of reasons. I know in my little island paradise in SC most people are buying property and mortgaging the property as a Second Home, meaning not to be rented really.
This kind of mortgage is given at a lower interest rate and a second home rider is attached to the mortgage. Of course the owner immediately puts the property on the rental market. Unless your doccuments clearly state that the HOA has to give approval of all mortgages in the HOA you don't stand a chance of restricting rentals. This in the internal picture.

Externally, the lenders, the brokers, the banks are not going to be dictated to as far as who they lend money to and the individual is ingrained with; this is my property and I'll do what I want and I don't give a rat's patutee about what the HOA papers say.

I hope you realize the real evil of rental properties taking over the neighborhood. Before long these rental properties are going to be the majority and can rule the HOA, even if they don't reside in the units. I have posted about this change in condos which is occuring much more rapidly in condos than Hoa's. Check the search feature upper right top of page.

Also, to make matters much worse in SC, after trying to digest the State Statutes and all your documents in condos and HOA's, you will eventually come to : Well, what does the Laws and all this crap mean, you have to wade through. I asked a question starting with our Board and going up the ladder to the Governors Office and back down to State Attorney General. A very long story, short, the AG office informed me by phone that the State considers all Regime business and all Regime Laws, Master Deed and State Statute to be outside the jurisdiction of the states power.
No, you are reading exactly right. The AG will not explain any SC laws to members of HOA's and Condos. Their recommendation is to hire an attorney for an opinion.

They would not under any circumstances give me this ruling in writing, although I have enough e-mails with them to invole their office in the problem. My simple question that I asked: Does the State Statute, The Horizontal Property Act allowed for HOA and Condo Regular Meetings of their BOD, be closed meetings and Regime members are not included.

More to the story but it only makes the picture more bleak.

Good luck.

DaneC (California)
Posts: 210

Posted:

Quote:

Posted By RobertR1 on 09/10/2007 5:03 PM

My simple question that I asked: Does the State Statute, The Horizontal Property Act allowed for HOA and Condo Regular Meetings of their BOD, be closed meetings and Regime members are not included.

Does this help?

SOUTH CAROLINA NONPROFIT CORPORATION ACT
ARTICLE 7.
MEMBERS MEETINGS AND VOTING
SUBARTICLE A.
MEETINGS AND ACTION WITHOUT MEETINGS

SECTION 33 31 701. Annual and regular meetings.

(a) A corporation with members shall hold a membership meeting annually at a time stated in or fixed in accordance with the bylaws.
(b) A corporation with members may hold regular membership meetings at the times stated in or fixed in accordance with the bylaws.
(c) Annual and regular membership meetings may be held in or out of this State at the place stated in or fixed in accordance with the bylaws. If no place is stated in or fixed in accordance with the bylaws, annual and regular meetings must be held at the corporation’s principal office.
(d) At the annual meeting:
(1) The president and chief financial officer shall report on the activities and financial condition of the corporation; and
(2) Unless this chapter or the articles of incorporation or bylaws require otherwise, notice of an annual meeting need not include a description of the purpose for which the meeting is called.
(e) At regular meetings, the members shall consider and act upon matters as raised consistent with provisions of the articles of incorporation or bylaws and, in addition, with the notice requirements of this chapter.
(f) The failure to hold an annual or regular meeting at a time stated in or fixed in accordance with a corporation’s bylaws does not affect the validity of a corporate action.

SECTION 33 31 702. Special meetings.

(a) A corporation with members shall hold a special meeting of members:
(1) on call of its board or the person or persons authorized to do so by the articles or bylaws; or
(2) except as provided in the articles or bylaws of a religious corporation, if the holders of at least five percent of the voting power of any corporation sign, date, and deliver to any corporate officer one or more written demands for the meeting describing the purpose or purposes for which it is to be held.
(b) The close of business on the thirtieth day before delivery of the demand or demands for a special meeting to any corporate officer is the record date for the purpose of determining whether the five percent requirement of subsection (a) has been met.
(c) If a notice for a special meeting demanded under subsection (a)(2) is not given pursuant to Section 33 31 705 within thirty days after the date the written demand or demands are delivered to a corporate officer, regardless of the requirements of subsection (d), a person signing the demand or demands may set the time and place of the meeting and give notice pursuant to Section 33 31 705.
(d) Special meetings of members may be held in or out of this State at the place stated in or fixed in accordance with the bylaws. If no place is stated or fixed in accordance with the bylaws, special meetings must be held at the corporation’s principal office.
(e) Only those matters that are within the purpose or purposes described in the meeting notice required by Section 33 31 705 may be conducted at a special meeting of members.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

DaneC,
I appreciate your effort very much and the information is important.
However, given my little tale of contacting the Attorney General I am not sure that all this amounts to some legal ruling that in the State of South Carolina Condos are required to have "Open regular" meetings. It also states that associations like ours have to hold regular meetings at the Regime's business address in South Carolina. In my mind for an organization like HOA's and Condos NOT to have OPEN regular meeting seems an strange position for any BOD to take. I fail to see the reasoning for their actions. What would they accomplish that would benefit the community more than an open meeting. I also believe we can work through this as the board evolves (as they all do). The bigger picture of the State Legislature denying any control is much more worrisome. I don't expect to change anything but I may be able to get the attention of those holding position of public service that they need to go back and take a look at governing laws that control Home Owners Association
Thanks again. If I were to form a conviction from the information you sent, I would decree; Regular Meeting have to be OPEN in accordence with the corporation laws. My BOD may not agree, because it would mean a change, if for nothing else. Then I am back where I started. Time andd effort will prevail.

AllenP1 (Oregon)
Posts: 10

Posted:

I have a rental property in a HOA concentration compound. For quite some time now they’ve tried to eliminate my ability to rent. Furthermore, their reasons are unfounded and w/o merit. For example, they claim that renters are bad for the community. How is that? My renters have never received any complaints. They go out of their way to maintain the property; much more so than the crappy landscaping company and other owner occupiers. They take an active role in preserving the atmosphere of the community; volunteer time for community activities, etc. They maintain their cars much better than owner occupiers, too. (Nothing worse than a beat up old piece of junk in front of a property).

I’m tired of all the complaining. Why don’t the board of directors get a life?

MelissaP1 (Alabama)
Posts: 13,836

Posted:

You have been lucky to have such good renters. Alot of renters aren't so caring of the owner's property. I rented my HOA property to someone. That person started operating his own business out of it, had a few motorcycles, and put a baby Emu in my backyard! It took me weeks to repaint, get the smell out, and try to kick him out!

However, I don't personally have an issue with someone using their home as rental property in a HOA. What the real problem is when the person occuping the house brings in issues unbeknowst to the owner that other neighbors have to put up with. Rental doesn't exactly bring owner's properties down as people believe, as much as the owner's lack control on what they can do to that property. A HOA can control an owner but can't the renter. You get enough bad renters and disconnected owners in one area, your going to have problems.

I don't believe a HOA should be able to limit owners from renting out their homes. However, if a majority of people feel the need to limit then I say "go for it". It may truly be up to the mortgage companies ultimately that can put restrictions on rental use than a HOA.

Former HOA President

AllenP1 (Oregon)
Posts: 10

Posted:

I'm straight forward with my renters. If, for any reason, I see a violation of the agreement (e.g., they're doing auto repairs in front of the place, they get a pet, a crazy late night/early morning party) they'll get an eviction notice and have 72 hours to pack up and move out. Furthermore, I have people that are more than happy to toss their stuff on the street. :-)

I think part of the problem is that land lords don't put the necessary time into evaluating renters. I get a nationwide criminal check. I call all their past employers and land lords. Of course I do a credit check. Moreover, here's a good thing to do as well. When they arrive at your place, be ahead of the game and meet them at their car. Look inside. Is it clean or is there crap strewn all over the place? If it's not clean that's a good indication that they won't take care of your place. That indicator has never failed me.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

AllenP1, your soooo lucky you haven't gotten sued by your renters! There are laws protecting "Renter's Rights". A 72 hour eviction notice may be illegal. You also can't just "toss out" someone's stuff out on the street without legal backing. In my county, you MUST give 2 10 day notices to evict someone from your rental property. The 10 days does NOT count holidays or weekends! The first notice is the "Intent to evict" the second 10 days later is "Eviction or sheriff's department will be there". We have to have the Sherriff's department to actually come in and serve the official eviction notice and kick the person out.

Did you know a person CAN legally move into rental property (house, apartment, condo, etc) and NOT pay rent to over a YEAR and NOT get kicked out? The lease agreement can even be expired. That's because of the laws protecting Renters. You should study up on that before you get stuck with a Renter who knows the laws. All a renter has to do with an eviction notice is to respond to it in court and keep fighting it for as long as the court allows "appeals". That could be up to a year!

It took me several months to kick out my tenant. He knew the rules and knew how to get away with them. He still owes me 5 months back rent but he uses a Post office box for an address. You can't serve a Post Office box a warrant. It has to be a physical address with a mailbox. It's those small details that can get you.

That's why I advise people who want a Renter kicked out in their HOA, that it's NOT that easy. Even if you have an interested owner who wants to evict a bad tenant, they are stuck with the laws. So you can't expect an owner to kick a tenant out overnight legally. The owner's are even more effected by a bad renter than the HOA is. That's the owner property that tenant is destroying! Believe me, it took me weeks to clean my house up enough to sell it. All the carpet was destroyed because he worked on motorcycles in the house! So be careful of the laws!

Former HOA President

AllenP1 (Oregon)
Posts: 10

Posted:

I'd just consider it an unfortunate act of God that they were broken into during the middle of the day and all of their property was taken. :-) I will not be controlled by a tenant, period.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It's NOT the tenants control I am worried about. It's the Judges and court system! You can go to jail, be fined, or sued severly for violating a Renter's rights. It's NOT a matter of fear with a tenant, it's a matter of the law and getting sued rightfully!

Former HOA President

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