Quote:
Posted By SheliaH on 11/05/2020 5:32 AM
We don't have state law addressing the issue, but there is case law that allowed HOAs to enact rental restrictions. Villas West II v. McGlothin (2008) was the talk of the local CAI seminars I attended.
I think the Villas West v. McGlothin case SheliaH cites is a good read for anyone who wants to get an idea of how Indiana Courts think about rental restrictions in HOAs. A few observations:
-- To clarify a bit, Villas West did not 'enact rental restrictions.' The rental restrictions had been in place when the very first Declaration was recorded. I think the latter may be relevant here, because the OP said the rental restrictions kicked in only by amendment of the Bylaws. As others have pointed out, whether the correct process for amending was followed may play a huge role.
-- In the 2006 Villas West case, Owner McGlothin claimed the covenants rental restriction violated the Fair Housing Act. McGlothin made an extensive argument, using data and facts for Indiana and his area in Indiana, that was consistent with the law on Fair Housing. The trial court agreed with McGlothin and voided the covenant. In this very specific case, I think this voiding of the covenant stands on a par with the voiding of other HOAs' covenants that, for example, flatly, explicitly prohibited Jewish people and Black people and so on from living in ____ HOA.' The appeals court affirmed the trial court ruling. See https://casetext.com/case/villas-west-ii-of-willowridge-v-mcglothin.
-- Here's the appeal court's bottom line:"In summary, we conclude that the trial court's finding that the restrictive covenant against leasing violated the Fair Housing Act is not clearly erroneous. McGlothin made a prima facie showing of a violation of the Act, and, although the Association demonstrated a bona fide and legitimate justification for the housing action, McGlothin showed that less discriminatory alternatives were available. Hispanics United, 988 F.Supp. at 1162. Of the four Arlington II factors, three factors favor McGlothin, although one of those factors favors her only slightly, and one factor favors the Association. While we think this is a close case, we cannot say the trial court's finding of a violation of the federal Fair Housing Act is clearly erroneous. In doing so, we do not intend to imply that all restrictive covenants prohibiting leasing violate the federal Fair Housing Act. Rather, this is complex, fact-sensitive analysis that should not be taken to apply to all such covenants."
-- In later years several other appeals court decisions cited the 2006 Villas West v. McGlothin case. One of these subsequent decisions seem relevant to this thread: Clark v. Oak Hill Condominiums, decided in 2008. Clark v. Oak Hill Condos involves an amendment to the Bylaws (sic). Said amendment prohibited rentals. The landlords lost. As interested, see https://casetext.com/case/clark-v-oakhill-condominiums-association?PHC&sort=relevance&resultsNav=false&q= .
-- In the 2008 Clark decision, of note to me is that Owner Clark did not even try to make an argument that the Bylaw amendment was unlawful on account of the amendment violating some fundamental land ownership right. Clark, like McGlothin, said the amendment violated fair housing law. Not so, said the trial court and appeals court. The courts said the 2006 McGlothin lawsuit was distinguishable from the 2008 Clark lawsuit.
-- Aside: Note that the rental restriction in the Clark case was in the bylaws, not the covenants. This is Indiana, next to Michigan, and both states appear to have HOAs that put property use restrictions in bylaws as well as covenants. The two states are perhaps a bit a-typical.
-- I think this brings us back to the OP's situation: If the amendment was lawfully passed, then for the longer run and in Indiana, I do not like the OP's chances of being able to continue to rent his home.
-- To me and barring more information, and like others posted, the question becomes: Was the amendment lawfully passed?