Change CC&R's to Limit Rentals

Zolton,
Welcome,
Exactly what will the new rental policy read? Yes, the investor issue has caused many associations to adopt new rental policies because of these "flippers" who come in, rent out their units and never do another days work for the good of the association. Renters can be good and they can be very bad. I have 2 right now so I know the meaning of being a landlord. Mine at both places are perfect gifts from heaven as tenants go. But there is an ugly side and covering the problem in your covenants is a good first step.

I , along with my Documents committee, worked for many months, writting a rental amendment that was presented to our association. It passed with flying colors which means that everyone understood it and it worked for everyone now and in the future. So send us what your Board is considering and I will try to be of help.

I also would look at the revisions for exceptions for hardship and allowances for leases to members of the unit owner's family.

Below you will find a copy of an adopted resolution on rental limitation.
As you now the Redbud case set most of the case history for rental limitations.

When your association has a good attorney to advise them, there is no problem with determining hardship in a manner which is relevant to the whole community. When we discussed it with the attorney, there were discussions of job transfer and death in the family. But when properties are bought by speculators, it is a business decision, it is not the board's responsibility to save people from bad business decisions.

I do like the 2 year ownership, as it comes into the capital gains issues should they sell. For more information on that people should talk to a licensed real estate professional or their tax attorney or accountant.

Hope this helps

HAPPY HOMEOWNERS ASSOCIATION
BOARD OF DIRECTORS RESOLUTION
RE: IMPLEMENTATION AND INTERPRETATION OF RENTAL RESTRICTION

WHEREAS, on June 23, 2004, Happy Nevada Developer, LLC, a Nevada limited liability company (the “Declarant”) caused the Declaration of Covenants, Conditions and Restrictions for Happy Homeowners Association (the “Declaration”) to be recorded with the Clark County Recorder’s Office, in Book No. ****, as Instrument No. ****, of the Official Records of Clark County, Nevada;
WHEREAS, Article 6, Section 6.14 of the Declaration establishes lease restrictions for the Lots within the Happy development (the “Community”);
WHEREAS, Article 6, Section 6.14(c) of the Declaration reads, as follows:
No more that twenty percent (20%) of the total number of Lots in the Property shall be rented or leased at any given time, or used for any purpose other than as the primary residence of the Owner, as determined by the Board in its discretion.
WHEREAS, Article 6, Section 6.14(d) of the Declaration reads, as follows:
All leases shall be subject to Board approval, and prior to entering into any lease agreement, the Owner shall contact the Board to confirm that entering into the lease agreement does not violate the lease restrictions imposed by Section 6.14.
WHEREAS, Article 6, Section 6.14(h) of the Declaration reads, in pertinent part, as follows:
The Board is hereby empowered with the right to enforce the lease restrictions set forth in this Section 6.14 . . . . Any Owner who leases his Lot in violation of any lease restriction set forth in this Section 6.14 shall be subject to enforcement action . . . . Additionally, if a lease is entered into at a time when less than twenty percent (20%) of all the Lots in the Property are being rented or leased but is not disclosed to or discovered by the Association until after more than twenty percent (20%) of all the Lots in the Property are being rented or leased, then the Owner shall be in violation of the lease restrictions set forth in this Section 6.14 and subject to enforcement action.
WHEREAS, the Board of Directors (“Board”) desires to establish its policy for implementation and interpretation of the lease restrictions set forth in the Declaration; and
NOW, THEREFORE, be it resolved that the Board for the Association hereby adopts the following policy for the purpose of implementing and interpreting the leasing restriction contained in the Declaration:
1.Consistent with Article 6, Section 6.14(h) of the Declaration, the individual Owners are responsible for contacting the Board before leasing a Lot within the Community. The percentage of Lots that are being leased is determined based upon the records of the Association at the time of the request of the Owner. Thus, if an Owner actually leases a Lot in the Community when less than twenty percent (20%) of the Lots are being rented or leased, but the lease is not disclosed by the Owner or discovered by the Association until more than twenty percent (20%) of the Lots in the Community are being rented or lease, then the Owner of that Lot is in violation of Article 6, Section 6.14(c) of the Declaration. The purpose of this provision is to place the responsibility of disclosure of the lease on the Owner that is actually leasing the Lot. This is consistent with the responsibility of all Owners to provide a copy of the Lease to the Association.
2.For the purposes of determining whether a Lot is counted against the twenty percent (20%) limit, the Board has determined that any Lot that is not being leased, whether it is vacant or occupied sparingly by the Owners, shall not be counted toward the twenty percent (20%) limitation. The Board is interpreting the reference “primary residence of the Owner” as being a reference to the use of the Lot while the Owner is in fact within the Association. Thus, the Lot should be deemed to be Owner occupied so long as the Owner or any member of the Owner’s family occupies the Lot during the term of the year and it is not leased to any other third party during that same term.
3.For the purpose of determining whether a Lot is occupied by an Owner, the Board interprets the term “Family” to mean the Owner or any member of the Owner’s immediate family, within one (1) degree of consanguinity. Thus, a Lot that is occupied by the parents, children or siblings of the Owner, shall be deemed to be Owner occupied and will not be counted toward the number of Lots that are being leased.
4.If an Owner contacts the Association and requests the right to lease a Lot and twenty percent (20%) of the Lots are already leased, then, in the absence of a hardship exemption that may be granted pursuant to Section 6.14 (g) of the Declaration, the Owner may be added to the waiting list maintained by the Association. If an Owner on the waiting list is notified that the Owner may lease the Owner’ Lot, then the Owner shall have thirty (30) days from the date of notification to provide the Association with a copy of an executed lease agreement for the Owner’s Lot. If the Owner fails to provide the Association with a copy of the lease agreement within 30 days from the date of notification, then the Owner forfeits the right to lease the Lot and the Association will forthwith notify the next owner on the waiting list of the right to lease his or her Lot. The Owner that forfeited the right to lease his or her Lot can have his or her name added to the bottom of the waiting list.
DATED this ______ day of _______________, 2007.
HAPPY HOMEOWNERS ASSOCIATION

thanks Jan. I also like the 2 year ownership restriction.

Would a limit on the lease time help? I know beach and tourist areas often want to rent daily, weekly, monthly, etc. So many buildings have a limit that the least you can rent is a monthly rental? Do you see any reason why that could not be expanded to a minimum of 6 months or 1 year lease? One HOA stated that move-in and outs often cause common area damage, dings and scratches, and it is hard to match up with who did what damage, so they have a standing rule that ALL move-ins pay $50, nothing to move-out. And of course, all residents need to be registered, with a fine for late registering, but registering is no cost if done ahead of time. When we lived in NJ, the township required a form that listed drivers license numbers and vehicle license numbers for rental residents.

Zolton,
The pros and cons of having a rental ban will go on forever. Demagraphics is what will determin property decline and increases. Certain areas live on rentals as we do in many areas in S. Florida as Arizona must have the same situation. So to put all rentals in the same catagory as being the reason that properties decline in value is not substantiated anyplace.

DonnaS: ...."I , along with my Documents committee, worked for many months, writting a rental amendment that was presented to our association. It passed with flying colors which means that everyone understood it and it worked for everyone now and in the future."

Donna, would it possible to obtain a copy of your amendment. My association is toying with the same thought and I hate to reinvent the wheel. It sounds like you did a lot of research and gave it some thought from both sides of the issue. You are to be commended for your perseverance and willingness to complete a much needed document. We are in Southwest Florida, so whatever you have would be applicable to our regulations and laws. Thanks.

DonnaS --- Thanks for your offer to scan. Many of us are in the same boat and would appreciate any guidance we can get on controlling rentals. I am looking forward to seeing what you have.

Thanks Donna. This makes for interesting reading and is a very strong starting point.

Thanks Donna ! Very helpful. We are in the process of doing this ourselves.

Yes I agree. We have no more problem with rentals than we do owner occupied. Our problem is the restrictions on obtaining mortgages in associations with high rental rates. You can't get a traditional type mortgage here with more than 25% rentals. Not even the FHA wants to insure mortgages with high rental ratios.
We are a COA so that might be slightly different.