How much can an HOA restrict renting/leasing?

This is in Texas.

Our CCRs currently prohibit renting of all or part of any property. A suggested amendment, as part of a larger CCR updating package, allows for leasing, and doesn't mention any restrictions beyond a 6-month lease contract. This is apparently just boilerplate text that was arbitrarily inserted by a management company attorney; it hasn't been discussed or anything.

My question is: if renting is allowed, can the HOA, through its CCRs, control the terms of the rental agreement? For example, requiring a $1,000 deposit, first and last months' rent up front, requiring a 12 month lease term, penalties for breaking a lease (i.e. forfeiting deposits), and so on.

I'm hoping the HOA has that ability; we don't want to just throw open the gates to anybody who wants to waltz in here and move into a rental.

The only pertinent language I can find in Texas Property Code, in 209.016(e), just states we can establish "a restriction relating to occupancy or leasing."

"(d) Nothing in this section shall be construed to prohibit the adoption or enforcement of a provision in a dedicatory instrument establishing a restriction relating to occupancy or leasing."

Thanks

It seems you would have to treat renters the same as buyers when they are moving in.
I don't think you can interfere with a contract.
You can probably limit the number of occupants to whatever the state allows. Here it is 2 persons per bedroom plus one.
And surely you can limit the lease term going forward but not retroactively.

The OP said (1) his HOA's covenants currently prohibit renting; and (2) the HOA is considering amendments to allow renting. Such an amendment would be removing restrictions, no?

I wish the OP would consider asking why this is a terrible, likely unreversible idea.

DavidG45's contribution seems particularly pithy to me, for a HOA that currently prohibits renting and insists on trying to delete this prohibition. The "maximum number of rentals" rule is the only one that I do not like. Experiences related here seem to indicate the latter is hard to track and enforce.

I hope Ron researches the issues that arise when HOAs permit rentals. We've had a number of posters on this site trying to rein in their rentals because of tenant and absentee owner issues. Condos in particular have problems with things like getting enough volunteers to run for the board or any other position, and absentee owners generally don't volunteer because they aren't around. If the landlords *are* taking an interest in being on the board, you have to consider if they're looking into converting the community to rental property.

You also have the issue that lenders do not like communities that have too many rentals in them. They'll either charge higher interest rates for these communities or won't lend at all, limiting the community to cash buyers. Both of these drive down property values. And buyers themselves will avoid such communities - they figure that if they're going to live around a bunch of tenants, they want the benefits of being tenants themselves and not have the responsibilities of home ownership.

Google "condo deconversion". And check out these articles from the Washington Post article that talk about investor groups buying up HOA property and turning the homes into luxury rentals (forcing out current owners and making housing increasingly unaffordable).

https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/

https://www.washingtonpost.com/business/interactive/2023/all-cash-buyers-housing-market/

https://www.washingtonpost.com/business/2022/03/31/charlotte-rental-homes-landlords/

https://www.washingtonpost.com/business/interactive/2021/investors-rental-foreclosure/

One of lawmakers' selling points on opening up HOAs to renters is that it makes housing more affordable, but these articles paint a different picture.

I don't know what the laws are in Texas, but we require a $500 refundable deposit for each unit that is rented (held in escrow by the HOA). We also require a complete background and credit check for each renter (that's legal here in Florida). We have restriction that minimum length of lease is 30 days and we limit to three leases per year.

Our condo sub-associations all have a two-year waiting period before you can rent your unit. One sub-association made an exception to that rule after the Hurricane Ian when housing was in critically low supply.

It’s a tricky topic, that’s for sure, but enforcement of some of the lease suggestions seems a bit complex and impractical. A few concerns:
- How will you check that the lease does contain the terms you require (eviction, minimum six months, etc.)? Will you check every lease that is executed, every time it is executed (yearly, bi-yearly, whatever)? How will you manage a change to the lease during the lease term, if the owner executes one?
- The lease must list all residents who will reside at the property – Residents come and go. Will this have to updated every time there is a new owner or a new person is added or removed from the deed? What if it happens mid-lease term? Is there a privacy concern with this? And not really seeing why this is necessary in the first place.
- The lease must specify that tenants may not bring guests to the amenities – how will you enforce this? You’ll have to (1) know everyone and all their family and guests by sight or issue them all ID and that’s a logistical nightmare, and (2) have someone as security to check authorization and remove anyone who is unauthorized
- Rental immediately after purchase – You’ll have to track every purchase date, make judgement calls about waivers which can leave you open to all sorts of problems (accusations of discrimination, etc.) and if someone is renting because they say they have been transferred, how will you confirm that?
- I know lots of buildings have rental caps, and I understand the wisdom of it, but it seems grossly unfair (“My neighbor has been renting for 20 years, I want them to stop so I can have my turn”). There has to be a fairer way to do it (Lottery? But, then, what about those with current tenants? Tricky, indeed.)
- Whole Home Only – again, I see the wisdom, but ADUs are rapidly becoming popular. This is going to be an issue eventually, I expect.

I’m not sure what the answer is (maybe a standard lease agreement for all owners to use? Maybe an annual amenities fee all owners with tenants?). Obviously, the less policing and interpreting you or anyone else has to do, the better. My concern is the above requires both.

(In all fairness, this seems to be a heck of a tricky topic. I’ve never dealt with it, and am glad for that, so power to you for tackling it.)

I suspect the management company's attorney didn't suggest this (why would they care? The property manager works at the board's direction and it's up to the homeowners to approve or disapprove any proposed amendments anyway). That said, you're probably correct this was a boilerplate addition - many HOA documents start off as cut and paste from the developer, and that's why the board and homeowners should review them every 5-7 years to ensure they're keeping up with current local, state and (sometimes) federal law, as well as tweaking the CCRs to see what should be added, dropped or tweaked.

Now, the rental agreement is between the homeowner and the tenant, so the HOA usually doesn't have any say on things like the amount of rent or deposits. Some communities state X percentage of units can be leased at a certain time, but that's very difficult to enforce. 55+ communities can put restrictions on the length of stay for guests younger than 55 (e.g. no more than 30 days at a time). Some prohibit renting to people on the sex offender list. It's one thing to establish rules, but you'd better have some sort of idea as to how you'll enforce them, otherwise you've wasted your time.

Living in a community where we have a considerable number of rentals (that seems common with townhouse communities), I've found the issue becomes how much the HOA can and should do that doesn't conflict with a homeowner's right to run his/her home as he/she wishes. The idea was to have a single family community, not an apartment complex and ideally, you should be able to walk around the neighborhood or go up and down a high rise and not be able to tell who's renting vs. being owner-occupied because EVERYONE should be aware of and comply with community rules. I've also wondered why would people buy a home or homes to rent them all out and then whine about the HOA rules - why in the hell would you move into a HOA community that has rules on a ton of things like parking, pre-approval of exterior change requests, so on and etc."??? But there are lots of ways to make money in America and virtually anything can be justified in the name of 'FREEEEEEEEEEEEEDOM"

If your community is considering rental rules, you need to do this with your association attorney because landlord-tenant relations are a whole different animal (do a search on this website and you'll find all sorts on conversations on various issues). You should also be polling the homeowners to see how they feel - you probably won't stop rentals altogether (and I think there should be hardship clauses), and that can help guide you in drafting reasonable rules. You'll also want to ensure those rules can be used to discriminate (which is why a lot of them were established in the first place)

Ron

I recommend your Board consult with an attorney who specializes in HOA matters. My wife and I have lived in and managed HOA and condominium properties in Texas for over 15 years and have read 100 or more sets of governing documents. The language in the CC&Rs which addresses leases/rentals is common, others who have posted have provided good examples of the language we have seen in most documents.

The language you are proposing is generally found in the lease agreement between the owner and tenant. I don't know if an Association can 'go that far', hence the advice to consult with an attorney.