HOA rental insurance increase issue

We aren't lawyers, so you'll have to talk to your association attorney. Unfortunately, there's may not be anything you can do at this point. These people have rented their units for years - as long as the rent check clears, why should they care about the pocketbooks of anyone else ? It's what Cathy, another poster (and a smart one) has often talked about: the interests of owner-landlords rarely match those of the people who actually live there.

Your situation is something I've feared in my community for years because I'm in a townhouse community and we've always had a high percentage of rentals - and we're 20X bigger than you.

In your case, the owner-occupants outnumber these guys, so you could vote to amend your documents to put in a rental cap or prohibit renting for, say two years, after purchase, but it wouldn't be retroactive to help you now. In fact, I could see these people suing you for selective enforcement or something. They may not win (it is a HOA after all and supposed to be majority rule), but they can slow things down with everyone being bogged down in lawsuits
.

You may need to find another insurance company - brace yourself for higher premiums because master insurance is skyrocketing everywhere for a variety of reasons. Also take a look at the current policy to see if there's something you can adjust to knock a few dollars off, like increasing your deductible.

I'd also insist that these people carry landlord insurance- make it a rule, along with requiring landlords to provide proof the renters have renters insurance or the landlord must purchase it for them. That might not help much, but it's a start.

Do keep us informed of your progress - your experience can help others. Put tge updates in a new conversation to make it easier to find. Good luck to you.

The increase has to be spread out evenly amongst the members. I would shop for other insurance. Little confused why the insurance is worried about renters. That is usually a mortgage thing. Which involves a PUD form. That has a 50% rental before consequences kick in.

My questions is what kind of insurance coverages is your HOA carrying? Maybe it is me, but typically renters are to carry their own insurance. If not, then all their losses are on them. The landlord should have homeowner's insurance as well. So what is the HOA insurance covering?

Ouch! I'm surprised at the size of the increase, so in your place I'd shop around and talk to my insurance agent about how to reduce premiums. A common way to keep premiums down is by raising your deductibles. I'm not surprised that insurers consider communities with a high percentage of rentals to be riskier - similar to another recent discussion about FHA lenders and mortgages in general. The insurers and banks probably aren't willing to share the numbers that demonstrate those higher risks, but it sure would be interesting to know them.

Regarding trying to cap the number of rentals, typically this would require an amendment to your CC&Rs/Declaration. These amendments generally require approval by a super-majority of owners (ie, 67% or 75%). This means you may not have the necessary numbers, assuming the current landlords would vote against. One possible way around this is to grandfather the two who are currently landlords - they may be willing to "lock the door behind them", so to speak.

This thread shows why communities with a low percentage of rentals should get a handle on it while they still can. The clock is ticking...

I know the rental is FHA or federal backed loans. However never heard of insurance being involved. That is odd to me. Like to know more about what their insurance coverage is. I do not know why insurance cares about rental property limits. Each owner has their own insurance. Renters should have their own. HOA insurance is for common areas and board members liability. Why would a member using property as rental play a role in HOA insurance?

This is the first time I have heard of a "25% standard amount of rentals" yada clause in a condo insurance policy.

Then again, this might be something unique to very small condo associations.

On the third hand, as others suggested shopping around might be worthwhile.

What an interesting situation.

Condo association declarations do typically have a clause that says expenses caused by or attributable to less than all units may be assessed to the units. I would go looking for this clause in your association's declaration. Consider quoting it back here.

Real-life example of such a clause:

Any Common Expenses occasioned by the conduct of less than all of those entitled to occupy all of the Units or by the Occupant(s), licensees, or invitees of any such Unit or Units may be specifically assessed against such Unit or Units.

In the unlikely event your Declaration lacks such a clause, then amendment would likely not pass muster with a court. Amendments have to be "reasonable." A majority forcing expenses on a minority, when the simple truth is all agreed to pay these expenses when they bought into the HOA, is not reasonable. So the courts have said a number of times.

But again, go looking for a clause in the declaration that says an expense attributable to less than all units may be assessed against the culpable units. Also see if the applicable Wa Condo Act says anything like this.

Here's the math for computing the assessment to the landlords:

-- Premium if above 25% rentals = X

-- Premium if below 25% rentals = Y

-- Assessment to be split between the two rentals = X - Y.

Because of the latest recent discussion on FHA rental caps (on condo associations only, by my reading), this too got my attention.

So insurers are saying rentals cost the insurers more in claims. I think this is pretty hard evidence of one huge reason why FHA lenders impose a rental cap (currently 50%, with caveats?) for a condo association to be eligible for FHA-backed loans.

We are not equal share. We vote by allocated interest. One of the owner occupied units is 33% and the other two owner occupied units bring the 3 to 80%. The two rentals share 10% each only. That is why we have such a big concern about who will pay for the new insurance.

We have already voted to eliminate rentals after they sell, but that does not help us now. I've been looking for a way to eliminate rentals after a current lease ends, but have not found much information.

If I were renting out my 10% share condo and I had to pay the majority of the new insurance policy, I'd sell and move on. They already complain that they cannot make any money because they will not remodel their units to be competitive with other rentals nearby.

This could be an opportunity for the renters Those renters s to become owners . If an equity share could be proposed to the tenants , to purchase a %age of their unit , it is no longer a rental . It becomes an equity share with the renter becoming 1/2 owner and landlord being the other half . I see that it technically is not a rented unit ( altho it might be argued by someone that one is renting the other half from the other ). Perhaps an experienced RE agent + experienced settlement attorney can set up the ownership ( create deed)by joint tenecy. When everything is facing with a 700 plus monthly increase , the condominium owners should think outside of the box on this problem . Crunch the numbers. Income , mortgage qualifying etc of course , might be deal killer . All you need is one of those units to make it happen

Edit : * everybody is facing ( not everything). Consult the insurance agent on that one so theirs no surprises . Make sure he can hang his hat on it .

This is from the Washington Uniform Common Interest Ownership Act. You can amend your declaration to provide for this:

RCW 64.90.480

(4) The declaration may provide that any of the following expenses of the association must be assessed against the units on some basis other than common expense liability. If and to the extent the declaration so provides, the association must assess:
...
(b) Expenses specified in the declaration as benefiting fewer than all of the units or their unit owners exclusively against the units benefited in proportion to their common expense liability or in any other proportion that the declaration provides;

(c) The costs of insurance in proportion to risk; and
...

If you have not done so already, then vote to opt in to Chapter 64.90 RCW, Washington Uniform Common Interest Ownership Act. There is a procedure for opting in, although I did not look it up. You may be able to amend your declaration without opting in, but there are probably other benefits to opting in.

Thank you Jeff. That is extremely helpful!