CCR changes for Rental Units

Started by RitaW • 8 replies • 1414 views

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RitaW (Tennessee)
Posts: 16

Posted:

We are a very small HOA with 12 units. Currently our HOA has only 1 rental unit and we have just learned those renters will be moving out last of March. We're not even sure the owner knows this yet but now some of the other owners would like to hurry and get the rental clause in our CCRs changed so units can not be rented and they are thinking that if they can get this done before the owner has time to rent it out again, they can keep it from ever being rented and that would force the owner to have to "sale" the unit. Question, since this unit has always be rented---and if by chance we did get our CCRs changed before it was rented again, would this unit be considered "vested" as a rental and the unit could always be rented until it was actually sold.

Thanks
Rita

DonnaS (Tennessee)
Posts: 5,671

Posted:

Rita,

I am sorry to say that the beautiful State of Tennessee has NO HOA laws and Statutes to protect it from bad membership and Boards and all internal disorder. The only laws are a few real estate and developer directed things to prevent fraud and that sort of stuff.

Do any of your documents address rentals? That will be the first place to look and follow if they are in your documents. Some things need amending by a vote of the entire membership, others can be Board enacted.

Do some research to find some fair and workable rules on rentals for your place. You will not have enough time to get this done if it needs a membership vote. And any change to the original documents needs to be filed in Tallahassee with the NOT FOR PROFIT Corp. division of Land Sales.

I am not a fan of just a basic "NON RENTAL" policy. Some day , owners might need to use the rental allowence for themselves and it will not be available to them. I do believe in restrictions such as ownership for so many years prior to renting a unit, lease lengths, etc. You can control this with good covenants.

RitaW (Tennessee)
Posts: 16

Posted:

Thanks, Donna, our CCRs have a VERY short section on "Leasing" --just states it can't be leased for less than 30 days--and doesn't address the "what ifs"-- we can change this and amend these CCRs by 75% of the vote and recoding the changes.

Our over all CCRs are probably a "standard template" of some sort and we probably just need to re-write them anyway to fit the needs of our complex--and we also need to take a look at our Bylaws why we are at it.

I also agree with you on the NON Rental---as I could see that being a problem in the future.

Thanks
Rita

GeraldT4
Posts: 1,022

Posted:

RitaW - The 12 units can be called to change the CC&R's and as you've posted it takes 75% to do so, therefore 9 units must concur. However, you are aware of the nationwide crisis in that it is not a seller's market, correct? You are aware that selling the unit in such a market may reduce everyone's property values because homes are not selling for the market value they were several years ago. The end result of restricting rentals may have an adverse affect. If an owner is forced to sell rather than rent, there sale will be averaged into the group of real estate comps. Rather it may be more wise to change the cc&r's to include a renter vetting process where everyone (renters, owners, and association) is on the same page in the rules and regulations.

PaulM (Pennsylvania)
Posts: 1,347

Posted:

RitaW: I,too, would caution you and assn. when wanting to eliminate the use of renting a unit. We never know how long this market will be in the hole and perhaps if an amendment change to no rentals could come back to bite you!!
Proceed carefully in this time of uncertain economy.

BrianB (California)
Posts: 2,820

Posted:

to answer your basic questions:
yes, it could be done. no, it likely cannot be done, properly and legally recorded, etc., in time to stop this owner from renting again. However, it can be in place for the next time the renter's leave.
Yes, it is legal to "stop" an activity from occuring that has been occuring for long times in the past. In general, you could not toss a current renter out on the street after passing a no renter's rule, but you can put the line in the sand, and after the current renter leaves (six months, six years, six decades), not allow another renter. Grandfathering is not "required" by laws (it's a nice to do thing), and even when it does occur, it typically only applies to the currently existing situation, not future ones.

GlenL (Ohio)
Posts: 5,491

Posted:

There is an excellent article that addresses this subject at: http://realtytimes.com/rtcpages/20020102_hoarentals.htm

Studies show that 5 out of 4 people have problems with fractions

HaroldS (Arizona)
Posts: 906

Posted:

I'm curious how you are going to hurry up and pass this rule before the rental owner finds out. Are you planning to exclude him from this vote? Amazing.

I would never vote to restrict renting. No one knows down the road what situation may require you to rent out your home. As mentioned before, if this owner is denied renting his property, he will dump it at whatever he can get just to be rid of it, with the resulting sale affecting all your properties' values. Now comps rule. When I took real estate apprasing in college, it was a lot more complicated than today. Harold

RitaW (Tennessee)
Posts: 16

Posted:

Thanks for all your responses. I personally don’t want to pass anything that would limit my right to sell or rent my property and I think it’s a bad idea and I would vote against it. However, I am the President of the HOA and I was approached by 2 of our owners asking me to check on the process for changing our CCRs. I don’t want to appear “not to act” on any request of an owner as I like for everyone to feel they have a voice in our HOA and can bring things to me and I will hear their concerns and address them or get an answer to their questions. And NO—if and when any attempts were ever made to change anything—ALL owners will be notified according to our CCRs, etc-- I try to run the HOA to the highest of standards and as long as I am the President, I’ll try to the best of my ability to do it right-even if I don’t always agree. Your posting have help me and answered my questions on the “vested” issue and I think I can go back to these owners and tell them what I have found out—and I really think that will be the end of it. I just want them to know that I have addressed the issue and looked at this and I can give them all the “reasons” as to why we shouldn’t do it—but if they get the majority behind them and want to push the changes, as President, I’ll be willing to pursue the issue with a lawyer. That’s about all I know to do. AND so far, there has not been a rental or for sale ad placed in the paper for this unit. I am hoping the owner will just sell it--she had 2 units and both were rented at one time. After the renters of one unit moved and she sold it and I'm hoping she will do the same with this unit. However, these rentes are nice people--and you just never know "who" will move in--even if it is sold--

Thanks again—I love this forum—it has really helped me.

Rita

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