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TonyM9 (South Carolina)
Posts: 2
Posted:
I have heard that a lot of communities are concerned about investment companies buying home strictly to rent. Has anyone encountered this and if so, have you done anything about it? Our board is looking at requiring that when a home is sold, it must be the primary resident of the buyer for 1-2 years. We realize that we would have to amend the bylaws to do this, but I'm just wondering if anyone else has done something like this. TIA.
SheliaH (Indiana)
Posts: 6,983
Posted:
That's been a problem in a lot of areas - we had several people in my townhouse community buy up several houses as investments and the ensuing fallout has been an ongoing issue. I've seen some articles indicating there may be a slowdown of this in some areas - one thing that seems to help is amending the CCRs requiring the house cannot be rented out for two years after purchase. Investors look for HOAs where there aren't restrictions like this, but to get homeowner approval, you might run into trouble from people who are already renting out their homes. If you already have a significant number of investors (who would have voting rights like owner occupants), you may be too late.

That said, you should have the association attorney take a look at your documents and current state law to see what you can and can't do. You'll also need to do a considerable amount of education among the homeowners There are good investor owners (I served with two when I was on the board), but too many seem to be interested in the rent check not bouncing. They don't care about serving on the board to run the community, scream like banshees when anyone talks of assessment increases, even if necessary (because that cuts into profits) and may bring in tenants who aren't informed of community rules and don't give a damn about them anyway - (they don't own the house or condo and can pull up stakes and leave.

Therefore, I also suggest you take a look at your community rules to see which ones may need to be updated, dropped or amended - along with fair and consistent ways to enforce them. You don't have bad tenants without bad owners - instead of stereotyping, ALL homeowners need to understand the rules exist to ensure the community remains clean, safe and attractive.

(Yes, I know I sound like I'm not very landlord friendly - that's what happens when you serve on a HOA board and see the worst of them. If you're mad because I hit a nerve, remember hit dogs holler, so say ouch!)



If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
ElleN (Idaho)
Posts: 1,404
Posted:
Is this a condominium association? Or a community of single family homes on individual lots?
Has anyone encountered this and if so, have you done anything about it? Our board is looking at requiring that when a home is sold, it must be the primary resident of the buyer for 1-2 years. We realize that we would have to amend the bylaws to do this, but I'm just wondering if anyone else has done something like this. TIA.
A few observations:

What the Board is considering is a restriction on the use of a home. This requires an amendment of the Declaration (not the bylaws).

An amendment of the Declaration will require an owner's vote.

Even if the required percentage of owners approves the proposed amendment to the Declaration, grandfathering may be needed. OTOH all a HOA/COA can do is approve such an amendment and wait until owners put a home on the market. An owner who did not support the amendment might have a viable lawsuit if a buyer comes along who says he/she intends to use the home as a rental.
TonyM9 (South Carolina)
Posts: 2
Posted:
They are single family homes on individual lots. We only have 70 homes. There are currently 6-8 that are currently being rented. Only one is an investment group. Those currently renting would be grandfathered in. It would only apple to new buyers.
TimB4 (Tennessee)
Posts: 21,126
Posted:
As has been posted, you will need to amend the covenants to make rental restrictions enforceable.

That said, the best restriction I have seen simply stated that the unit may not be rented during the first x years of ownership.
This tends to keep the investors out, as they would not have rental income for that time frame.
Most military assignments within the continental US are 2 or 3 years in length, so keeping the restriction within that time limit should minimize the hardship cases.
DouglasK1 (Florida)
Posts: 2,050
Posted:
I think it would be hard to require that a house be the owner's "Primary Residence", limiting rentals for some initial period of time would the way to go.

Escaped former treasurer and director of a self managed association.

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