Amending CC&Rs to disallow renting/home leasing

Started by MicheleD • 15 replies • 2389 views

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MicheleD (Kentucky)
Posts: 4,491

Posted:

I guess I'm just not entering the correct "search criteria."

Anyone have any suggestions on where I can find some starting-point verbage for amending CC&Rs to prevent leasing or renting out of single-family homes?

We are not a condo association, nor are we even remotely in a vacation destination area.

I've tried searching the site and I'm not getting anywhere, but it could be the way I'm keywording it.

Any suggestions?

GeraldT4
Posts: 1,022

Posted:

MicheleD - Absolutely cannot resist...you are beginning research for the purpose of trying to prevent single-family homes from renting? You are aware of the current nationwide housing crisis, correct? You are aware that preventing any owner from leasing or renting will provide the owners no option other than to sell at the current market value, or sink into bankruptcy? Correct? Surely there must be an amicable alternative. Such as to work with the owners your association Board is dissatisfied with to accomplish the task at hand, rather than prevent leasing or renting of single-family homes. I'm sure there's more to this story than you are posting, do tell.

To amend your CC&Rs look to your bylaws for the starting point verbiage.

RogerB (Colorado)
Posts: 5,067

Posted:

Michele, I think it would be almost impossible to get sufficient approval amend your Declaration of CC&Rs to prevent leasing or renting out single family homes. Check your Declaration, many would require approval of mortgagers as well as mortgagees and the outright owners.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Gerald and Michelle,

I'll just add to Geralds reasons why this does not seem to be the right thing to do, and surely not right now. I just get to a point where sometimes, an Association seems to be crossing the line on infringement of owner rights. No one in the world should be able to say that I as an owner, cannot rent out my property. No One!! Especially as these are free standing single homes.

The arguement of renters being "bad" for a community doesn't validate this arguement either. Being in the housing/rental business for many years, there is an equal mix of bad renters and bad owners. Read the posts here. How many homeowners are the biggest pains in Board's sides? So lets not argue that as we have done it so many times.

If the Board and community want to control behaviors of people living within the developement, then to discriminate against renters is not the way to do that. Rules and Regulations and excellent enforcement is the way to go. Owners being held accountable for any renters and being on top of any issues from them is the answer but to stop all rentals is far from the answer to a good community.

HaroldS (Arizona)
Posts: 906

Posted:

She WAS trying to read the posts here, and has asked for help in searching.
I've gone on record often enough opposing rental control by HOAs. I would never vote to implement it in my HOA. We have all the power necessary to control that the owner of the property complies with the CC&Rs. Why dibble in their contract with a renter? Our contract and control is with the owner.

GlenL (Ohio)
Posts: 5,491

Posted:

Michele I believe there was a recent court ruling on this matter that someone posted here about a year ago but I couldn't find it either. In effect if the documents allowed it when the homes were bought, then you can't ban it. However this article from 2002 that explains how to do it:

http://realtytimes.com/rtcpages/20020102_hoarentals.htm

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

GlenL (Ohio)
Posts: 5,491

Posted:

Further research and I found a Harold post and while it applies to Arizona, remember other states often look at such rulings to keep from actually making an unpopular decision themselves; scroll down and read the comments from EdieL. This is not the post I remember however, I think that it was from one of the HOA experts but I'm getting old so I may be loosing my memory.

http://www.hoatalk.com/Forum/tabid/55/view/topic/forumid/1/postid/30309/Default.aspx

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

MicheleD (Kentucky)
Posts: 4,491

Posted:

Thanks, Glenn, I appreciate that.

First point, in fact, it can be done "after the fact" in HOAs here in Kentucky as several have done it. I have already reached out to some who have, but am trying to drag out the research as long as possible and I want to cast as large a net as possible.

Second point, it makes no difference what my personal opinion is, the homeowners have requested through a petition and a special meeting that the board investigate the possibility of amending the deed restrictions to do this. Our board has been asked informally in the past by one or two individual residents to pursue this, but, as a board, we did not place it as a top priority for many reasons.

However, as the appropriate formal procedures were followed, we will conduct the research and move forward with a committee to review and recommend on any potential amendment. Since we have so many members who feel so strongly and so passionately about this, we felt it better to be a part of the process and therefore have some control over input into the situation.

Third point, I realize the housing market is not great, which is, I think, one of the many reasons the homeowners got together to request this.

Fourth point, the handful of houses in our neighborhood that are currently being rented out have been part of what sparked this request as well.

Three of the homes are not a problem. However there are a few that we are having a difficult time dealing with, and for which we are racking up attorney's fees and very soon court costs to obtain injunctive relief in one case in particular. The owner of the couple of leased properties that are problems is a builder who snapped up the final lots in the subdivision. He considers himself the "Developer." He considers that when the CC&Rs refer to "The Developer" -- and all the perks that The Developer may or may not have -- applies to him.

However, in the course of that, he has rented/leased out one of the homes to a man who owns a mulch service in another city. The man is using the leased home as a sort of "flop house" for his workers while they are in town with jobs. There are mulch trucks (huge deuce-and-a-halfs) parked in the driveway, in the yard and on the street. The "landlord" insists the man is not technically running a business out of the house (which would be against local zoning as well as our CC&Rs) but is only using it to house out-of-town workers. He says as "The Developer" he has the "right" to give the mulch man permission to park his company trucks there.

We are preparing for court on this issue and a few others with him as well.

However, the residents in the association were sufficiently spooked by this leasing experience they want to "nip it in the bud," as one mentioned during the meeting last week.

We cautioned them that even if we DID manage to get an amendment to include this ban, that it would not apply to homes that were ALREADY CURRENTLY being leased -- in other words, this guy would still be able to lease out his homes that are already leased.

What happens in our community is that when a ban like this passes, then the currently rented/leased properties are grandfathered in. Once a renter leaves, then our community's office of Inspections, Permits and Licenses is notified and they place a flag on the property (figuratively on the property, literally in their database).

IF, and that's a HUGE IF, especially in this sort of housing market, the property then does NOT lease out within a specific time frame (can't remember if it's 6 months or a year), then the property reverts to not ever being eligible for lease/rent again, in accordance with the CC&R amendment restricting it.

Anyway, I appreciate the concerns, and I also appreciate any pointers to the right information I need.

(the "verbage" I'm needing is how a ban on rentals is worded, as well as what key words to type into a search engine to get such articles, etc, to turn up. I've been batting zero in that regard. I already know the "verbage" in our governing documents. There isn't any. They are totally silent on this topic.)

DonnaS (Tennessee)
Posts: 5,671

Posted:

Michelle,
I went to Google and tried a couple of different wordings. Came up with

"Rental Bans" and there was a few that you could look at, especially the 5th one down. Good luck as there is so much to read thru.

MicheleD (Kentucky)
Posts: 4,491

Posted:

Also, to Gerald, I already know how to amend our documents. We've had several amendments over the course of the years.

I was looking more for places I could go to research wording/verbage for restricting the renting of single-family homes in an HOA.

I've lots of for and against articles, I'd just like to see examples of various amendments or CC&Rs that already include it.

GeraldT4
Posts: 1,022

Posted:

MicheleD - I know you were not looking for a debate, nor am I trying to be argumentative. I do find your scenario fascinating, to me it's like the false perception of the lemmings blindly following the pack en mass heading for the edge of the cliff. If indeed the association board has been presented with a legal petition to amend the cc&r's to restrict leasing and rentals of units, than yes the association board would be remiss to not entertain the desire. However, as your post evidences, you are having a difficult time with "a few". It never ceases to amaze me the amendments that owners seek due to a few exceptions or a handful of problem situations, and the effect that the "movement" has upon the individual. In an association there is no such thing as maintenance free, it's rare if an attorney and court costs are not involved at some point.

What fascinates me about your association's scenario (and that of other similar ones) is the philosophy of reactionary measures by current owners overturning rules that run with the land. Ownership changes hands, sometimes often. What was good for some in the association in one particular set of circumstances may not be good for those who are new members. To me the type of amendment your association is seeking will have the affect of diluting the investments rather than bolster them. By your own admission you were cautioned that even if you managed to get an amendment to include this ban, it would not apply to homes that were ALREADY CURRENTLY being leased -- in other words, the exceptions.

For that reason my response to the community would be that as a Board member I have the responsibility of protecting the owners against themselves, and that I think the effort should be spent on getting the owner to comply with the cc&r's. However, I do respect your wanting to be a part of the process to keep some control over the situation. That is very admirable. : )

GlenL (Ohio)
Posts: 5,491

Posted:

Michele you will probably need to have your attorney draft it for you and I would also suggest if you have been turned over from your original developer that you remove the declarant from your documents.

I too have tried different search parameters and come up dry. I also tried visiting several HOA web sites I have bookmarked and couldn't find anything on point as to a ban. I did find this which might be an alternative to an outright ban from an association in Virginia that has an excellent website: http://www.unionmills.com/documents/umca_lease_addendum.pdf

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

MicheleD (Kentucky)
Posts: 4,491

Posted:

Gerald, I realize you aren't trying to get into a debate with me, and if we were to *discuss* it, we would very likely find that we are in what I call *violent agreement.*

However, sometimes you have to take people by the hand and lead them into decisions in such a way as to make it appear the final call (i.e., deciding not to amend) was their own conclusion. If you catch my drift.

Quote:

Posted By GeraldT4 on 03/07/2008 11:57 AM
By your own admission you were cautioned that even if you managed to get an amendment to include this ban, it would not apply to homes that were ALREADY CURRENTLY being leased -- in other words, the exceptions.

In addition, regarding this caution, please note, I was the one who cautioned them. The people they want to affect, the mulch guys, would be untouched by the amendment. But, by god, they're going to nail that door shut on those horses that already got out into the pasture, now, aren't they? (tongue in cheek)

And I find it very unlikely that an amendment would ultimately find the right numbers to pass anyway. However, hopefully I can have enough information and variations on the theme to lead a few to an intelligent decision, or at least an "informed" decision.

Keep in mind also that our board is somewhat split on this as well. There are a couple (who are fairly new) who are part of the "we gotta do this" contingent. With all due respect to them, I would prefer to be a part of the fact-gathering process, again, "wink wink nudge nudge, if you know what I mean." I am not going to keep information from them, but I will feel more comfortable if I made sure they had as MUCH detail as possible in pulling this together.

I know an attorney will ultimately need to provide the button-downed wording, but it is in the nature of people to feel as though they have "brought something to the process."

In other words, like dogs who mark their territories, we must have The Committee um . . . piddle . . . on it =]

(Hope I didn't offend anyone.)

MicheleD (Kentucky)
Posts: 4,491

Posted:

Glen, that Lease Addendum is intriguing.

Thanks for the link!

DonnaS (Tennessee)
Posts: 5,671

Posted:

Michele,
I too have spent some time this afternoon looking for some form of wording that bans rentals, and have come up without anything that I think you are looking for. That would come directly from someones CC&Rs. I have 4 sets, my own home and my 3 rentals, and none have the ban on rentals. The rentals have restrictions but no complete ban. So, I'll keep searching later and see if I find some. I have a couple of Developements down here that might have it but I need to read their CC&Rs on the County Clerks web site.

GeraldT4
Posts: 1,022

Posted:

Micheled - Read your response, I know you cautioned your association, and wasn't lumping you into their march on Washington. Hopefully you will be able to protect these people from themselves once in the mix of guiding the process. I think what you need is to have your Board provide the committee a charge/duty to draft a resolution. Provide them an example and treat this process like the School House Rock "I'm Just a Bill" song. You certainly didn't offend me!! : )

I'm Just a Bill
Whew! You sure gotta climb
a lot of steps to get to this
Capitol Building here in
Washington. But I wonder who
that sad little scrap of paper is?

I'm just a bill.
Yes, I'm only a bill.
And I'm sitting here on Capitol Hill.
Well, it's a long, long journey
To the capital city.
It's a long, long wait
While I'm sitting in committee,
But I know I'll be a law some day
At least I hope and pray that I will
But today I am still just a bill.

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