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TamaraW (Ohio)
Posts: 193
Posted:
Has anyone made the transition of changing governing documents too, basically - allow no more renters and anyone who purchases has to purchase for the sole purpose of residing in the home vs. turning the home into a investment property?

With foreclosures on the high here, we are seeing a huge number of rental units pop up. This is creating a huge headache for the Board and homeowners. Why -

They do not know the rules
They treat our community like an apartment complex
When landlords do not enforce the violation letters they get with the rentals, then many monies of the association are spent to evict the renters.
We are getting a lower class (sorry to use that term, but it is factual)of people moving into our neighborhood -druggies, hookers, just "I don't own my house" type of mentality behavior.

We have had many homeowners express that they want to see a cap on this and see us change our governing documents. We called the Lawyer in, after we were told by our PM we could do this, and she suggested to us not to do this. However, she advised us too say - if the rental unit goes without renting for 60-90 days then the unit loses it's right to rent. OK, so then that would force us to foreclose on the unit. To do that we would have to pay her more money and continue to help the economy bring the value of our homes down while packing her wallet with money.

So has anyone made this transition and what do you suggest?

Thanks!
DonnaS (Tennessee)
Posts: 5,671
Posted:

Tamara,

We have discussed the pros and cons of having a rental ban in our communities many, many times. Go to the archives and read some of them..

I own a rental in a 55+ community in South Florida where they tried 3 times to pass a total rental ban. It never passed because many owners cannot predict what the future may bring to them and they would possible need an income from their units.

Instead, the documents committee got creative when they were instructed yet again, to write a rental ban. Instead of an all out ban on renters, they wrote something similar to this.

That no unit can be rented out until after the unit is owned for a consecuative time of 2 years. That discourages investors from hoping to make a quick dollar after buying some of these great deals on properties. Make it so all leases must be no less than 12 months, credit checks and backgraound checks can be added, security deposits to the association and a few other hurdles to discourage fly by night owners and tenants. But do check our archives.
TamaraW (Ohio)
Posts: 193
Posted:
Thanks Donna, I will do that and continue my input there.
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Tamara,
If your documents allow, and if the State allows, and if your owners will vote the needed vote you can take some action. Donna states a solution for her issue, I don't know if it fits with you. I think the Lawyers idea is innovative, I just don't know what would be accomplished.

I am also of the opinion your problems are short term rentals and undesirable tenants. You are not going to effect change with out making change and that could take a while. So you may make conditions better if you get tough on rule enforcement and any other kind of enforcements you can exert according to your documents. It may require hiring security personal with authority to insure security. It will be quicker than document changes. Many times situations occur because they are allowed to. If you can stop this unseemly behavior, stop it. Of course, the Board has to make the commitment of funds and do the deed, the owners MUST support the Boards' action.
EllenS1 (Florida)
Posts: 1,148
Posted:
Quote:
Posted By DonnaS on 02/04/2009 11:02 AM

Tamara,

We have discussed the pros and cons of having a rental ban in our communities many, many times. Go to the archives and read some of them..

I own a rental in a 55+ community in South Florida where they tried 3 times to pass a total rental ban. It never passed because many owners cannot predict what the future may bring to them and they would possible need an income from their units.

Instead, the documents committee got creative when they were instructed yet again, to write a rental ban. Instead of an all out ban on renters, they wrote something similar to this.

That no unit can be rented out until after the unit is owned for a consecuative time of 2 years. That discourages investors from hoping to make a quick dollar after buying some of these great deals on properties. Make it so all leases must be no less than 12 months, credit checks and backgraound checks can be added, security deposits to the association and a few other hurdles to discourage fly by night owners and tenants. But do check our archives.

Donna give lots of good advice. The only thing I can add is that your PM, who is your employee, should not be making serious decisions for your board.
LynetteB (Texas)
Posts: 141
Posted:
Tamara,
Our place is single family homes and is not built out yet, but we have some renters. I have chosen to get with these renters as soon as they arrive and get them involved in our community just as I do the homeowners. (or at least I make the effort to get them involved). We invite them to community gatherings and most importantly we educate them on what our rules are. (we don't hope the landlord will give them the rules). We ask them for input as we don't see things from their view. This effort has opened the communication, made it easier to talk to them when there is an issue, and made them more receptive to our reasoning.
We have different situations but one thing we are looking into as far as violation enforcement, is amending our docs to specifically allow the POA to collect money from the renter if the landlord doesn't pay it, and the landlord would have to credit the renters for that amount as if they had paid their rent (like for fines for violations). This, hopefully, will cause the landlord to do more to prevent the renter from violating rules. We haven't had many issues, but want to plan ahead. We will also look into limiting the number of rentals, but since we are not built out yet, it is not top priority. (all of this is still in preliminary stages).
I am aware that this isn't your specific question, but I am just offering another view.
GordonD1 (California)
Posts: 131
Posted:
Tamara:

The problem is not the tenants. The problem is the homeowner. In my community they revised the CC&Rs on the rules for renting. We hold the homeowner responsible. The homeowner has to send the management company all the information about the tenants, receipts signed by the tenants that they received the bylaws and CC&R's, and other documents as well.

We also make sure that the tenants received all the important information about the community including newsletters.

Let me tell you it works, we hardly have any problems with tenants. We have to do everything to keep our properties a desirable investment even on a bad economy.

Start by reviewing your bylaws and CC&R's.

Good luck,

Gordon
KirkW1 (Texas)
Posts: 1,665
Posted:
So, you would rather have empty homes then renters? Keep in mind that you will increase your foreclosure rate. This is a very bad time to try and make that move. Suck it up and deal with it. Hold the owners responsible for the tenants. Ignorance is no excuse. "The renter did it" is less then that. (And don't reset the offense count just because the renter changes.)
RobertR1 (South Carolina)
Posts: 5,164
Posted:
Lynette is not proposing what you are suggesting, from what I read, and as she says, "they are planning ahead." Good idea, what you decide will be dictated by your owners majority, but either way, you need a Good rental policy with enforcement powers. From your post Lynette, you sound like you are reasonable enough to fill your associations needs and desires. Get the job done.

I live in a condo that has a half baked Rental Policy that no one follows at all and never has for over twenty years. Associations do not stay static, they are in a constant change of flux, enforceable rule and policies are necessary and they will never be perfect, it your association has no rental problems, maybe it is because you have an enforceable rental policy and run a tight ship. If you don't you will have problems now or when conditions change and you get over run with rentals.
TamaraW (Ohio)
Posts: 193
Posted:
Good conversation going here. We have reached out to renters, the response has been mostly unbelievably bad. We let them know of the rules and regs and on several occasions I have taken our governing documents over to them.

We have NO renters Policy and that is what we need to come up with. We have had many conversations and meetings with Landlords, and those don't go pretty - ever. After providing all necessary governing documents to one Landlord, he looked at us and told us the Renters had rights as well. Now our association, upon charging his account, is waiting to collect over 800 dollars in Attorney fees to evict them.

We try to tell the renters with kids, the boundaries of each home and give them the guidelines, after reading them they want to move because of the lack of knowledge they received from their landlord.

We had hired security, which has been helpful. That cost money as well, and because of bad landlords. Can everyone here just input one idea to incorporate into a "renters policy"? That would be most helpful.

We were told by our Attorney's we could not request a background check, could get us in trouble with the FHA!
KirkW1 (Texas)
Posts: 1,665
Posted:
A good idea would be to see if you could amend the documents to make both the owner and the tenant liable for any fines that are assessed. Further, if allowed, you should put into place policy for filing a lien in the event fines go unpaid for a certain period of time.

I would say that you should file such a lien in the most cost effective manner possible. But if you make it clear to the purchaser that you will fine people and that the fine will be held against the land that should take care of many of your problems.
JonD1
Posts: 2,350
Posted:
As to who should be held responsible I would tend to believe the property owner should be fined. The association has no legal standing with the tenant.

In this case how or why does the association cover the cost to evict? The property owner should be the only person allowed to determine who can live in the property and who is to be evicted.

I would suggest the tenants be held to the same rules and regulations as the owner residents. In the event they violate the rules then the owner needs to be warned or fined under your policy.

When the fines build up to more than the monthly rental income the owners might take action.

I agree to work for a complete ban of rental units would in today's economy run the risk of pushing other owners into a finacially unstable position. Some people own rental properties for income. (That is not against the law)We have had several units occupied by those that rent and have never had a problem with them to force them out would be a mistake, unfair to the tenants and owners.

But they should be forced to have standards for behavior and consequneces when their tenants have a negative affect on the community.

One suggestion to place a lien on the property for unpaid fines. I would suggest you consult with an attorney BEFORE doing so. Under some state laws it is not permitted to lien a property for fines. In some instances you can only file a lien for unpaid common charges or dues. That might vary state to state.

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