Rental Restrictions - HOA Meeting Communication

Two thoughts - 1)limit the percentage that can be rented; and
2) require all rental agreements to include language protecting the assocation and require approval by the Board

Hi Roger - Thanks for the reply -

Yes currently we have about 25% rentals and that is too many. We live in a nice enough area that we have not had any real problems but we have notice that the renters we have had are not as caring about the property.

We would like to hold it at the 25% OR 30% if allowed at all.

Your second point.

Rental Agreement document approval or Rental Agreement approval meaning we would be able to review applicant.

- We have talked over raising fees for rentals. Raising rent to the point of litle profit or little benefit of renting (ie. I might as well buy a place).
- We have taked about only allowing people to rent their place for one year during a time of special transition.
- We have talked about writing rules particular to rentals that irritates the landlord to the point they want to sell. ie. increaseing the arc rules for the rental property.

Again our main objective is to keep our property as private and stable and nice as possible.

Thanks
Take Care
William

Hi Don

Thanks for the reply. Our CCR require 50% of the people voting in person or by proxy to make a change to the CCR. We would just change the CCR to not allow more than so many rentals and then we would have to develop process to enforce it.

Am I off base?

Thanks
William

WilliamS1,

I'm going to play devil's advocate in favor of majority rules. Plus my distaste for board agendas, and requests for changes that don't come from non-board members first.

Your second post to RogerB is why I say it's important for you to dot your i's and cross your t's on this one, plus the fact that you stated you need 50% to change the CC&R's.

In my opinion your 2nd post is indicating an agenda and evidences some methods that are being concocted by a few to achieve a predetermined end for the majority.

You say that 25% rentals is too many. That sounds subjective. Too many for what, or whom? Too many for what your cc&r's restrict? Too many so as to diminish the integrity of a private and stable community?

You admit, you haven't had any real problems, except for a few renters not as caring about the property. Isn't that unnaceptable if the renters are violating the rules. Doesn't the unit owner that is renting the unit need to be notified of the renters violations and corrective action taken?

Define, if for no one else but to yourself, how many "we" consists of in your 2nd post statement third sentence "We would like to hold it at 25%.....".

The three items you listed in the 2nd post that you talked "over" or "about", are indicators of perhaps rather devisive mechanisims to achieve a predetermined end.

I understand and respect your need and right to keep your property as private and stable and nice as possible. I applaud a board member that feels compelled to uphold his/her fiduciary responsibility to protect the investments of the constituents.

But don't board members have an intherent obligation to keep things the way that are good for the majority, not for themselves or a select few?

Your original opinion poll is a good idea, I say get that to the community in an objective way so as not to sway a particular outcome. Get the pulse of those you serve objectively to begin a process of change. Perhaps you're right, a 25% renter threshold is the limit.

Remember, renters may turn into buyers, and they certainly keep vacancies of units at a minimum. Some owners may need a resale profit margin. If you limit it to 25% rentals as opposed to 30%, and owners are forced to sell, rather than rent, in a downward market,that may force a reduced resale of a unit, which inturn causes a decrease in property value.

Best of success!!
GeraldT1
NNJ

Gerald is so right. A forced sale because the property cannot be rented would drastically affect all near by property values. And we all know it is an HOAs mantra to protect property values. The Board already has the power and means to make the owner abide by the CC&Rs. The board's legal contract is with the owner and without the stipulation already in the documents to pre-approve a renter, they have no business getting involved with approving a renter. I am actually surprised a board would even want to take on the added duty and responsibility of approving renters. And if the board-approved renter turns out to be a dud, who is at fault? I could see an owner suing a board for approving a renter that ultimately destroyed his property. Just use your existing CC&R powers to make the owner comply with any problems. Harold

Keren - I am so curious, tell me about your situation. Units - Votes Needed - Votes Received - Problems - Benefits

Thanks
William

WillamS1,

In furtherance of your posts regarding rentals, I truly hope that others continue with their thoughts. However, I feel compelled to say a little more.

The concept of limiting rentals is to me, perhaps the most disturbing notion I've seen posted on this site or heard of to date. Even if it's written into cc&r's, by-laws, etc. I can't imagine the benefit of forcing unit owners to sell or hold onto their units at a loss. It may, may, even be discriminatory depending on the state's authority over an hoa/coa.

If the concept was floated in my community, I would do everything in my power to defeat it. And believe me, it wouldn't take much, nor do I think it would get very far since North Jersey is starting to experience some of what's to be expected of the housing decline. The units in my community have increased considerably from their original price, but are not re-selling as high as they were a year ago. The going rate for a rental of a 2,800 sq. ft. townhouse per month is $3,300.00.

All that aside, I fail to see what limiting rentals will accomplish to fix the situation you have with those few renters already in house at the 25% threshold that you say don't really care about the property?

The majority who have responded to your post seem to discourage renting or at least have reservations that relate to the matters I've discussed.

What I'd like you to answer is, if those who have posted including myself were owners in your community, and we expressed our reservations in an open meeting, would you 1) still pursue the concept of a renting threshold, and if so, 2) at what point would you stop pursuing the concept.

I am also curious how many owners in your community participate on committees and attend your meetings?

GeraldT1
NNJ

BradP,

You disagree with me that I, that I feel the most disturbing notion is restricting the number of rental units??? Perhaps the ridiculous, perhaps unconstitutional notion of curfews was the most disturbing to YOU, but to ME, this topic is far far more disturbing. Because I believe it has a direct impact upon property values, far more detrimental than any other topic I've heard of or posted (thus far).

You and I seem to sit on opposite ends of the opinion that forcing owners to sell (rather than rent) will have a devastating effect on property values. Glad it's your property values, and not mine.

Answer this. How does restricting future rentals solve WilliamS1's problem with current renters? Can you answer that? My answer is, it does not address a thing. I believe it is an inadequate response to say the least.

If a portion of 25% of WilliamS1's current rental population is violating the cc&r's, or in this case not respecting property as an owner would, limiting future renters will not solve the proportionate problem. Plain, simple, and irrefutable.

To solve the problem with renters, don't you have to address the renters, or the owners that rent to them. How can permitting violations achieve any goal?

This situation is not about give and take BradP. WilliamS1 has posted quite the opposite with the methodology that has been talked "about" or "over" regarding an after the fact restriction on creating a rental threshold. In my dictionary, the series of posts relating to this top will go down as the quintessential example of an HOA pitfall.

All the best!!
GeraldT1
NNJ

I forgot the last part of your post. To answer your question, yes they do need to enforce cc&r's with landlords, but sometimes finding them is hard. The lady we have we had to track down and even then she is not responding to our letters. In the meantime her house and yard look like junk and our only recourse is to fine and place a lien on her home. In the meantime potential buyers see this eyesore and it is particularly disturbing to me since she is right around the corner. I do agree with you there, if rentors are causing issues it needs to be addressed with owners, but they don't care as much because they don't live there.

Gerald:

IF you put yourself in a situation where you have to sell quickly, you should expect lower offers. The last house I had we sold for well below value, but I needed to get rid of quickly and still turned a profit on it. To me that is just part of the game of life, sometimes it dictates you do that, it doesn't matter whether you allow rentors or not, people will still take low offers to sell a home. What about a for sale by owner, those are done to save realtor costs therefor lowering the sale price, should we outlaw those since it is affecting property values?

I am not trying to argue and respect your passion for this.

Actually selling by owner is easy if you have a motivated buyer, I have done that and it was much easier than using a realtor. Good arguement, we will agree to disagree.

BradP,

I would like to apologize now. My intent isn’t to offend you in any way. I have been following the responses you and others have posted on this topic. I value your opinion, but IMO, you just gave the exact reasons why there should be a restriction on rental property! You said “yes they do need to enforce cc&r's with landlords, but sometimes finding them is hard. The lady we have we had to track down and even then she is not responding to our letters. In the meantime her house and yard look like junk and our only recourse is to fine and place a lien on her home. In the meantime potential buyers see this eyesore and it is particularly disturbing to me since she is right around the corner. I do agree with you there, if rentors are causing issues it needs to be addressed with owners, but they don't care as much because they don't live there. Just like all the rules and laws in the CC&Rs” There are some landlords that will be above and beyond the typical landlords. Just like many of the MC in the world today. Some are good for a community, while others give HOAs and bad name. Not everyone will agree that every CC&R written for an HOA is “fair”, but they have been written to protect the majority of the people.

Let me ask you this question. That home being as “nasty” as it is, do you think you would be able to get top dollar if you were to sell your home? You said yourself that “her house and yard looks like crap”. Hypothetically, what if all the rental properties looked like this one does? Would you want to buy a new home in a community that looked like that?
Being a first time homeowner, I can tell you that I wouldn’t have even considered putting my family in that type of environment. My main purpose is to provide a safe environment for me and my family.
Like many of the laws that are established in the best interest of the people. It maybe intended for everyone, but we all know the there will always be someone, somewhere that isn’t going to be happy.

Curfews, Yes on anyone 16 years an older shouldn't have any reason to be outside “after dark” It’s obviously you and many others don’t agree with that. You all have your reasons. There will always be someone, somewhere that is offended and thinks that is just ridiculous! But IMO, it has the potential to benefit an entire community!

Again please don’t be offended. I value your opinion on this forum. I appreciate all of your suggestions and responses.

If nothing else, “we can agree to disagree”
Thanks so much

Chuck W.

ChuckW,

Imagine you'd like to sell your home. You're asking $569,900. Your bottom line is that you must, must sell it for no less than $555,000 prior to commissions, etc. Offers come in, and none are above or at $555,000 OR acceptable to you. Now what are your options? They are:
1) Sell below your bottom line
2) Except no offers, and let the house sit on the market until an acceptable offer comes in.
3) Take the house off the market.

Renting is not an option if a renting threshold has been reached.

Now, imagine that homes in your neighborhood are renting at $3,300.00 per month. That's $39,600.00 per year. After say $8,000.00 in taxes are paid, you've got $31,600.00. Depending on your financial circumstances, $31,600.00 could be enough to cover your current mortgage on the house you're renting out, plus pay the taxes on the place you moved to, you get the point?

I'm not denying the reality that property values decline when renters or any owner doesn't maintain the exterior of their homes. IMO, the energy is wasted on creating a threshold rather than develop a good set of Architectural Review Standards that owners and renters are to adhere to.

As for curfews, it seems you're all about thresholds. When and if you do ever get elected to the board, keep us informed on the outcome of your concepts. You're the one that opened up the curfews which could perhaps be unconstitutional but certainly is an unrealistic restriction.

So answer this, a 16 year old is asked to go walk the dog by her dad (who broke his leg and mom's out of town). I guess the dog has to go in the house because the 16 year old is not allowed outside because there is a curfew. Your zero tolerance policy for curfews cannot factor the outdoor activity of a 16 year old walking her dog and prevent owners from logging a complaint.

Deal with each situation in and of itself, a blanket policy of a rental threshold or a curfew will discriminate against 75 - 80% of the law abiding residents. Don't develop policies that will cut your nose to spite your face.

Best of luck!!
GeraldT1
NNJ

Chuck,

Based upon your latest response, it seems you may now be thinking of a renting threshold in a different light? For the sake of your property values, I certainly hope so.

You may not currently be in the situation of a rental threshold, but you may one day be in that particular situation, that is if you move into WilliamS1's community, or one that has a rental threshold.

If you find yourself in that situation of a threshold that is all maxed out and you are forced to comply, the financial impact upon you and your family will be irrelevant because of the collective decision of the association's members or the restrictions in the Master Deed.

Re-read WilliamS1's first couple of posts. Do you, or anyone else consider the concepts to be after the fact machinations. IMO they represent all the reasons not to buy in an HOA. Never underestimate the potential negative impact upon your bottom line, and the loss (irrelevance) of your feelings when living in an HOA/COA. Since we are all leaders, volunteers, or residents in associations, we must all raise the bar and do better to make our communities more beneficial non-hoa residences.

Best of success!!
GeraldT1
NNJ

Gerald,

I don’t want the responsibility of renting my home out to others. There is a tremendous amount of maintenance required. I don’t have the interest to rent my home to anyone other than a potential “long term homeowner”.

I appreciate all your insight. I will re-read the previous responses to WilliamsS1 post once again. Like you said maybe there is something I misinterpreted.

Chuck W.

To: WilliamS1 Re: post dated 08/28/2006 3:48 PM

It may not be as simple as an amendment to the CC&Rs by a majority vote. Fundamentally, the CC&Rs are a contract among the parties. Normally, such a contract can be changed only by approval of all the parties.

For CC&Rs used to create common interest developments (CIDs), an amendment provision is usually included. However, the scope of "amend" may be limited. Amend means to put right; to change or modify for the better; improve by making corrective changes, usually suggesting slight changes. On the other hand reform or change means drastic change, or material change. Is an amendment regarding rentals to the CC&Rs (denial of rights to some owners) in your CID a slight change or a drastic change?

A recent decision of the North Carolina Supreme Court comprehensively addressed this issue. Perhaps a summary of the decision is a quotation from another court: "For the reasons stated above, we conclude that the disputed amendment is invalid and unenforceable. In so doing, we echo the rationale of the Supreme Court of Nebraska in Boyles v. Hausmann, 246 Neb. 181, 191, 517 N.W.2d 610, 617 (1994): “The law will not subject a minority of landowners to unlimited and unexpected restrictions on the use of their land merely because the covenant agreement permitted a majority to make changes in existing covenants.”" The full decision of the NC Supreme Court including a comprehensive discussion of amendments and enforceability is available temporarily at .

The NC decision also suggests the possibility that amendments might be binding on new owners (after amended CC&Rs are recorded), but not on existing owners.