Has Anyone Run into this Problem?

ReneeD (Illinois)
Posts: 201

Posted:

Scenario:

About 10 years ago, our BOD passed a "rule" stating that anyone purchasing a unit must live in it for 5 years and, if they then want to rent out, they can do so. Outside of that, there is no other verbage in our governing documents referencing this.

Now, we have a person aka business entity that purchased a unit late last year through an auction (unit was foreclosed) and he has had someone living in it to fix it up. Just one week ago, I noticed a moving van in the driveway and I assumed at that time they might be new homeowners. I went to that unit today and introduced myself to the person answering the door and they told me they were renting and had just moved in.

In the meantime, we are having a election runoff meeting this Monday, January 11, and the person/entity that owns this unit sent in their proxy. My question now is would that proxy be considered valid if they are not abiding to our rental amendment by not living there and renting out that unit?

Thanks all! -Renee

GlenL (Ohio)
Posts: 5,491

Posted:

IMHO yes the proxy is valid, whether the new owner is in violation of this “rule” or not they are still the owner. Unless your documents somehow allow the BOD to void the voting rights of owners for violations of the rules.

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

MicheleD (Kentucky)
Posts: 4,491

Posted:

Well, our covenants allow us to deny voting rights to people not "in good standing," which includes covenant violations that have not been rectified.

However, if the lot owner has not been "notified" of the violation and has not been request to remedy the violation, then they cannot be considered "not in good standing."

There is a process that we have to follow, and if the non-compliant owner has not been notified of the violation and presented with a deadline for the violation remedy, then they are not considered "officially" not in good standing.

Don't worry so much about whether the owner can vote; it's only one vote in the end.

Focus on enforcement, notifying the owner of the violation and work towards compliance.

SusanW1 (Michigan)
Posts: 5,202

Posted:

What does "rule" mean? Was this passed and stated in documents? Were members notified?

If it ain't in writing, it does not exist.

BruceK3 (Arizona)
Posts: 14

Posted:

I agree with the prior post, if it wasn't properly passed as an ammendment to the bylaws, I don't think it would stand up under court scrutiny. I think they wanted to pass this, but didn't want to go through all of the procedure to do it correctly.

RickW (Illinois)
Posts: 169

Posted:

While this owner might not be following the rules directly, I'd like to offer the opinion that owner could be enhancing your property values.

He did purchase the property that was in foreclosure and is fixing it up. In our association of 56 units, we have 2 units that have gone through foreclosure, they are now owned by banks, they sit empty, and we spend time trying to force the banks to pay assessments. Not only has the foreclosures lowered the overall property values, but we are not receiving assessments.

Address the rules violation for sure, but don't forget to sit back and look at the bigger picture every now and then.

ReneeD (Illinois)
Posts: 201

Posted:

I appreciate everyone's replies but, need to clarify. The "rule" I am referring was an amendment to our governing documents that was properly recorded with County Clerk and mailed to all homeowners notifying them to retain along with other association documents.

In the past, the BOD has communicated to the membership anyone wishing to to become a Board member that certain stipulations must be met, namely be a member in good standing, current in assessments, no outstanding fines---in so many words uphold homeowner rules and regulations. IMO, a unit purchased by an investor should comply with these rules and if they don't, the Board should consider invalidating that vote; otherwise why have rules? And, if the Board doesn't invalidate the vote, would homeowners attending that election meeting have the right to challenge and invalidate that vote? -Renee

MaryA1 (Arizona)
Posts: 7,043

Posted:

Renee,

I'll post again what Michele said on 1/8: "However, if the lot owner has not been "notified" of the violation and has not been request to remedy the violation, then they cannot be considered "not in good standing."

As long as the board has failed to notice this violation the member has every right to vote and no one can challenge that right. However, I think you should focus more on the fact that this new member has not been noticed of the violation rather than worry about discounting his vote. Do you really think his one vote is going to make any difference in the election? I really doubt it. IMO, what is more important is that he is violating the gov. docs. I'm sure, as an investor, he bought the property with the intent of renting. Perhaps he was not aware of the rule b/4 purchasing the home, but he should be made aware of it now. He should not be given preferential treatment just because he is an investor, nor because he purchased a property in foreclosure that wasn't paying assn fees. Perhaps the rule should be amended, but it cannot be overlooked for this one member.

RogerB (Colorado)
Posts: 5,067

Posted:

Quote:

Posted By ReneeD on 01/08/2010 12:55 PM
Scenario:

About 10 years ago, our BOD passed a "rule" stating that anyone purchasing a unit must live in it for 5 years and, if they then want to rent out, they can do so. Outside of that, there is no other verbage in our governing documents referencing this.

Now, we have a person aka business entity that purchased a unit late last year through an auction (unit was foreclosed) and he has had someone living in it to fix it up. Just one week ago, I noticed a moving van in the driveway and I assumed at that time they might be new homeowners. I went to that unit today and introduced myself to the person answering the door and they told me they were renting and had just moved in.

In the meantime, we are having a election runoff meeting this Monday, January 11, and the person/entity that owns this unit sent in their proxy. My question now is would that proxy be considered valid if they are not abiding to our rental amendment by not living there and renting out that unit?

Thanks all! -Renee

Renee, was this restriction recorded as an amendment to the Declaration of CC&Rs. If not, it probably is not valid. If it was then I think you need the opinion of an experienced HOA attorney to determine whether it is a legal amendment. Until such time as it is determined the restriction can be unheld in Court I would accept the proxy.

JimW8 (California)
Posts: 14

Posted:

HI

I would say read your master documents and if it does not read as you have to live on the property to vote - everything would be cosider legal to vote on. BOD do make incorrect decisions by not knowing the laws and that effects all homeowners. Research the law in state your are in and go from there - state rules usually over rule BOD decisions if known or shown to be coded by law. Of course some of the state rules only have benefited politicans by them getting something passed by their named attached to it.

If the BOD made a decision by having to live on property for five yrs, your management should have notified to make sure this was pointed out to this new home owner. if it was noted and owner signed CCR's acknowlledge this, BOD has a duty to efforce the rules and regs of the property.

I hope this is not too rambling

-------------------------------------

About 10 years ago, our BOD passed a "rule" stating that anyone purchasing a unit must live in it for 5 years and, if they then want to rent out, they can do so. Outside of that, there is no other verbage in our governing documents referencing this.

Now, we have a person aka business entity that purchased a unit late last year through an auction (unit was foreclosed) and he has had someone living in it to fix it up. Just one week ago, I noticed a moving van in the driveway and I assumed at that time they might be new homeowners. I went to that unit today and introduced myself to the person answering the door and they told me they were renting and had just moved in.

In the meantime, we are having a election runoff meeting this Monday, January 11, and the person/entity that owns this unit sent in their proxy. My question now is would that proxy be considered valid if they are not abiding to our rental amendment by not living there and renting out that unit?

Thanks all! -Renee

JimW8 (California)
Posts: 14

Posted:

HI

I would say read your master documents and if it does not read as you have to live on the property to vote - everything would be cosider legal to vote on. BOD do make incorrect decisions by not knowing the laws and that effects all homeowners. Research the law in state your are in and go from there - state rules usually over rule BOD decisions if known or shown to be coded by law. Of course some of the state rules only have benefited politicans by them getting something passed by their named attached to it.

If the BOD made a decision by having to live on property for five yrs, your management should have notified to make sure this was pointed out to this new home owner. if it was noted and owner signed CCR's acknowlledge this, BOD has a duty to efforce the rules and regs of the property.

I hope this is not too rambling

-------------------------------------

About 10 years ago, our BOD passed a "rule" stating that anyone purchasing a unit must live in it for 5 years and, if they then want to rent out, they can do so. Outside of that, there is no other verbage in our governing documents referencing this.

Now, we have a person aka business entity that purchased a unit late last year through an auction (unit was foreclosed) and he has had someone living in it to fix it up. Just one week ago, I noticed a moving van in the driveway and I assumed at that time they might be new homeowners. I went to that unit today and introduced myself to the person answering the door and they told me they were renting and had just moved in.

In the meantime, we are having a election runoff meeting this Monday, January 11, and the person/entity that owns this unit sent in their proxy. My question now is would that proxy be considered valid if they are not abiding to our rental amendment by not living there and renting out that unit?

Thanks all! -Renee