What Kind Of Renter

PeterB1 (Florida)
Posts: 257

Posted:

We are a Florida HOA. It happens that we own a lake that supports water-skiing and other water sports. The community is 120 homes - mostly full-time residents and a few 'snow-birds'.

We are concerned with an increasing number of owners renting or leasing their homes. Because of the environment described above, this has become a profitable enterprise.

Our governing documents are silent on the subject of lease/rent. However, it does give us the authority to create and enforce rules pertaining to Common Areas (which does include the lake).

While we don't intend to dictate how one may use his/her home, the short-term renter has become a concern. Party-types in here for a few weekends or a month of vacation are a disturbing presence to some residents. They also tend to ignore established rules - like speed limits and boating hours.

FINALLY... A question. Can the Board of Directors implement some type of rule which prohibits short-term renters from using the property - which would make the rented property less desirable? Has anyone done something about this problem? Any suggestions?

Thanks.

peter

MaryA1 (Arizona)
Posts: 7,043

Posted:

Peter,

The answer to your question is "YES"!!

Since most gov docs extend the use of the amenities to a member's guests (which could include renters) I don't believe it's a good idea to not allow renters the use of amenities. It doesn't promote a very friendly environment for someone living there either. Instead, why not adopt rules pertaining to rentals? Many HOAs are now adopting rental rules requiring the property owner to sign a rental agreement. If they do not they are in violation of the CCRs and can be fined accordingly. Your rental agreement could contain a clause requiring rentals be for a certain period of time, say at least 6 months.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

Beware of making rules against renters.....

The current owners may have bought the property as a second home with the plan to rent it. The renter's pay for the mortgage. If you restrict renters, the current homeowners may sue, foreclose, or just replace the current board/president and remove the restrictions again.

In my opinion, the home owner pays the mortgage. They have a right to live in it, rent it, keep it vacant, or whatever they wish to do with it within city/state/fed laws.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Peter,
I have had several rental units in Florida and every single one of them have a 6 month minimum lease restriction in them. If you think that this might hurt the "seasonal" rental owners, then it can be enacted to a minimum of 4 months. This type of restriction will certainly curtail those short term rents. Many citys and countys have a "bed Tax" on short term rents so that might be worth checking out.

Now as for what the Board can do. This is where the Statutes come into play. Any change in use of any unit or property MUST go before the membership with a 14 day prior notice. You might just find that some of the rental members will get hopping mad but unless your CC&Rs definitely state that there are to be no rentals, you will need to pass an amendment to your covenants allowing rentals as you think will work for your association.

FROM 720:303, 2 (2)

" Written notice of any meeting at which special assessments will be considered (((or)))) at which amendments to rules regarding parcel use will be considered must be mailed, delivered, or electronically transmitted to the members and parcel owners and posted conspicuously on the property or broadcast on closed-circuit cable television not less than 14 days before the meeting.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

With regard to rental restrictions. No, you do not have the right to do as you will with the property you bought. Think about it, you HOA has trash pickup regulations, they can dictate whare you park, the can rstrict the us of the common area, you can not sit up a business in that house you bought. You have to pay ssessments, etc, etc. You may not be able to paint your door orange.

All Hoas and condos should have a rental policy approved by the Board and included in your governing documents. Some banks etc that loan money for mortgages will not give mortgage money if the rentals are over 30 %, FHA< Fannie Mae come to mind. Now suppose you want to sell your house, a buyer is found and the deal is struck, then FHA comes in and says I am not granting this mortgage because there is 35 % rentals in the association. You don't rent, never have, you just want to sell your house on the open market. Now are you going to be happy aboujt losing the sale, you lost big bucks because the restrictions place on % of rentals was ignored. I expect you couldn't wait to get a lawyer fast enough. If it turns out the restriction is noted in the Rental policy and was not enforced, then you get to sue the Board and the owners that rent and are interferring with your right to sell your property. How mo you think you would react if you had been renting your property and no policies were in place and you find out you can't sell your unit because you are part of the cause the sale can't be completed.

There are many associations in the country that have incorporated into their governing documents rental restrictions and property use restrictions.

LynetteB (Texas)
Posts: 141

Posted:

PeterB1,
Your best bet would be to amend your CC&R's to add the necessary info. Since you are "mostly full-time residents", as long as the required percentage of you have the same concerns, you should be able to get it passed.
Our Ski Site has the following in the CC&R's, along with specific Ski Lake Rules with more detailed info on guests and leasing of ski rights.
Before you implement the rules, give me your info so I can get in line for my family ski vacation! haha! Can't wait for the lake to warm up.
Lynette

Section 8.6 Number of Memberships. Each Waterfront Lot includes one (1) Water Ski
Club Membership Unit. This Membership Unit shall be appurtenant to and may not be
separated from the ownership of the Lots. Water Ski Club membership is mandatory for
all owners of Waterfront Lots. Additionally, the Developer may make available, up to
fifteen (15) additional Water Ski Club Membership Units. Each of these additional
Water Ski Club Membership Units shall be subject to the Water Ski Club Assessment as
described herein, upon notification from the Developer of its creation.

Each Water Ski Club Membership Unit shall apply to the Primary Owner, his or her
spouse, and children of the Primary Owner and/or spouse who are living at home and
under the age of 25, or if a Primary Owner is unmarried, he or she may select one (1)
adult and one (1) child under the age of 18 as skiing companions. These companions
must be designated in writing to the Association. Revocation and changes are not to be
made more often than every three (3) calendar months. The Primary Owner shall be the
owner of the Water Ski Club membership. In the event that ownership is vested in more
than one (1) person, then that group of common owners shall appoint one person, in
writing to the Board, who shall have the rights to use of the Common Area as if he or she
were the Primary Owner. Revocation and changes may not be made more often than
every three (3) calendar months.

In the event that a partnership, corporation, or other entity other than a natural person
owns a Lot, said entity may appoint one (1) person to use the Common Area as the
Primary Owner. Revocation and changes may not be made more often than every three
(3) calendar months. In all cases of multiple or non-natural persons having ownership of
a Lot, if such group or entity fails to notify the Board of Directors of its declaration of an
individual Primary Owner, then no individuals shall be allowed use of that Lot's access
rights.
Section 8.7 Leasing. A Water Ski Club membership owner may, by written request to the
Association, and upon written approval by the Association at its next regularly scheduled
meeting, lend, lease, rent, or otherwise assign his Water Skiing Activity rights to another
person ("Related User") for a period of not less than three (3) months, nor more
frequently than two (2) times within any calendar year. During such leasing period, the
owner relinquishes all Water Ski Club rights and privileges irrevocably until such lease
contract expires, or when the owner, by written request, receives approval by the
Association at the next regularly scheduled meeting to have the owner's Water Ski Club
rights and privileges reinstated and the Related User's rights discontinued. All such
leasing agreements shall contain provisions obligating the Related User to abide by the
Declaration and any supplements or amendments thereto, the Rules and Regulations and
Association Bylaws. No owner may assign his Water Ski Club access rights if in
violation of any terms or provisions of the terms of this Declaration, including
nonpayment of dues or assessments.

Section 8.8 Time Sharing Prohibited. No time share plan shall exist or be arranged,
offered for sale, lease or rent in the Subdivision. For the purposes hereof, a “time share
plan” shall mean any arrangement, plan, or device, whether by membership, agreement,
tenancy in common, sale, lease, deed, rental agreement, license, right to use agreement or
by any other means whereby a purchaser or other consumer, in exchange for consideration, receives a right to use property, Common Property, accommodations or
facilities, for a period of less than three (3) months.

TimB4 (Tennessee)
Posts: 21,060

Posted:

Peter,

You may need to check into which document actually has to be changed. If your CC&Rs allow guests to use common areas then I believe that the CC&Rs would need to be changed vs. just making a resolution.

Also, you should apply any policy equally to all renters (not just short term). Otherwise it could be considered discrimination. The other option is to operate the lake as Lynette proposes (however, enforcement of such a policy may be difficult depending on the layout of the lake).

Since your Association is already established (and the wording in Lynette's posting sounds like they implemented the process during the development stage), I would suggest that Donna has the better idea of making a 6 month lease mandatory for any rental property. Depending on your existing documents and State law, this could probably be done by a simple resolution.

Hope this helps,

Tim

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Tim,
If your documents contain reference to renters as part of your CC&R's, then you will need to amend the documents. If there is reference but no spoecifications about renting or leasing, you have to make amendments with vote of associations also.

I would also suggest if there is no reference either in association documents or state law, this would also require a amemdment of your documents. I don't believe a resolution or a rule would pass the test of association approval. A resolution to close the pool at 9 at night could be justified to protect the whole. Any rental program recognised by the board and enforced by the Board must contain enforcement provisions and protection of the association provision. I suspect those assaociations that have an enforcement authority written out in the documents will stand the test, those that add conditions or restrictions outside the written documents are suspect. IMHO

DonnaS (Tennessee)
Posts: 5,671

Posted:

Robert,

You are correct that any change in the use will need to go before the membership. Peter, the O.P is in Florida and that use change of any unit must be voted on by the membership as it will need to be added to the CC&Rs. This cannot be done by a simple resolution or rule change. While they are writting the change, that is when they can add a provision if they wish, to allow the Board or committee or membership, to amend the allowences by a simple vote or whatever they chose.

MaryA1 (Arizona)
Posts: 7,043

Posted:

The BOD most likely has the authority to adopt rules or they can pass a resolution adopting a rental policy w/o a vote of the membership. Only if the CCRs contain specific guidelines pertaining to rentals, or no info at all regarding rentals, do the CCRs require to be amended.

PeterB1 (Florida)
Posts: 257

Posted:

Well, I broke down and consulted our attorney - sometimes ya gotta do what ya gotta do!

The recommendation was that we modify our Declaration of Covenants to restrict leases. (Our problem with that is it requires 75% of the residents to approve a change).

The caveat brought out by the attorney is that there is no state statute pertaining to rental restrictions in an HOA. There is (in Florida) such a provision for condos. Recently, the legislature passed a bill for condos stating that the any amendment restricting owners' rights (pertaining to rental) applies ONLY to those who voted for it!

Our attorney is concerned that even if we passed the appropriate amendment, it might be contested in court and the condo statute might be a precedent to shoot down our amendment.

The BOD will decide. I wanted to let you know that there may not be a solution to our problem.

peter

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Peter,
Of note is this subject has been discussed here in the past and no ready solution seems practical. Each proposal has problems as you pointed out about a 75% approval for change. However in a condo and of course depending on each individual condo location real control would vary greatly dependent on the rental or lease demands. Most would have to be tailor made.

However there are circumstances that would benefit both sides of the track. There is also the restrictive provisions of some mortgage lenders to not provide mortgage money if the rental ratio was too high. I believe that issue has been decided in some courts and it was ruled the rental restrictions are valid because without them the property would not allow for fair and equal access to a free market. But to get back to the idea of making this aa win win sitution, it has been proposed by some that a cooperative plan could be devised and restricting rentals would in effect raise property values. If there was a benefit by loweriung the number of rentals, this would make the property as a whole more attractive to non-renters and those that rent. It was further suggested that the first step would be the Boards to appoint a committee of those that rent and those that don't, to explore the long term effects of a compromise and rental or lease control. Our condo has a rental policy that has been ignored for twenty years. Surely that arrangement is not going to do anything to serve the association and protect the whole of the association which is the clear message of our documents. Granted it would be a tough job and likely not all would be happy, but there could well be advantages, especially if owners could be educated in these advantages.

Of note, I think it was Donna that ventured that if there was a rental policy in place, you would not need the 75% to change, the board could modify the renal policy with just board approval. Again if a compromise could be reached the demands put in place could be simple, until someone else wanted to take you to court. That would present another question. Could a owner that wants to 0bject to rental restrictions have any standing since the policy has been on the books for so long and no objection was registered.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Peter,

Could you ask the attorney to reference the statute number? I've checked through the condo statutes and couldn't find a reference to rental properties. Frankly, if, in fact, this is in statute I think it's a terrible statute and one that would put a hardship on the board to properly maintain.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Mary,
Your: "Frankly, if, in fact, this is in statute I think it's a terrible statute and one that would put a hardship on the board to properly maintain."

There is very little that presents a dilemma in any association that is not filled with contradictions and unfairness and subject to the vagaries of the human mind and personal ambition. I have no idea how to solve this other than to fight about it. The claimed winner this week could well be tomorrows loser.

PeterB1 (Florida)
Posts: 257

Posted:

Mary -

Your statutes are not my statutes. The cite is Florida 720. Don't know anything about AZ.

peter

DonnaS (Tennessee)
Posts: 5,671

Posted:

Peter,

I did some legal research on this rental thing and because you are individual homes, you will not find any Statute that could be used to back up a non rental policy. It is considered under a "change of use" restriction that you are trying to restrict and as your attorney told you, at least 75% of those homeowners must vote to approve such a thing.

If the few seasonal renters are the problem with using or abusing the lake and common areas, then that is where you need to enact rules. That your Board can do. Trying to pass amendments to the CC&Rs that changes the status of individual home use would be a really hard sell in a court of law. Homeowners do have some rights to use their properties as long as they obey rules of the community and that includes any tenants that they may have. Sorry but I think that this would be a totally unnescessary burdeon on some of your owners.

PeterB1 (Florida)
Posts: 257

Posted:

Donna,

You are probably right. But, I tend to do a lot of research. The following article appeared in the Chicago paper. So, it is possible to put restrictions on rentals.

http://www.chicagotribune.com/classified/realestate/ct-home-0205-rental-benny-kass-chomes-20100205,0,190517.story

In part: "This issue has been litigated in many states, and to my knowledge, all the court cases have held that community associations have the right to limit — or even prohibit — the number of renters in those associations."

Our problem is not passing rules, it is enforcing them. We can't bring the Coast Guard onto the lake. We have a problem even if we do 'catch' a violation. What are the chances of getting either a renter of owner to pay a fine?

I'll keep digging.

peter

DonnaS (Tennessee)
Posts: 5,671

Posted:

Peter,

The Courts in Florida realize that this State is a different animal, with renters being a major financial resource for the State. Illinois tends to be a more conservative area than Florida so comparing the 2 is not going to give you good comparisons.

Yes the Associations do have the right to limit or even prohibit rentals but to change the restrictions after many owners have purchased under a rental allowance, will probably not be accepted. (Don't forget that the change in use would have to pass the membership)

So what I really picked up from you is that you have an enforcement problem and you are partly blaming this on the renters. NOW, that I find as not truthful nor acceptable. We have hashed this over hundreds of times here and concluded that renters are NOT the problem. It is owners, management companies and association documents and as we know from you, a problem with enforcement.

I have had several renters in my 4 different rentals places in Florida and only one 15 year old caused problems. This is the owners responsibility to make sure that anyone renting knows and obeys the rules.

Have you not had problems with owners screwing up on the rules? Have some not abused the amenities? Probably so, therefore a rental ban would never erase problems with use of the common area and the lake.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Donna, I am not taking sides here, but I have to ask, as I have in the past. Because you are an attentive landlord, and you have had one problem in your history of renting property, I don't believe that is relevant to the issue and proves nothing. If you have never been exposed to the other side of this story, surely you can't believe there is not some legitimacy or valid concerns about the rental or lease issues. I honestly believe a community is a better community if there is some rental property. But I don't believe that an Hoa is a free wheeling no holds barred society. The aim as I see it is to reach a balance for all. Simple to say, I live in the good old USA and no one is going to tell me what to do. We, as owners, didn't buy there because of that, and we can't say, I will abide by all the restrictions, expect I don't want to live here under the restrictions, but if my tenant will pay me a fee I will let him live there, because I see where I can have my cake and eat it too. I don't have a problem with that, it is there for the taking, but I do have a problem with absentee homeowners not contributing to the associations they live in. Of course that puts me in the same boat as you and drawing conclusions from my 35 years of living in associations. Best case for all concerned is for the association to have a rental policy, have a standing committee that addresses rental or lease issues. If any expense is attached to any of this it must be born by the businesses leasing the property. As you know, in a condo, no one owns any individual part of the complex, each owns a portion of the whole and not necessarily equal portions.
You know that you can't slice off a piece of common property and rent it, even if you turned a profit and rebated some back to the Association. If you want to rent a piece of my property, then pay me for the use of it. We are fond of saying, if you sue the association, you sue yourself. Sort of the same thing here, if you rent your property then you should give yourself some of the profit, because you are also an owner, but I am an owner also. There is enough concern from the folks that have issues with too many renters effecting their right to a free marketplace by restricting mortgage money, that particular battle is real. One of your properties may be the one that raises the flag of FHA to step in and say to you, until this association can lower their rental percentages to an acceptable level we are not going to lend you money for a mortgage.

Finally, a good well run rental program, controlled by some that rent and some that don't could set up conditions that would benefit both parties and protect the whole. I have no idea why a program like this could not be put e into place and coveted just like our other covenants are protected. It would not be run by the board it would be run by the covenants.

An aside. Where I live, the county has an occomodations tax that anyone receiving lease or rental income (A business, in effect)must pay to the county. So, the county can charge you a fee to rent our property, but I am part owner of the propoerty and I don't get a cut. The county don't own anything yet they are using my property to make county money and you, as landlord have to pay because you rented our jointly owned property.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Donna, I am not taking sides here, but I have to ask, as I have in the past. Because you are an attentive landlord, and you have had one problem in your history of renting property, I don't believe that is relevant to the issue and proves nothing. If you have never been exposed to the other side of this story, surely you can't believe there is not some legitimacy or valid concerns about the rental or lease issues. I honestly believe a community is a better community if there is some rental property. But I don't believe that an Hoa is a free wheeling no holds barred society. The aim as I see it is to reach a balance for all. Simple to say, I live in the good old USA and no one is going to tell me what to do. We, as owners, didn't buy there because of that, and we can't say, I will abide by all the restrictions, expect I don't want to live here under the restrictions, but if my tenant will pay me a fee I will let him live there, because I see where I can have my cake and eat it too. I don't have a problem with that, it is there for the taking, but I do have a problem with absentee homeowners not contributing to the associations they live in. Of course that puts me in the same boat as you and drawing conclusions from my 35 years of living in associations. Best case for all concerned is for the association to have a rental policy, have a standing committee that addresses rental or lease issues. If any expense is attached to any of this it must be born by the businesses leasing the property. As you know, in a condo, no one owns any individual part of the complex, each owns a portion of the whole and not necessarily equal portions.
You know that you can't slice off a piece of common property and rent it, even if you turned a profit and rebated some back to the Association. If you want to rent a piece of my property, then pay me for the use of it. We are fond of saying, if you sue the association, you sue yourself. Sort of the same thing here, if you rent your property then you should give yourself some of the profit, because you are also an owner, but I am an owner also. There is enough concern from the folks that have issues with too many renters effecting their right to a free marketplace by restricting mortgage money, that particular battle is real. One of your properties may be the one that raises the flag of FHA to step in and say to you, until this association can lower their rental percentages to an acceptable level we are not going to lend you money for a mortgage.

Finally, a good well run rental program, controlled by some that rent and some that don't could set up conditions that would benefit both parties and protect the whole. I have no idea why a program like this could not be put e into place and coveted just like our other covenants are protected. It would not be run by the board it would be run by the covenants.

An aside. Where I live, the county has an occomodations tax that anyone receiving lease or rental income (A business, in effect)must pay to the county. So, the county can charge you a fee to rent our property, but I am part owner of the propoerty and I don't get a cut. The county don't own anything yet they are using my property to make county money and you, as landlord have to pay because you rented our jointly owned property.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Peter,

I was asking what the FL statute is. I need more than just "FL 720"; can you give the specific statute within 720?

DonnaS (Tennessee)
Posts: 5,671

Posted:

Robert,

If you can see past the rental issue here, Peter's statement about having little or no enforcement is the bigger issue stated by him. We all can argue the renters being BAD thing until eternity and there will never be a consensus on the issue. Because I am a landlord, and an absentee one as well, you would think that I am pro renter. I am not biased one way or the other.

What I am against is the knee jerk reaction to an incident which makes everyone think that banning renters is the solution to problems with enforcement. It Is Not the answer. Boards need to look within themselves as enforcer of the documents, and not to think that removing certain types of residents will make everything better. It will Not.

Put it this way---been there, done that with my current rental unit. It's not a condo but a large villa association. When I bought my unit in a 55+ community, renting was allowed on a 6 month minimum basis. When a few of the neighbors found out that it would be a rental, they mounted a massive campaign to amend the covenant to ban all rentals. It failed to pass with the positives leading by 32 votes.

What we did get amended (and I voted for it) was to allow a unit to be rented out after a 2 year ownership which discouraged speculators from buying in as an income source. This solved the problem of short term, weekly type rentals. Problem solved.

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Donna,
Consenus of opinion has never been a requirement to mandate lawsor rules.

But somehow, we need to look beyond what is accepted and develope ccovenants based on reaalities. You mentioned this enforcement issue as getting in the way of reaching the root of the problem. I agree you let too much crap in the game but we also just leave big black holes in the picture if we don't consider all we know. This conversation, supported by my below raises issues that don;t get a fair read when we try and problem solve with have the evidence.
I alluded to this in my post and last night this ended up in my mail box. This is also not the complete story but it is important and has to be considered anytime we get in the ring about renter "problems".

South Carolina Community Association Law Blog published a new entry entitled "New Fannie Mae Underwriting Guidelines For Condominium Developments" on 2/7/2010 12:29:26 AM, written by Ryan McCabe.

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

New Fannie Mae Underwriting Guidelines For Condominium Developments
Effective March 1, 2009, Fannie Mae adopted new underwriting guidelines which will make financing more difficult to obtain for purchasing condominiums. Fannie Mae may refuse to accept mortgages in condominium buildings where 15% or more of the owners are delinquent in their assessments or where any one owner owns more than 10% of the condominium units.

The new guidelines also permit Fannie Mae to exclude mortgages in existing condominium developments where more than 49% of the condominium units are being leased or rented. Fannie Mae has recently began requiring that 70% of the units be sold to non-investors before it will accept a mortgage. These underwriting guidelines will make it more difficult for condominium owners to sell their units.

This site and any information contained herein is intended for ! informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

Permalink: sccommunityassociationlaw.com/2010/02/07/new-fannie-mae-underwriting-guidelines-for-condominium-developments.aspx

DonnaS (Tennessee)
Posts: 5,671

Posted:

Robert,
Some good information posted by you. Florida Statutes allow for rental bans IN CONDOS only and that is only on any unit that agrees to the ban. The close proximity of the units is where the concerns are.

But this becomes a different situation when these are Stand Alone homes that Peter's association is. There are no Statutes that cover this area.

One cannot dissallow rentals in individual homes in Florida. If a Stand Alone home association passes a no rental policy, anyone who is renting has their home is grandfatherd or has tenure on that unit.