Huge Increase in Renters vs Owners

I work for the largest mortgage lender in the country. The discussion actually came up this afternoon in regards to our bank keeping these properties and renting them out until the market improves to avoid the heavy losses they are taking right now. I would think they are paying the association dues, which has to be a plus. This trend may continue until the housing market improves and jobs are created.

Ultimately the homeowner is responsible for the actions of their tenant so if the renter violates the rules then fine the H/O. If your CC&R’s and state law allow it, put rental rules in place to add some protections by requiring certain language in the lease or as an addendum to the lease. Some of the things I would suggest in no particular order are:

1. Make the minimum rental term at least 6 months preferably a year.

2. Add something to the effect of if the homeowner becomes delinquent with their assessments then the Association can collect them and any past due amounts directly from the tenant and the owner must credit the money paid by the tenant as rent. In other words if your monthly assessment is $150.00 and the H/O is delinquent then the BOD collects the $150.00 from the tenant directly. When the tenant sends the owner his rent minus the $150.00 the owner must credit it as if the tenant paid him in full.

3. I would also include language that if you have amenities (pool, tennis court etc.) the owner either assigns the amenity to the tenant and cannot use it for the term of the rental or keeps it for their self and the tenant can't use it.

4. Give the Association the power to initiate eviction actions against problem tenants with the cost to be born by the homeowner.

And finally when you have the whole thing drafted have it looked over by an attorney to make sure it doesn't violate the landlord - tenant law in your state and adequately protects your Association as much as possible.

Sorry Richard but in all the HOA laws I’ve read from across the country and the different CC&R’s I’ve read I can’t recall any that give a homeowner a pass in following the CC&R’s if they are a bank; unless maybe if they are the Declarant and the HOA is still under their control. While there is often a requirement for the lien holder to sign off on a Covenant change there are usually provisions binding the H/O even if the lien holder doesn’t sign. The only perk being first lien holder gets them is that they get first dibs at any money in the event of foreclosure.

Alex,

If you look back at Real Estate history in Florida, you will find that every 12 years or so, this very thing happens over and over. Anytime houseing prices drop, investors or as we Floridians call them, speculators, grab up properties and rent them out until the price values increases hugely and then they all go back on the market, leaving the speculators rich. I have bought and sold units under these very circumstances.

Now, you cannot give a unit away so renting is the only option. At least the landlords do pay the maintenance fees on most of them which in turn helps to keep the association going financially.

That is also why many associations have adopted rental policies which limits the number of renters. but if you are overloaded with renters, then they will have to be allowed to stay until they leave on their own. As I have posted before, my villa assocaition has adopted a successful rental policy which has completely ended the spec buyers. That might be something that you can try to get the association to adopt. Ours reads that NO UNIT may be rented out unless the unit has been owned for 2 years prior to allowing it to be rented. Then there is a minimum lease length. It is working just fine.

Good comments !! Some indicating a posible change to the CC&Rs, etc. That is a problem in that if we sent out a letter to the OWNERS asking approval to change the CC&Rs to read... for example.... the owner must reside in the unit for two years prior to renting.... more than half of the owners are now renting out and would never sign any such change.... I thnk it requires 2/3 of the owners to approve any change to the CC&Rs and that is 2/3 of the owners even if only 10 respond.

Alex,

It is never too late for anything and a change might be down the road but I would work on this with all of the energy that I could find. You could write this saying that when a unit gets sold, it no longer could be rented until the 2 year thing or even 1 year. Either way, it prevents the speculators from grabbing the units up and might slow down the renters. Current rentals would be vested in which would ensure that those folks would be safe from the fear of not being allowed to stay. (FYI, you cannot remove renters currently resideing because of a change in CC&Rs.) This cannot be an overnight fix so bring this to the members who think along the same lines as you do and study the pros and cons of such a change in unit use.

Alex seems to me this might be a good use of the video cams they talk about in another thread. Don't know how big your complex is but you should be able to identify offenders and what units they come from. Call the police, get a report, fine the landlords

Mary,

How right you are. Anyone residing within the develpement has identical rules to follow. No pets would be everyone, not just renters.

Susan, have you heard of selective enforcement? That is basically what you suggested--selective use or occupancy, call it what you will but that is a big no no.