Restriction on % of rental units in HOA in NC

Started by MarilynnB • 5 replies • 3341 views

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MarilynnB (North Carolina)
Posts: 1

Posted:

I would like to know if NC law permits HOA's to restrict the number of rental units in a community. We have 56 units (townhomes) in our community. Originally all were occupied by the homeowner. Now some of the homeowners have moved on (mostly out-of-town or state) and rent their unit. We are now at 20% rentals and would like to limit it to the 20% before it get higher.

Marilynn

RogerB (Colorado)
Posts: 5,067

Posted:

Marilynn, restricting the percentage of rentals would require an amendment to your Declaration of CC&Rs and I doubt your members would approve such an amendment.

ChrisP5 (Missouri)
Posts: 165

Posted:

Quote:

Posted By RogerB on 06/17/2010 4:40 PM
Marilynn, restricting the percentage of rentals would require an amendment to your Declaration of CC&Rs and I doubt your members would approve such an amendment.

Roger I am curious why you say that you doubt members would approve such an amendment? There is an association in my town that had almost 50% rental and still got 66% to vote to restrict rentals. At the request of our membership we are currently working with our attorney to draft an amendment to our CC&Rs to restrict to 25% rentals.

Have you had associations try to accomplish this and fail?

RogerB (Colorado)
Posts: 5,067

Posted:

Chris, I doubt it would be approved for three reasons:
1. It is often difficult to get any amendment to the CC&Rs approved. Most CC&Rs require approval of 2/3 or more of ALL units. Our experience has been that many owners do not vote; this reduces the number of available approvals.

2. Some CC&Rs require approval of the mortgage companies for significant changes. This may be considered to be a significant change to the CC&Rs. It can be difficult to overcome this hurdle since most HOAs do not maintain mortgage company information and find it difficult to get this information.

3. If there are 20% rentals and the amendment is to restrict rentals to a maximum of 20% (as stated), I believe the HOAs we manage would not vote to approve since the limit has already been reached. They would fear not being able to lease if the need arose.

Also, if there is a restriction on leasing in the CC&Rs then there should also be an established process to prioritize the waiting list; such as "the oldest leasing request is honored first".

RobertR1 (South Carolina)
Posts: 5,164

Posted:

Chris,
I would not be put off because of the difficulties getting approval of the owners. After all there are many associations that restrict rentals in a number of different ways. Could be your association can be educated to understand the restriction of rentals could protect their property values. It really is dependent on the location, type of owners (age restricted for one) and also past recent history of the properties nearby and your particular complex. There are many advantages to rental restriction, you will need to sell the idea. Do your homework and give it a shot. What percentage do you need to amend documents?

ChrisP5 (Missouri)
Posts: 165

Posted:

We need 2/3 of the allocated interests (not quite a 1:1 vote based on 2 sizes of units). Right now we have about 20% of our units rented so the hope is to move quickly enough not to get to the 25% number and then have to utilize the lottery our attorney has proposed.

Roger - Thanks for pointing out the info about mortgage holders as we hadn't considered that and our MC hadn't brought it up either (not really surprising though).

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