HOA rules - limit number of rentals?

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topper1296
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HOA rules - limit number of rentals?

Post by topper1296 »

I bought a brand new townhouse about 14 years ago and when most of the units were owned by the homeowners that actually lived here. Fast forward 14 years and now it seems like most of the units are being rented out by the owners. Our HOA has rules where we can't rent out our units for short term rentals like Airbnb, but there are no restrictions on how many units can be rented on longer term leases.

Does anybody else here live in a place with an HOA with no restrictions on the number of rental units? If you live in a place that does restrict them, how many can be rented out? It seems to me that limiting the number of rental units would help persevere property values and also promote "community goodwill" for lack of a better word with neighbors between each other. I'm not on our HOA board, but may bring it up to them and also specify that current owners should be grandfathered in so they can still rent, but future sales of units for rental purposes may have restrictions based on how many units are currently being rented out.

Just wondering what other peoples thoughts are on this subject.

Thanks.
bluebolt
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Re: HOA rules - limit number of rentals?

Post by bluebolt »

topper1296 wrote: Wed Apr 07, 2021 2:28 pm I bought a brand new townhouse about 14 years ago and when most of the units were owned by the homeowners that actually lived here. Fast forward 14 years and now it seems like most of the units are being rented out by the owners. Our HOA has rules where we can't rent out our units for short term rentals like Airbnb, but there are no restrictions on how many units can be rented on longer term leases.

Does anybody else here live in a place with an HOA with no restrictions on the number of rental units? If you live in a place that does restrict them, how many can be rented out? It seems to me that limiting the number of rental units would help persevere property values and also promote "community goodwill" for lack of a better word with neighbors between each other. I'm not on our HOA board, but may bring it up to them and also specify that current owners should be grandfathered in so they can still rent, but future sales of units for rental purposes may have restrictions based on how many units are currently being rented out.

Just wondering what other peoples thoughts are on this subject.

Thanks.
If the percentage of rentals gets too high, some banks will be reluctant to write mortgages.

I lived in an HOA that limited rentals to 10% of total units. Each unit could only be rented for 3 out of 5 years and minimum leases were 1 year. If there was more interest than availability, there was a random drawing to determine who could rent.
systemr
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Re: HOA rules - limit number of rentals?

Post by systemr »

Two things:
(1) there is a % of owner occupied units that some banks require for mortgages
(2) limiting the number of rentals can lower the property value, I looked at a condo in a building that was already maxed out on allowable rentals and didn't want to purchase it was the eventually goal was to live there and turn it into a rental. there was some kind of queue/wait list and it wasn't clear that it would be able to be rented out in two years so it was an automatic pass for me
TallBoy29er
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Re: HOA rules - limit number of rentals?

Post by TallBoy29er »

I looked at a place a while back that had approx 26 units total (townhomes). As I recall, they only permitted 4 of them at a time to be long-term rentals. It's not uncommon, and I get and respect the notion that it represents. That said, I'm not a fan of HOA's and people telling me what I can do with my real property, so I passed.
Soon2BXProgrammer
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Re: HOA rules - limit number of rentals?

Post by Soon2BXProgrammer »

bluebolt wrote: Wed Apr 07, 2021 2:35 pm
topper1296 wrote: Wed Apr 07, 2021 2:28 pm I bought a brand new townhouse about 14 years ago and when most of the units were owned by the homeowners that actually lived here. Fast forward 14 years and now it seems like most of the units are being rented out by the owners. Our HOA has rules where we can't rent out our units for short term rentals like Airbnb, but there are no restrictions on how many units can be rented on longer term leases.

Does anybody else here live in a place with an HOA with no restrictions on the number of rental units? If you live in a place that does restrict them, how many can be rented out? It seems to me that limiting the number of rental units would help persevere property values and also promote "community goodwill" for lack of a better word with neighbors between each other. I'm not on our HOA board, but may bring it up to them and also specify that current owners should be grandfathered in so they can still rent, but future sales of units for rental purposes may have restrictions based on how many units are currently being rented out.

Just wondering what other peoples thoughts are on this subject.

Thanks.
If the percentage of rentals gets too high, some banks will be reluctant to write mortgages.

I lived in an HOA that limited rentals to 10% of total units. Each unit could only be rented for 3 out of 5 years and minimum leases were 1 year. If there was more interest than availability, there was a random drawing to determine who could rent.
I am not a real estate investor. However, rentals are an escape hatch in case something is going on. I wouldn't buy a townhouse that didn't allow me to have this escape hatch if needed.
Ranunculus
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Re: HOA rules - limit number of rentals?

Post by Ranunculus »

I own a condo that is currently rented, and this topic comes up periodically. The attorney we consulted on the matter advised strongly against implementing restrictions. She said that most people purchasing property want the full freedoms of ownership, which include the option to rent. State law (CA) requires that current owners be allowed to rent out their property, since that was the rule in effect when they purchased the unit. We plan to implement a one year minimum lease requirement, but most other restrictions are prohibited by fair housing laws (i.e. number of occupants).

Two of the most active board members are landlords, and that helps keep peace with the owners in residence. Our CC&R bylaws are packed with regulations targeting scofflaw renters, and the board doesn't hesitate to notify owners of units with problem renters.
alex_686
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Re: HOA rules - limit number of rentals?

Post by alex_686 »

Soon2BXProgrammer wrote: Wed Apr 07, 2021 2:39 pm I am not a real estate investor. However, rentals are an escape hatch in case something is going on. I wouldn't buy a townhouse that didn't allow me to have this escape hatch if needed.
I will take the opposite side here. The next time I buy a condo I am going to be looking for the % or rentals and what rules are in place.

IIRC, if more than a third of units are rented out you can't get a FHA, so that knocks out some buyers.

I owned a condo during the great real estate crash of 2008. Lots of units underwater. People rented out their units as a escape hatch. Rentals topped 50%. Character of the building changed. Nosie went up. Due to increased wear and tear, maintenance went up. I did not expect that. Lots of accidental landlords who had no clue what they were doing. In short, a disaster. Property values were negatively impacted. We put in a rule saying that only 1/3 of the units could be rentals. Took us 10 years to go from 50% to 33%.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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daytona084
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Re: HOA rules - limit number of rentals?

Post by daytona084 »

I'm on the board of my HOA ... We don't have a problem with excessive rentals (but a nearby friend in a different community has exactly the problem you do and proposed a similar change - I'll check with him to see how his proposal went). There are many hurdles to making the change you propose-

1. There would be a question if the current owners who are renting their units out would be in favor, even if they are grandfathered. Some of them might want to buy more units and rent them out.
2. If current owners who are not renting their units out are grandfathered, the change might not have much immediate effect. My aformentioned friend proposed to grandfather current rentals but not all current owners.
3. My HOA requires a 2/3 majority of all owners for any change in the bylaws. We made some minor changes in our bylaws some yeares ago. Just collecting the votes was a major challenge.
4. If you were to get enough votes to make the change, there are legal fees involved in getting the new documents recorded legally.

My opinion is it's a worthwhile change but will take a lot of work. If you "bring it up" to the board, you should volunteer to do most if not all of the legwork. My experience is that people have all kinds of ideas and sugestions - "We should do this or that"... but they really mean "you should do this or that".
alex_686
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Re: HOA rules - limit number of rentals?

Post by alex_686 »

daytona084 wrote: Wed Apr 07, 2021 2:57 pm 3. My HOA requires a 2/3 majority of all owners for any change in the bylaws. We made some minor changes in our bylaws some yeares ago. Just collecting the votes was a major challenge.
At least in our state, we were able to get away with a resolution. So all we needed was a majority of the board.

We grandfathered in all current rentals. The waitlist was determined by date purchased.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
runner3081
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Re: HOA rules - limit number of rentals?

Post by runner3081 »

201 houses in our community.

No rules on number of rentals.

Back when we bought in 2013, there were >50% rentals due to investors buying after the crash in 2008ish.

Now, as prices have nearly doubled since then, investors cashed out and we are about 85% owner-occupied.

We talked about this with our attorney (limiting rentals). Ultimately deemed to not be worth it.
stan1
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Re: HOA rules - limit number of rentals?

Post by stan1 »

State laws may apply. In my state HOA restrictions on >30 day rentals only apply after the property is sold (e.g. cannot be applied to current property owners).
Goal33
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Re: HOA rules - limit number of rentals?

Post by Goal33 »

alex_686 wrote: Wed Apr 07, 2021 2:53 pm
Soon2BXProgrammer wrote: Wed Apr 07, 2021 2:39 pm I am not a real estate investor. However, rentals are an escape hatch in case something is going on. I wouldn't buy a townhouse that didn't allow me to have this escape hatch if needed.
I will take the opposite side here. The next time I buy a condo I am going to be looking for the % or rentals and what rules are in place.

IIRC, if more than a third of units are rented out you can't get a FHA, so that knocks out some buyers.

I owned a condo during the great real estate crash of 2008. Lots of units underwater. People rented out their units as a escape hatch. Rentals topped 50%. Character of the building changed. Nosie went up. Due to increased wear and tear, maintenance went up. I did not expect that. Lots of accidental landlords who had no clue what they were doing. In short, a disaster. Property values were negatively impacted. We put in a rule saying that only 1/3 of the units could be rentals. Took us 10 years to go from 50% to 33%.
It would have been worse for your property values to have everybody get foreclosed on, instead of renting them out.
alex_686
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Re: HOA rules - limit number of rentals?

Post by alex_686 »

Goal33 wrote: Wed Apr 07, 2021 3:23 pm It would have been worse for your property values to have everybody get foreclosed on, instead of renting them out.
Honestly I don't think so. We are talking about single compressed event verse a long chronic event. But you do have a point. Depends on the situation and the assumptions.

It also depends on the building. I know some condo buildings that have a high rental rate and do well. The ones that I am thinking about are in core downtown areas. Lots of short term leases to corporate road warriors on temp assignment, etc. But the building is large enough that it has the infrastructure to handle it - like a loading doc with freight elevators. Full time front staff. etc. And a board of bored little old ladies that ensure that everybody is following the rental rules.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
IowaFarmBoy
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Re: HOA rules - limit number of rentals?

Post by IowaFarmBoy »

I understand why you would want to do this but I think it would be hard to implement fairly. One of our kids had a condo in building that hit a threshold of percentage of rentals that made it hard for individuals to get loans. I don't recall if it was impossible for individuals or if it just required a much larger down payment. The net result was that investors were the only active buyers so they didn't get top dollar.

Implementing this would be the challenge. As several have mentioned, I think purchasers want the flexibility as a failsafe if nothing else. If a rule implementing some limit (like no more than 25% of the units can be rented) is adopted, it would seem to be really unfair that the person that takes the percentage up to 25% can rent their unit out but the next person can't. That seems really problematic.
AnEngineer
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Re: HOA rules - limit number of rentals?

Post by AnEngineer »

I really hate the idea of HOAs, so I'm perhaps not a great perspective.

But a particularly annoying provision I've heard of is that when there are more people that want to rent than are allowed, you lose the ability to rent if your current tenant moves out. That's going to get degenerate fast, and encourages people to lie about who is on the lease.
alex_686
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Re: HOA rules - limit number of rentals?

Post by alex_686 »

AnEngineer wrote: Wed Apr 07, 2021 4:02 pm But a particularly annoying provision I've heard of is that when there are more people that want to rent than are allowed, you lose the ability to rent if your current tenant moves out. That's going to get degenerate fast, and encourages people to lie about who is on the lease.
I have never heard of a association setting up the rules like that. It is always the unit that is targeted, not the tenants.

I know of some city rent control laws that work at the tenant level and I would agree that causes problems.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
criticalmass
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Re: HOA rules - limit number of rentals?

Post by criticalmass »

topper1296 wrote: Wed Apr 07, 2021 2:28 pm I bought a brand new townhouse about 14 years ago and when most of the units were owned by the homeowners that actually lived here. Fast forward 14 years and now it seems like most of the units are being rented out by the owners. Our HOA has rules where we can't rent out our units for short term rentals like Airbnb, but there are no restrictions on how many units can be rented on longer term leases.

Does anybody else here live in a place with an HOA with no restrictions on the number of rental units? If you live in a place that does restrict them, how many can be rented out? It seems to me that limiting the number of rental units would help persevere property values and also promote "community goodwill" for lack of a better word with neighbors between each other. I'm not on our HOA board, but may bring it up to them and also specify that current owners should be grandfathered in so they can still rent, but future sales of units for rental purposes may have restrictions based on how many units are currently being rented out.

Just wondering what other peoples thoughts are on this subject.

Thanks.
Restricting property rights with new restrictions (e.g. ability to rent, boards of directors allowing new fines, etc) will likely require approval of a supermajority of owners (66%-75% or even 80% is frequently the magic number), and that approval typically needs to included notarized signatures of each owner recorded with the deed. Check your covenants AND state requirements.

Other requirements, like how the board of director operates is usually in the bylaws. That typically can be modified by a simple majority of the membership at a member meeting.

Passing new restrictions, if successful, means that future new owners will have less utility in their property. That deflates property values and decreases the potential buyer pool when you want to sell. Use caution.
ActiveIndexer
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Re: HOA rules - limit number of rentals?

Post by ActiveIndexer »

Owned a condo for 10+ years and served on the HOA. Our building was built in 1960 with 200+ units and our bylaws originated in the 80s, I believe.

We had no restrictions on number of rentals, only they must be one year or longer lease. There were 2 problems I experienced that relate to your post:

1. Once you hit a certain ratio of rentals to owner occupied, certain loans/lenders will not finance purchases so property values and quality of residents is negatively impacted.

2. Our bylaws were written in a way that certain changes, such as limits on number of rentals or not allowing smoking in units, requires a 100% approval vote from all residents.

Good news is there are creative ways to deter rentals if your bylaws do not allow it but your local/state laws do. We created a $1000/yr administrative fee for rentals since they used up more of our building manager and staff’s time. Even if owners pass those costs off to the tenant, at least it will raise the quality of people renting.
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peetsperk
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Re: HOA rules - limit number of rentals?

Post by peetsperk »

HOA’s are notorious for imagining a problem that may possibly exist in the future and then instituting a new rule or regulation to solve the imaginary problem.
bluebolt
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Re: HOA rules - limit number of rentals?

Post by bluebolt »

criticalmass wrote: Wed Apr 07, 2021 8:58 pm Passing new restrictions, if successful, means that future new owners will have less utility in their property. That deflates property values and decreases the potential buyer pool when you want to sell. Use caution.
Not always. For example, if you have a condo complex in a college town without rental restrictions, it can turn into a dormlike situation quickly with absentee landlords and greatly depress the value of units. Complexes with rental restrictions have a much higher level of owner occupancy and are worth more.
HomeStretch
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Re: HOA rules - limit number of rentals?

Post by HomeStretch »

My parents’ condo association wanted to limit rentals but couldn’t come up with an equitable way to implement a % cap - i.e., which owners would be allowed to rent to stay under the cap. Instead a restriction was put in place that a unit could only be rented to one tenant for up to 3 consecutive months per year.
Bcdkgf
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Re: HOA rules - limit number of rentals?

Post by Bcdkgf »

HomeStretch wrote: Thu Apr 08, 2021 6:09 am My parents’ condo association wanted to limit rentals but couldn’t come up with an equitable way to implement a % cap - i.e., which owners would be allowed to rent to stay under the cap. Instead a restriction was put in place that a unit could only be rented to one tenant for up to 3 consecutive months per year.
So the tenants would be forced to move after 3 months? Wouldn't short term tenants be problematic? Looking at this from a personal point of view. We are elderly and downsizing, selling our way too large home. My husband and I want to rent a condo in the Bradenton to Clearwater area for at least a year or more and are finding that the rents vary by season and are somewhat limited in term. We haven't rented for at least 45 years, looks like things have changed a lot. Moving is a big hassle.
Coltrane75
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Re: HOA rules - limit number of rentals?

Post by Coltrane75 »

I live in a condo with an upward trending % rentals that I think is near 50% at this point.

We had tried to put in a rule where the cap for the building was no more than 50% rentals allowing for:
1. Phase-in period; rule either only goes into effect on new owners going forward or after a period of 24 months
2. Hardship considerations; if an owner had a financial, medical or other time of unique issue, they can with the approval of the board be exempted from the rule.

We did a poll and a small majority of people in the building were in favor of it, but the board sat on it...I may try to reactivate it.

I thought this proposal was pretty reasonable and balanced.
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hand
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Re: HOA rules - limit number of rentals?

Post by hand »

Protecting owner's ability to sell to buyers who require a mortgage by keeping the rental rate below the bank lending threshold is the most common restriction I've seen. (Also the easiest to explain, and build support for.) Of course if half the owners are already prefer renting, the horse has probably already left the barn. Only sliver of hope is that renting owners are no longer active and can't be bothered to engage / vote against.
stoptothink
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Re: HOA rules - limit number of rentals?

Post by stoptothink »

We live in a townhouse community. When we first moved here 5yrs ago there were almost no renters. There is not a single renter in our 8-home unit (4 homes per row, two sides of the street), but we know of a few in other units. But, with how often people are buying and selling, they might as well be renting; not one family currently in our 8-home unit was here when we bought, two of the homes are on their 3rd owner since we've been here, and we're about to have our 4th next-door neighbor (just sold last week). I genuinely have no idea about rental limits for our HOA, I'm just blown away about how often people are moving and buying. Average length of ownership in our ~100 unit community has got to be <3yrs.
HomeStretch
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Re: HOA rules - limit number of rentals?

Post by HomeStretch »

Bcdkgf wrote: Thu Apr 08, 2021 7:16 am
HomeStretch wrote: Thu Apr 08, 2021 6:09 am My parents’ condo association wanted to limit rentals but couldn’t come up with an equitable way to implement a % cap - i.e., which owners would be allowed to rent to stay under the cap. Instead a restriction was put in place that a unit could only be rented to one tenant for up to 3 consecutive months per year.
So the tenants would be forced to move after 3 months? Wouldn't short term tenants be problematic? ...
The owners voted this in by majority for their complex. The preference was for an owner-occupied complex rather than rentals of condos held by owners as an investment. One 3-month renter (usually a snowbird) seems to be no more or less problematic than a 12-month renter.

Any renter would be aware of their lease term per the lease agreement signed with the owner so I don’t see any lessee being “forced” to do anything other than honor the terms of the executed lease agreement. If the 3-month rental restriction results in a smaller amount of prospective tenants, that’s seems to be fine with the majority of owners. Usually there are more prospective renters than available units as the complex is on a canal with deep dock and ocean access.
scifilover
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Re: HOA rules - limit number of rentals?

Post by scifilover »

Our So. AZ Winter home is in a community of 2500 homes. When AirBandB started to get big our association proposed and then passed via an election a bylaw change that limited renting to periods of time of 30 days and longer, and limited rentals to no more than 10% of the number of homes in the community. This was done during a period of rising home prices, which is still occurring. The revised bylaw also requires owners who are renting to provide a copy of the rental agreement to the association, and to let the association control the membership cards that allow occupants to access our amenities, such as the gym. Prior to the election, the association surveyed to determine the current number of renters which at the time was less than 10%.....
Bcdkgf
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Re: HOA rules - limit number of rentals?

Post by Bcdkgf »

HomeStretch wrote: Thu Apr 08, 2021 8:20 am
Bcdkgf wrote: Thu Apr 08, 2021 7:16 am
HomeStretch wrote: Thu Apr 08, 2021 6:09 am My parents’ condo association wanted to limit rentals but couldn’t come up with an equitable way to implement a % cap - i.e., which owners would be allowed to rent to stay under the cap. Instead a restriction was put in place that a unit could only be rented to one tenant for up to 3 consecutive months per year.
So the tenants would be forced to move after 3 months? Wouldn't short term tenants be problematic? ...
The owners voted this in by majority for their complex. The preference was for an owner-occupied complex rather than rentals of condos held by owners as an investment. One 3-month renter (usually a snowbird) seems to be no more or less problematic than a 12-month renter.

Any renter would be aware of their lease term per the lease agreement signed with the owner so I don’t see any lessee being “forced” to do anything other than honor the terms of the executed lease agreement. If the 3-month rental restriction results in a smaller amount of prospective tenants, that’s seems to be fine with the majority of owners. Usually there are more prospective renters than available units as the complex is on a canal with deep dock and ocean access.
My Dad owned a 15 unit complex on Miami Beach, he would turn away anyone that would only rent for three months, he required a year lease. I still think a three month rental would not attract the kind of people that would care about what they rented. As a teenager, he and I cleaned out those units (aweful!) that were leased short term before he changed everyone to long term.

That experience colors my opinions today. Long term rentals have a stake in the community. I just don't "get it" that a Condo would want short termers. I personally would not buy into a Condo where three months, seasonal or weekend rentals are allowed.
Mr. Rumples
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Re: HOA rules - limit number of rentals?

Post by Mr. Rumples »

When I was on an HOA board, this issue came up repeatedly. We did not like that the number of rentals was increasing and it was affecting loans. There were very good renters and not so good.

The governing documents were clear, no rentals for less than 30 days and all leases had to be filed with the HOA. We were told by the attorney that it would require a change in the governing documents to actually limit the rentals.

We took a different approach. All communication between the HOA and the unit had to go through the unit owner. Violations and fines would go to the unit owner. Since the HOA did not manage rental property, anything which might be considered by the board (list prepared by the attorney) to be a rental management type of issue, for example if a renter asked about trash removal, it resulted in a fee for the time - an hourly rate, not prorated; when one renter threw a pool party - caught on camera people pouring beer in the pool, the owner was charged for the cleanup including having to replace all of the water. . Seems petty and spiteful perhaps, but frankly out of town unit owners were just making money while the HOA had to educate new renters on procedures and so forth.
Ranunculus
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Re: HOA rules - limit number of rentals?

Post by Ranunculus »

ActiveIndexer wrote: Wed Apr 07, 2021 9:31 pm Owned a condo for 10+ years and served on the HOA. Our building was built in 1960 with 200+ units and our bylaws originated in the 80s, I believe.

We had no restrictions on number of rentals, only they must be one year or longer lease. There were 2 problems I experienced that relate to your post:

1. Once you hit a certain ratio of rentals to owner occupied, certain loans/lenders will not finance purchases so property values and quality of residents is negatively impacted.

2. Our bylaws were written in a way that certain changes, such as limits on number of rentals or not allowing smoking in units, requires a 100% approval vote from all residents.

Good news is there are creative ways to deter rentals if your bylaws do not allow it but your local/state laws do. We created a $1000/yr administrative fee for rentals since they used up more of our building manager and staff’s time. Even if owners pass those costs off to the tenant, at least it will raise the quality of people renting.
Our HOA began implementing a host of punitive fees on landlords until they were challenged by a new landlord/owner. The attorney for the association confirmed that fees can only be imposed for actual costs incurred by the association, and cannot be justified if they are clearly intended to discourage renters. We previously had a $400 "transfer fee" each time a new tenant moved in, purportedly for documentation costs. This was reduced to $25 at our last board meeting based on advice from the attorney.

Our biggest challenge going forward will be the potential loss of self-governance if owner/landlords do not participate on the HOA board. It's already a challenge for me since I live out of town, but I do attend quarterly meetings. We only have 15 units in our association and most of the owners in residence are well past retirement age and some are not competent to serve on the board due to age related cognitive issues. The added cost of requiring professional management will be a direct result of the increase in renter occupied units.
stan1
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Re: HOA rules - limit number of rentals?

Post by stan1 »

Ranunculus wrote: Thu Apr 08, 2021 11:06 am
Our HOA began implementing a host of punitive fees on landlords until they were challenged by a new landlord/owner. The attorney for the association confirmed that fees can only be imposed for actual costs incurred by the association, and cannot be justified if they are clearly intended to discourage renters. We previously had a $400 "transfer fee" each time a new tenant moved in, purportedly for documentation costs. This was reduced to $25 at our last board meeting based on advice from the attorney.

Our biggest challenge going forward will be the potential loss of self-governance if owner/landlords do not participate on the HOA board. It's already a challenge for me since I live out of town, but I do attend quarterly meetings. We only have 15 units in our association and most of the owners in residence are well past retirement age and some are not competent to serve on the board due to age related cognitive issues. The added cost of requiring professional management will be a direct result of the increase in renter occupied units.
Yes, HOA boards often try to do things that are not legal. CC&Rs that are decades old may not be consistent with current state laws. In my state priority seems to be: tenants first, then property owners, then HOAs.
GoldenRam2030
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Re: HOA rules - limit number of rentals?

Post by GoldenRam2030 »

I lived in an HOA where the board was proposing new restrictions on rental units. Here are my observations:

1) MOST people in an HOA community dont want to get involved. They will sign any petition to get a neighbor off their doorstep but few really want to do anything
2) Most HOA boards wanting this change see rentals as transients lowering the property value. In my case, I saw Renters as good people, but landlords on the whole were difficult to deal with if your unit abutted theirs as they simply didnt care to do the maintenance. Nobody wants a hostile HOA board, but if they enforced common sense regulations on landlords it is a better way to go. Also, nobody likes raising HOA fees, but if it is for some property investment homeowners are MORE likely (though still an uphill climb) to approve them and rental landlords will NOT want higher HOA fees.
3) Right now the real estate market near me is on fire+. Thats great if you are a seller (not so great as a buyer) but things change. Some of the people owning these homes may not care if the market drops (and it will eventually) when it comes to their time to sell. When I sell I wont care what the buyer wants to do with it as along as his check clears.
4) Most renters/landlords bought into these communities early or at a price point where the numbers work for rentals. Thats a hard thiing to overcome.
LittleMaggieMae
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Re: HOA rules - limit number of rentals?

Post by LittleMaggieMae »

I have a rental townhouse. It's 1 unit in a building with 3 other units (so 4 units per stand alone building) in a subdivision with 100 or so other buildings just like the one I described. There are 5 different HOA's (based around a pool, common area).

It's been so long I can't remember the "restrictions" on rentals. I do believe there's some maximum # due to the banks giving mortgages. I do know that the HOA rules include a bit about they get to vet any renters (ie they want access to a back ground check and employer check). The HOA also has a "boiler plate" set of pages that are added to the lease and that the renter must sign (and that I also must sign and agree to). in other words if my tenant is breaking the rules (or incurring fees) I'm the one that pays and has to enforce the rules. My 40 page lease agreement has a bit in there were non-compliance with HOA rules (which they agreed with when they signed the lease) gives me/my property manage reason for eviction or keeping the security deposit, blah, blah, blah. My renters seem to stay for a minimum of two years - the longest renter was 4 years. I've had the townhouse for 12 years.

The townhouses in the subdivision are actually somewhat sought after for living or renting as it's in a solid midrange of rental prices and townhouse sizes/amenities and a rather nicely laid out "subdivision" considering there are so many units in it. I think the cooperation between the HOA and the owners who rent and the renters plays into this. It's all made very clear what everyone's responsibilities are and what expectations there are in the lease agreement - and in all the interactions with potential renters BEFORE the lease gets signed.

So, I'm thinking your mileage might vary when it comes to the effects of renters on any particular "condo" or "townhouse" or any neighborhood with an HOA (that has some say on owners/renters).
Old Guy
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Re: HOA rules - limit number of rentals?

Post by Old Guy »

Our community doesn’t allow rentals of less then six months. That’s fine with me.
criticalmass
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Re: HOA rules - limit number of rentals?

Post by criticalmass »

HomeStretch wrote: Thu Apr 08, 2021 6:09 am My parents’ condo association wanted to limit rentals but couldn’t come up with an equitable way to implement a % cap - i.e., which owners would be allowed to rent to stay under the cap. Instead a restriction was put in place that a unit could only be rented to one tenant for up to 3 consecutive months per year.
In other areas, 3 months would be "short term tenancy" and prohibited.

In any event, that restriction would open the door to all kinds of games, if people desired to play. Condos are a bit easier to police tenants if there is door security, but not by much....
criticalmass
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Re: HOA rules - limit number of rentals?

Post by criticalmass »

GoldenRam2030 wrote: Thu Apr 08, 2021 12:49 pm I lived in an HOA where the board was proposing new restrictions on rental units. Here are my observations:

1) MOST people in an HOA community dont want to get involved. They will sign any petition to get a neighbor off their doorstep but few really want to do anything
2) Most HOA boards wanting this change see rentals as transients lowering the property value. In my case, I saw Renters as good people, but landlords on the whole were difficult to deal with if your unit abutted theirs as they simply didnt care to do the maintenance. Nobody wants a hostile HOA board, but if they enforced common sense regulations on landlords it is a better way to go.
How do you recommend enforcing the common sense regulations, unless they already exist in recorded documents? Taking owners to court is expensive for both parties. Issuing fines is extremely problematic if the documents recorded with the deed do not explicitly the board to do so, and state case law has punished HOAs for trying to do this.
Ditto taking away things that their HOA money is paying for.....
And owners can be reluctant to sign documents that allow the HOA board to issue "reasonable" fees.
jibantik
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Re: HOA rules - limit number of rentals?

Post by jibantik »

This is why I don't live in an HOA. Nothing worse than someone else dictating arbitrary rules about what someone can do with their private property.

I think a rule of no short term leases is a reasonable compromise, but capping the total and requiring tenants to move out and a lottery system sounds awful.
bwalling
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Re: HOA rules - limit number of rentals?

Post by bwalling »

In the cases I've seen, and in the plurality of what's been described here, the problem is absentee owners, not renters. The owner, who makes the decisions, has become disconnected from the interests of the owner occupants, and the renter, who is more likely to have common interest with the owner occupants, has no agency.

Rather than limit or cap renters, why not pursue regulations and obligations that compel or require owners to maintain their property sufficiently, and provide for minimum standards for common upgrades and maintenance? Or, allocate voting rights on certain decisions to owner occupants, and remove or reduce voting rights on certain topics from those that do not occupy the development? In this way, you do not limit what another can do with their owned property, but you do limit its ability to adversely impact other owners. (If you do this, think about "snowbirds" - people that split time between two places during different times of the year)
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LilyFleur
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Re: HOA rules - limit number of rentals?

Post by LilyFleur »

The number of rental units in my development is not formally capped. We did have problem renters in one unit (the police were called on them many times), and the HOA board pressured the landlord to make those renters move out.
michaeljc70
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Re: HOA rules - limit number of rentals?

Post by michaeljc70 »

Out of 34 townhomes we allow 4 to be rented at a time for a period no less than 1 year. Too many rentals is not good for property values in general. No flexibility in renting it out if you need to is also bad. I am not sure how it works if you want to rent your unit and the 4 are already rented.
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