Question: I manage a large unit condominium complex. Several years ago, the board tried to pass a rental restriction and did not get the member votes needed. Now, in light of the foreclosure crisis, investors are buying foreclosed units and renting them out. We have one homeowner who is in the process of buying his fourth unit. Can an HOA limit the number of units owned by a single entity? And how does this affect our association as a whole?
Answer: Yes, the HOA can limit rentals but it is subject to an appropriate vote of the members as defined by the governing documents which may be a super-majority (2/3 or 3/4) or even unanimous. Of course, the more rentals you have, the tougher it will be to get the vote. But now, lenders are more closely scrutinizing the number of rentals within condominiums. FHA, Fannie Mae and Freddie Mac all impose rental restrictions on loans they insure (FHA) or underwrite (Fannie Mae and Freddie Mac). FHA's limit on rentals is 15% and 49% on the other two. Since these entities are responsible for the lion's share of condo loans, failing to adhere to the rental restriction limits could severely compromise the ability to sell or refinance a unit.
Question: Our board has been badly managed for years. The building was built over 25 years ago and previous boards did not believe in reserving for major repairs. As a result, we are now faced with huge costs for roofing, decks, fences, on and on. I'd like to survey the owners and ask them to prioritize what needs to be done.
Answer: Asking for owner input to prioritize maintenance is asking for trouble. Most will ask that something that affects them personally be fixed first. That's human nature. Instead, the board should develop a plan, share the plan with the members and ask for comment. That way, the board leads with input from the members.
Question: Our owners approved by 75% a rental restriction amendment to the governing documents. The vote was contested in court and the judge determined that this amendment needed 100% approval. Should the board appeal?
Answer: Rental restrictions are often considered a fundamental property right by the court. Once the matter is put before a judge, anything can happen and, in this case, did. Whether the HOA should appeal is a matter of cost and likelihood of prevailing. A fair amount of money and emotion has probably already been expended. The board should not spend any more of the HOA's money unless the 75% majority is supportive of spending more in the way of a special assessment.
Question: I have owned a rental condo for years. The board recently adopted a policy that rental owners must submit copies of rental agreements to the board, pay a $200 administration fee and that the rental agreement must be for a duration of 12 months or more. Can the HOA legally require a copy of a private rental contract? Can the HOA dictate the terms of the rental agreement on a property they do not own? Can the HOA charge an administration to rental owners only?
Answer: It is reasonable for a landlord to provide the board a copy of the Rental Agreement for emergency contact information purposes. It is also reasonable for the board to require that all renters are subject to the same rules and regulations as owners. So, the Rental Agreement should include a copy of the HOA Rules and Regulations and make violation of them subject to fine and/or eviction.
However, the board has no authority to single out landlord owners for special fees unless those fees are based on actual costs incurred by the HOA. Sometimes a Move In/Move Out fee is charged because the entry code, mailbox tag and additional janitorial is required to clean up after a move. However, owners move as well as renters. If there is cost incurred by the HOA, it should be charged to both owners and renters. Landlords should not be singled out for special treatment or charges.
The board cannot require a specific rental term other than, say, all rental terms must be "long term" versus "short term" such as those that take place at resort locations. Many state statutes prohibit Rental Agreements longer than 12 months.
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