Leasing restrictions can be one of the most controversial and complicated matters in community association governance. Between statutory requirements, governing documents and VA/FHA regulations, how are Associations supposed to sort it all out, especially when there are often conflicts between them? Not to mention the fact that statutory and lender regulations seem to change just when you are starting to get use to the current requirements. The information below is meant to provide you with a general overview to help you determine if you are properly handling rentals in your association or wish to restrict them. But remember, it’s subject to change without much notice! Continue Reading Leasing Restrictions Dos and Don’ts
Q. Does a landlord have to provide a prospective renter with a new HOA packet directly from the association?
A. A landlord does not have a responsibility to provide prospective tenants with a copy of the governing documents in either a Condominium or Property Owners Association under Virginia law. However, many Associations have extensive provisions relating to rental units or homes which go beyond anything provided in the Virginia Code. Some common provisions require owners who are landlords to provide copies of leases for approval, require both landlord and tenant acknowledge in writing the tenant’s obligations to follow Association rules and require that the landlord provide copies of the same documents made available to any new purchaser. If properly adopted, these provisions are enforceable.
QUESTION: Our association is experiencing as high number of rentals with multiple and/or unrelated adults living in single family dwellings. The renters are pretty much ruining the community. What can be done?
ANSWER: Many Associations have become concerned about there being a large percentage of rental units available in their communities. In such cases we recommend that the Association consider enacting a leasing amendment which limits the percentage of units which are available for rental at any one time and has other provisions related to requirements in the lease as well as the length of term.
Q:We have some unruly tenants in a couple of our condominium units and the absentee owners don’t seem to be too concerned when we send them letters. What can we do to these tenants to get them to live by the rules and respect the property and rights of other residents? Can we enforce the lease when the unit owner fails to do so?
A:This is a question we hear frequently and it does demonstrate a difficult legal problem. The problem, of course, is that in most cases the Association has no legal relationship with the tenant. The tenant has a lease with the unit owner. Many condominium documents or the rules of the Association provide that leases must contain certain provisions which will give the Association some authority over the tenants if there are breaches of the rules. Many Associations have developed a lease addendum which is provided to all unit owners to use in the event that they decide to lease their units. A rule should be passed by the board requiring, under penalty of fine, the use of the addendum if a unit owner is going to enter into a lease. Further, to put more teeth into the rule, an amendment to the documents should be considered, which would provide that the association will be able to recover attorney’s fees and court costs from any unit owner who fails to use the addendum and the association is forced to initiate a nuisance suit or other litigation due to the improper conduct of the unit owner’s tenant. Continue Reading Unruly Tenants / Absentee Owners
Q:Our condominium seems to be continuing to attract investor buyers. Out of 64 units, we have 14 rentals. The renters don’t seem to abide by the rules to the same degree as owners and the owners who rent don’t participate in meetings or volunteer for community work, so we view this trend as not a good one for the community. Can we restrict our owners from renting?
A:This is a question that is frequently asked because it seems, to many people, that it should be an “inalienable right” of ownership that you can rent your property, but that is not true in a community association. When you “sign on” to participate in a community association by accepting a deed subject to the restrictions of record, you give up certain rights and submit to the will of the majority on most aspects of community living. Consequently, if the required number of owners is willing to sign off on an amendment, everyone must comply. Continue Reading Rental Restrictions
Why are rental restrictions becoming popular?
Over the past couple of years, there have been an increasing number of requests for amendments to the documents placing restrictions on the rental of units. The main focus has been to put a cap on the number of permitted rentals. Many owners ask why this is important. The #1 reason seems to be that a high number of rentals in a community can cripple an owner’s ability to secure financing. Secondary mortgage agencies, including Freddie Mac, Fannie Mae and VA, impose restrictions on the percentage of rental units in a homeowner’s association or condominium. If rentals exceed those limits, owners who want to refinance can find it difficult to secure a normal rate or even obtain a loan. While the allowable percentage can vary by agency, the typical threshold is around 30%, but it can go as high as 50%.
The second driving force behind rental caps is the widespread perception that renters do not respect and maintain property to the same degree as owners and are not as involved in the community. A high percentage of renters results in a smaller pool of resident owners to serve on the Board of Directors, and otherwise help with committee work.
A third concern is the impact of a high percentage of rentals on property values. Most real estate agents are aware of the rental percentages and are likely to steer their buyers away from those communities with significant rental percentage, because they know it is typically not as desirable a community to live in for the reasons stated above. Continue Reading Rental Restrictions