Clubhouse Rental – Should we? Would You? > HOA Forum

Unanswered

Active Topics

Forums

Forums > Homeowner Association > HOA Discussions

Subject: Clubhouse Rental – Should we? Would You?

Prev Next

You are not authorized to post a reply.

Author

Messages

BruceD1
(Georgia)

Posts:39

07/17/2008 7:45 AM
We are a new single home HOA community that now is homeowner controlled. We have a small clubhouse that is only used for association sponsored meetings (committees and board) and a few association sponsored social events as per our use rules. The furniture occupying the clubhouse is very nice furniture that would be found in a living room and dining room of a home, i.e. a couple sofa’s and end tables and a dining room type table that sits 6 people, lamps, etc. We receive many requests from residents to rent out the clubhouse for parties, and for those sale type parties like Southern living. What should we consider or beware of before we make a decision? If your community rents out the clubhouse what would you do different? Thanks.

BruceF1
(Connecticut)

Posts:594

07/17/2008 8:16 AM
We have a good-sized clubhouse that includes a function room (holds 250 persons per the fire marshall), a completely equipped kitchen, a service bar, a furnished sitting room with a fireplace, mens and ladies restrooms and a coat closet on the main floor. There is an equipped exercise room and 2 more restrooms on the lower floor. We do rent our clubhouse for private functions to unit owners only. It may not be rented by non-unit owners. The rental fee is $150 plus a $350 security deposit. The security deposit is returned provided the clubhouse is cleaned after use and there is no damage. Rental includes the entire main floor only. The lower level, which includes the exercise room, may not be used by those attending the private function (mainly because of liability issues) and remains open for unit owners (it has a separate outside entrance). Unit owners who wish to reserve the clubhouse for a "home" sales-type party (like a jewelry party or whatever) may do so without a rental fee provided that 1) the party is restricted to community residents and their guests, and 2) at least 50% of the unit owner's earnings (or cash equivalent) is donated to the clubhouse fund that is used to purchase additional furnishings for the clubhouse. Just remember to make sure your HOA liability insurance covers any losses that may arise out of renting your clubhouse.

BruceF1
(Connecticut)

Posts:594

07/17/2008 8:19 AM
Oh, and also remember that any income arising from renting your clubhouse must be reported as non-exempt function income on your IRS Form 1120-H.

BradP
(Kansas)

Posts:1742

07/17/2008 8:25 AM
Bruce: If there is demand for it I would rent it out...to me it is another way to raise funds and perhaps the rental money is set aside for maintenance of the clubhouse so members don't have to finance it. The things I would be worried about are liability, insurance, alcohol, access and damage. I would work with your association's attorney to draw up a standard contract that addresses the concerns you and the attorney would have. I would require each person who rents the facility to obtain their own liability insurance, those policies are generally cheap to get. I would take a stance on whether you want to allow alcohol or not, if you do it increases liability. I would require payment of the rental fee and the damage deposit in advance and would think about how you want them to gain access...do you want to give them a key or will you have a staff member look after them.

SheliaH
(Indiana)

Posts:82

07/18/2008 9:40 AM
Here are some basics on our rental policy - hope these are useful First, renting the community building is only available to homeowners who are current in maintenance fees. If the homeowner is renting out his/her unit and the tenant wants to rent the building, the homeowner must sign off on the reservation form and is ultimately held responsible for any damages. The community pool is next to the building, but it isn't included in the rental fee - otherwise pool use is an additional charge and the homeowner must provide a lifeguard/pool monitor at his/her expense. Since I've lived here, I don't think I've heard of anyone renting the pool area. Events may start no earlier than 9 am and must be concluded by 11 pm. The homeowner may stay until 2 am to finish cleaning up the place, after which EVERYONE must be out. There is a $100 deposit, which is returned if the building passes a post event inspection by a designated board member or property manager/designee. The board member also inspects the building before giving the key to the homeowner, and the homeowner must return the key within 24 hours after the event ends. We're considering purchasing digital cameras to use in walk-throughs and may also use them to document any messes to justify keeping the deposit, if necessary. Our security officer is authorized to enter the building at any time during the event to investigate complaints and shut the event down if warranted (e.g. serving alcohol to minors) There are a few more things we may add to

PatrickH
(California)

Posts:197

07/19/2008 7:30 AM
Hi Bruce, We've been renting out our clubhouse for years and it works pretty well. We have a rental contract that is about two pages long that has evolved over time to cover most of the issues and problems that could arise. Among the highlights I'm trying to remember off the top of my head: Only property owners can rent the clubhouse. Owner must be in attendance at the function. No alcohol allowed. Guests cannot use the other facilities; pool, jacuzzi, tennis courts, etc. $ 250 refundable security deposit. $ 50 rental fee. Renter is responsible for clean up and trash removal. Party must end one hour before closing time at the recreation center. Maximum number of guests is 40. (Fire code says 55 is the maximum number of occupants, so that leaves a little wiggle room.) Start with the basics and see how it goes. We've found most owners have been very concientious about it and have had very few problems over the years. Good luck

DJ1
(Ontario)

Posts:456

08/09/2008 11:21 AM
This issue has just come up in our neighborhood. It brings to mind a few questions since the rental is to an outside agency which is causing increased traffic/parking as well as the bumping of the long standing pool/card night to accomodate the rental. Also the club is usually locked making it a white 'vacant' elephant in this non-member's opinion. All the best of my understanding, 1. The zoning is residential so doesn't commmercial or for-profit use impact conflict with the zoning and permitted uses in residentially zoned areas. 2. Commercial or for-profit use could impact (increase) the taxation of the property. 3. If rental income is being created should sales taxes also be collected and a proper business number be obtained with appropriate remittances to upper levels of government. The other issues that go without saying is insurance (liability) impact, bumping of members ability to use the facility in order to rent out to an outside agency etc etc.

BradP
(Kansas)

Posts:1742

08/09/2008 1:20 PM
DJ: 1. Not sure on the zoning question, but really I don't think this would fall into commercial status since that isn't the primary function, but not sure. 2. Not sure on that either 3. Sales taxes do not need to be collected. I would strongly encourage anyone who rents the clubhouse out to make the person renting it get a liability policy, they are very cheap and affordable for a day and keeps your insurance from being the primary. The other thing to think about is this is a clubhouse for the members of the association, I think the members of your community need to decide if it is appropriate to bump them.

RobertR1
(South Carolina)

Posts:2158

08/09/2008 4:04 PM
I just wish someone would come up with an acceptable plan. We have a nice space, nicely decorated and refurbished lately. 1500 sq ft, with living room area with fire place, a dinning area, two rest rooms, a kitchen equipped and the rest a large rectangular room for a meeting or party room. I have lived next to this unit for 19 years. It has been used by renters, by owners, by special groups over all that time. We charge $100 for rent and has to be turned over clean, and all that stuff. We hold an owners once a month social session that last an hour during some of the months. I had my way, no outside rental would be allowed, if an owner wants to use it, have at it but must be present and responsible. If owners want to have card etc., get key from manager, return key after cleaning up. No charges involved, it is not worth it. You rent to outside concerns, owner sponsored or not, you get liability, plus use of alcohol and more responsibility, under aged attendees, more liability, spill over to outside areas. noise, parking problems, and time and money spent running down violators of rule and payment for damages. That little space can serve a very useful purpose for owners, especially for committee meetings, Board meetings, Annual meetings. It is considered common property for tax purposes, it is a nice amenity and some say under used.....so what. The benefits outweight that. Over the years there has been some important discussions that greatly influenced the operation of our regime, not all of them good, I may add. It is just a nice easy place to go, a neutral ground.

SusanW1
(Michigan)

Posts:2183

08/09/2008 4:42 PM
For our community center, the applicatant must be "sponsored" by a resident/member. A deposit if taken and the place must be clean after use, by an inspection by the community center committee head. The deposit is returned only after that.

RobertR1
(South Carolina)

Posts:2158

08/09/2008 5:16 PM
Susan, You're a covenant watcher, and a good one, I might add; what is your read on sponsoring an "outsider". Is that legal; now if sponsoring means being in attendence, I see no problem because the member assumes the responsibility by his presence. Who has authority if the sponsor is not there and the person has a conflict with an owner over the appropriate use of the amenity. I would not want to fine tune that argument. Also doesn't it seem odd that a member can sponsor an "outsider", and at the end of the party or whatever, you are asking your members who volunteer their time to watch dog this person a member sponsored. At least make the one that sponsors responsible for the restoration of the facility. Or is this "Nitpicking?"

DJ1
(Ontario)

Posts:456

08/10/2008 6:28 AM
...and what do you do when it is the BOD that 'sponsors' and outside for profit company to rent it weekly for a one year term while members have to go get a key since the club isn't open.

SusanW1
(Michigan)

Posts:2183

08/11/2008 5:24 AM
We have not had that many problems. The homeowner is the person responsible for the lease agreement, so who cares if it's her/his daughter-in-law who is having a baby shower? The person who is head of the committee overseeing the center gets a small stipend for every rental, since, as you can tell, this involves a lot of pre-interview and post-inspection time. We looked at the $$$ budget numbers and decided that building must be able to pay for itself, or at least close to it. If someone wants to hold a jewlery party there, that's OK. It still requires a homeowner to "sponsor" the rental.

SeaB
(Florida)

Posts:2

09/09/2008 4:14 PM
I was on the forum to research a different issue, but saw this thread and decided to reply. Our clubhouse is approximately 1,600 SF, and includes a full kitchen plus two bathrooms, but is sparsely furnished (i.e., non-destructible) with lots of fold up tables and chairs. We use the clubhouse for monthly HOA meetings, monthly social hours, and rent it to homeowners (only) for private events. At the back of the room are three sliding glass door that lead to the pool area and a very large (1980's) pool. The pool area is not included in the rental, meaning that other residents are not restricted from using it during private functions, but the clubhouse renters may also use it during their event. We don't restrict alcohol use, but that's never been a problem in the five years that I've been active in the community. The biggest problem we've had is when a owner-parent rented the clubhouse for a graduation party and didn't supervise. Everything was fine until another school decided to crash the party, and there was no parking left for the additional 50+ cars. Our security guards contacted the missing parents and took care of the problem within an hour. My HOA charges $25 non-refundable for the rent, and $150 refundable damage deposit. I'm in Central East Coast Florida. SB

JeannieraeO
(California)

Posts:27

09/09/2008 4:44 PM
We rent our clubhouse (800 sq ft space, full kitchen) out for $25 and a $50 refundable deposit. I'm considering changing the structure because $25 is nothing for renting a public room in California, and it's very time-consuming to monitor whether the residents are following the rules or not. I'm increasing the fee to $150, $100 of which is a flat cleaning fee. There will be a further $50 deposit to be refunded if the place is cleared out and no trash is left. We have a couple who run a janitorial service who live in the complex so we have contracted them to clean after every event. That way the place is maintained. I might add that we've recently upgraded the space with new furniture, carpet, and paint, so we want to be sure it isn't trashed.

You are not authorized to post a reply.

Forums > Homeowner Association > HOA Discussions > Clubhouse Rental – Should we? Would You?