Rental Restrictions - HOA Meeting Communication > HOA Forum

Unanswered

Active Topics

Forums

Forums > Homeowner Association > HOA Discussions

Subject: Rental Restrictions - HOA Meeting Communication

Prev Next

You are not authorized to post a reply.

Page 1 of 2

Author

Messages

WilliamS1
(South Carolina)

Posts:58

08/28/2006 10:18 AM
We are wanting to either restrict the number of rentals allowed in our community, do away with them completely, or find ways to discourage homeowners from renting their units out possibly by raising fees on rental units. The BOD is of course all homeowners and most agree that we should try this. We have a homeowmners meeting coming up and I am searching for the best way to communicate with the general homeownership the idea. 1) I thought making an announcement regarding the restriction then having people sign on at a table after the meeting. This would allow us to get a feel of how the homeownership will respond and allow us to do some talking before an actual vote. 2) I thought about writing it up and puting it before the homeownership for a vote after including it in a letter and having a open meeting on it. I don't want to undermine my intentions by letting the issue out of the bag at the wrong time. Any thoughts. Thanks William

RogerB
(Colorado)

Posts:3724

08/28/2006 10:26 AM
Two thoughts - 1)limit the percentage that can be rented; and 2) require all rental agreements to include language protecting the assocation and require approval by the Board

Roger Borcherding Official HOATalk.com Sponsor DARCO Property Management (Colorado) (303) 925-0150 *See legal notice below (end of page) or go to www.hoatalk.com/legal

GeraldT1

Posts:0

08/28/2006 11:10 AM
WilliamS1, Dot your i's and cross your t's by providing all owners adequate notice of the matter as an agenda item, advise that an informal opinion poll will be conducted at the meeting as a basis for future ratification. Publish the agenda in advance of the meeting so as to comply with your by-laws and state law. Trust me on this one. If the community feels your idea has merit, you don't want it to be undermined because of a procedural oversight. Just to play devil's advocate, how do you restrict rental of one unit, yet permit rental of another? May you be accused of denying owners income? In that way, it's better to attempt to restrict rental entirely or establish a better set of renter screening criteria that owners must use, and then enforce renter violations. In many many states, it's a buyer's market right now, and in my community, many will get beat on the profits if they sell. Therefore, renting the units until the market corrects itself in favor of the seller is the preferred option for some. If my community prohibited renting as the by-laws currently permit, we'd be hit with so many discrimination lawsuits it wouldn't be worth the change. Best of success!! GeraldT1 NNJ

WilliamS1
(South Carolina)

Posts:58

08/28/2006 11:14 AM
Hi Roger - Thanks for the reply - Yes currently we have about 25% rentals and that is too many. We live in a nice enough area that we have not had any real problems but we have notice that the renters we have had are not as caring about the property. We would like to hold it at the 25% OR 30% if allowed at all. Your second point. Rental Agreement document approval or Rental Agreement approval meaning we would be able to review applicant. - We have talked over raising fees for rentals. Raising rent to the point of litle profit or little benefit of renting (ie. I might as well buy a place). - We have taked about only allowing people to rent their place for one year during a time of special transition. - We have talked about writing rules particular to rentals that irritates the landlord to the point they want to sell. ie. increaseing the arc rules for the rental property. Again our main objective is to keep our property as private and stable and nice as possible. Thanks Take Care William

DonN
(Michigan)

Posts:242

08/28/2006 12:10 PM
It may not be as easy as just a communication or even an approved resolution of the association. It all depends upon what is stated in the CC&Rs. If the CC&Rs permit rentals, it might be very difficult to get an enforceable change in the CC&Rs. On the other hand, if the CC&Rs require use for residential purposes, then short-term rentals for commercial purposes are likely prohibited by the CC&Rs. See "residential vs commercial of rental properties" at <http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/7034/view/topic/Default.aspx> for additional information.

Don Nordeen Governance of Property Owners Associations

WilliamS1
(South Carolina)

Posts:58

08/28/2006 12:48 PM
Hi Don Thanks for the reply. Our CCR require 50% of the people voting in person or by proxy to make a change to the CCR. We would just change the CCR to not allow more than so many rentals and then we would have to develop process to enforce it. Am I off base? Thanks William

WilliamT
(Arizona)

Posts:489

08/28/2006 1:53 PM
Something I consider important regarding the subject of limiting rentals is this: Is every homebuyer made aware of the rental restriction before signing a purchase agreement? If not, is there a means of making the disclosure to the homebuyer so they have a way to cancel the agreement if they cannot accept that covenent? When I purchased my home, I didn't know anything about HOA's. This is a gated community and I knew there were some rules, and that it was an HOA. Other than that I was clueless. I received the Bylaws and CC&R's from the Title company along with all of the closing documents, after escrow closed. I would have been very upset if there was a rental restriction covenent and it was not disclosed to me until after the fact. There can be many reasons why a home owner may "need" to rent their home out, such as a temporary work transfer, or the housing market took a bad down turn and the owners need to make a move, and determine that leasing their home is the best option available. I feel that any rental restriction must take into consideration that the owners must be able to make financial decisions that are in their best interest, and since their home is usually their largest single investment they should not be unduly encumbered by a non-rent covenent. Have options that will help owners in this type of situation, and by all means make sure the restriction is disclosed before escrow closes. In Arizona the new law will require a homeowner to notify the HOA withing 10 days after signing a contract that there is a sale agreement. The HOA must then transfer the governing documents to the home buyer. While the law does not state this, it would, nonetheless give them the opportunity to read the docs before closing cancel the agreement if they could not agree to accept the covenents.

GeraldT1

Posts:0

08/28/2006 3:49 PM
WilliamS1, I'm going to play devil's advocate in favor of majority rules. Plus my distaste for board agendas, and requests for changes that don't come from non-board members first. Your second post to RogerB is why I say it's important for you to dot your i's and cross your t's on this one, plus the fact that you stated you need 50% to change the CC&R's. In my opinion your 2nd post is indicating an agenda and evidences some methods that are being concocted by a few to achieve a predetermined end for the majority. You say that 25% rentals is too many. That sounds subjective. Too many for what, or whom? Too many for what your cc&r's restrict? Too many so as to diminish the integrity of a private and stable community? You admit, you haven't had any real problems, except for a few renters not as caring about the property. Isn't that unnaceptable if the renters are violating the rules. Doesn't the unit owner that is renting the unit need to be notified of the renters violations and corrective action taken? Define, if for no one else but to yourself, how many "we" consists of in your 2nd post statement third sentence "We would like to hold it at 25%.....". The three items you listed in the 2nd post that you talked "over" or "about", are indicators of perhaps rather devisive mechanisims to achieve a predetermined end. I understand and respect your need and right to keep your property as private and stable and nice as possible. I applaud a board member that feels compelled to uphold his/her fiduciary responsibility to protect the investments of the constituents. But don't board members have an intherent obligation to keep things the way that are good for the majority, not for themselves or a select few? Your original opinion poll is a good idea, I say get that to the community in an objective way so as not to sway a particular outcome. Get the pulse of those you serve objectively to begin a process of change. Perhaps you're right, a 25% renter threshold is the limit. Remember, renters may turn into buyers, and they certainly keep vacancies of units at a minimum. Some owners may need a resale profit margin. If you limit it to 25% rentals as opposed to 30%, and owners are forced to sell, rather than rent, in a downward market,that may force a reduced resale of a unit, which inturn causes a decrease in property value. Best of success!! GeraldT1 NNJ

WilliamS1
(South Carolina)

Posts:58

08/29/2006 2:55 AM
Thank you all for the replies and thank you HOA talk for such a great forum. Your replies have been great and thought provoking. Thank you.

HaroldS
(Arizona)

Posts:904

08/29/2006 11:40 AM
Gerald is so right. A forced sale because the property cannot be rented would drastically affect all near by property values. And we all know it is an HOAs mantra to protect property values. The Board already has the power and means to make the owner abide by the CC&Rs. The board's legal contract is with the owner and without the stipulation already in the documents to pre-approve a renter, they have no business getting involved with approving a renter. I am actually surprised a board would even want to take on the added duty and responsibility of approving renters. And if the board-approved renter turns out to be a dud, who is at fault? I could see an owner suing a board for approving a renter that ultimately destroyed his property. Just use your existing CC&R powers to make the owner comply with any problems. Harold

KarenL
(California)

Posts:1

08/29/2006 6:48 PM
Hi William, We ended up passing an amendment to the CC&Rs stating no rentals are allowed, except for the ones that were grandfathered in. So if you choose to move, you have to sell to an owner/occupant. The unit could not be rented. It is very hard to enforce though, as it is specific to our association and not backed by state/federal law.

WilliamS1
(South Carolina)

Posts:58

08/29/2006 8:31 PM
Keren - I am so curious, tell me about your situation. Units - Votes Needed - Votes Received - Problems - Benefits Thanks William

GeraldT1

Posts:0

08/31/2006 11:57 AM
WillamS1, It seems the thoughts and input you received on the possible downside to limiting renatls were not thought provoking enough. Best of Luck....you'll need it with this one. GeraldT1 NNJ

GeraldT1

Posts:0

08/31/2006 1:42 PM
WillamS1, In furtherance of your posts regarding rentals, I truly hope that others continue with their thoughts. However, I feel compelled to say a little more. The concept of limiting rentals is to me, perhaps the most disturbing notion I've seen posted on this site or heard of to date. Even if it's written into cc&r's, by-laws, etc. I can't imagine the benefit of forcing unit owners to sell or hold onto their units at a loss. It may, may, even be discriminatory depending on the state's authority over an hoa/coa. If the concept was floated in my community, I would do everything in my power to defeat it. And believe me, it wouldn't take much, nor do I think it would get very far since North Jersey is starting to experience some of what's to be expected of the housing decline. The units in my community have increased considerably from their original price, but are not re-selling as high as they were a year ago. The going rate for a rental of a 2,800 sq. ft. townhouse per month is $3,300.00. All that aside, I fail to see what limiting rentals will accomplish to fix the situation you have with those few renters already in house at the 25% threshold that you say don't really care about the property? The majority who have responded to your post seem to discourage renting or at least have reservations that relate to the matters I've discussed. What I'd like you to answer is, if those who have posted including myself were owners in your community, and we expressed our reservations in an open meeting, would you 1) still pursue the concept of a renting threshold, and if so, 2) at what point would you stop pursuing the concept. I am also curious how many owners in your community participate on committees and attend your meetings? GeraldT1 NNJ

BradP
(Kansas)

Posts:1742

08/31/2006 2:23 PM
Gerald: Actually I would disagree, the most disturbing notion i have seen to date on here is a curfew for adults in their own neighborhood. Let me play the other devils advocate for you. What do most rentals do? The renters could care less about the exterior of the home and the community and therefore it tends to get run down and has an adverse effect on the neighborhood. We have an issue with one in our neighborhood, she doesn't live in this state and it is a constant battle with them. There are exceptions to every rule, but I would bet limiting rentals would pass with ease in our neighborhood. I am not saying you should limit rentals, but if the purpose of an HOA is to promote a healthy neighborhood with increasing values, how can allowing rentals achieve that goal? On a personal note I agree that rentals should be limited, if the neighborhood agrees to it per your bylaws I don't see where any homeowner would have a leg to stand on to sue. It would be similar as saying I can't sell my home because prospective buyers don't want 2 or more trees in the front yard, yet our cc&r's mandate it, therefore HOA I am going to sue you. You buy in an HOA, it is a give and take.

GeraldT1

Posts:0

08/31/2006 5:17 PM
BradP, You disagree with me that I, that I feel the most disturbing notion is restricting the number of rental units??? Perhaps the ridiculous, perhaps unconstitutional notion of curfews was the most disturbing to YOU, but to ME, this topic is far far more disturbing. Because I believe it has a direct impact upon property values, far more detrimental than any other topic I've heard of or posted (thus far). You and I seem to sit on opposite ends of the opinion that forcing owners to sell (rather than rent) will have a devastating effect on property values. Glad it's your property values, and not mine. Answer this. How does restricting future rentals solve WilliamS1's problem with current renters? Can you answer that? My answer is, it does not address a thing. I believe it is an inadequate response to say the least. If a portion of 25% of WilliamS1's current rental population is violating the cc&r's, or in this case not respecting property as an owner would, limiting future renters will not solve the proportionate problem. Plain, simple, and irrefutable. To solve the problem with renters, don't you have to address the renters, or the owners that rent to them. How can permitting violations achieve any goal? This situation is not about give and take BradP. WilliamS1 has posted quite the opposite with the methodology that has been talked "about" or "over" regarding an after the fact restriction on creating a rental threshold. In my dictionary, the series of posts relating to this top will go down as the quintessential example of an HOA pitfall. All the best!! GeraldT1 NNJ

BradP
(Kansas)

Posts:1742

08/31/2006 5:25 PM
Gerald: How is restricting rentals forcing anyone to sell their property? We all make decisions in our lives and understand the consequences of them, if selling a house is part of it then so be it. With the housing market hitting a slump I am going to think long and hard about doing something that would require me to move, and I have the option to rent. That is just part of life. We just have different opinions that is it, I respect your viewpoint and hope you do the same with mine. Restricting rentals does nothing for current rentors, what it does do is tell potential buyers that the neighborhood will not become a landlord owned area, some people like that, others don't care. I have no intention to introduce anything in our area to limit rentals, however, when I do buy again that will be a deciding factor to me amongts a lot of other things.

BradP
(Kansas)

Posts:1742

08/31/2006 5:28 PM
I forgot the last part of your post. To answer your question, yes they do need to enforce cc&r's with landlords, but sometimes finding them is hard. The lady we have we had to track down and even then she is not responding to our letters. In the meantime her house and yard look like junk and our only recourse is to fine and place a lien on her home. In the meantime potential buyers see this eyesore and it is particularly disturbing to me since she is right around the corner. I do agree with you there, if rentors are causing issues it needs to be addressed with owners, but they don't care as much because they don't live there.

GeraldT1

Posts:0

08/31/2006 5:34 PM
BradP, If the threshold is reached at 25%, and you try to sell but all offers come in low, then you are forced in one of two directions. Sell lower than you need to sell for, or......ooops.....renting isn't an option. GeraldT1 NNJ

BradP
(Kansas)

Posts:1742

08/31/2006 5:39 PM
Gerald: IF you put yourself in a situation where you have to sell quickly, you should expect lower offers. The last house I had we sold for well below value, but I needed to get rid of quickly and still turned a profit on it. To me that is just part of the game of life, sometimes it dictates you do that, it doesn't matter whether you allow rentors or not, people will still take low offers to sell a home. What about a for sale by owner, those are done to save realtor costs therefor lowering the sale price, should we outlaw those since it is affecting property values? I am not trying to argue and respect your passion for this.

GeraldT1

Posts:0

08/31/2006 6:20 PM
BradP, You've factored in something "selling quickly" to justify a point I'm not arguing. Offers will come in low or high, but maybe, for some, not high enough. A house that sits unsold on the market also has a devaluing factor. In WilliamS1's HOA, I go further to expand the options to three, sell at a loss, let the house sit on the market until you get your bottom line, or take it off the market. Renting, will not be an option. Your option is to sell by owner? Gee, didn't know moving into the HOA would create (yet another) day job!! My passion is impress the downside to grandiose notions that have can have devastating effects on people's quality of life. Good luck!! GeraldT1 NNJ

BradP
(Kansas)

Posts:1742

08/31/2006 6:25 PM
Actually selling by owner is easy if you have a motivated buyer, I have done that and it was much easier than using a realtor. Good arguement, we will agree to disagree.

GeraldT1

Posts:0

08/31/2006 7:39 PM
BradP!!! : ) And what if you don't have a motivated buyer? I too sold by owner, in a seller's market. I know full well how "easy" it is, rather how much work it is. If you wish to chaulk my point and yours of the negative effect of developing a threshold of rentals in an HOA upon resale values, as "agree to disagree", then so be it. LOL. Better, your property values, then mine. Best of success!! GeraldT1 NNJ

CharlesW1
(Georgia)

Posts:820

09/01/2006 4:33 AM
BradP, I would like to apologize now. My intent isn’t to offend you in any way. I have been following the responses you and others have posted on this topic. I value your opinion, but IMO, you just gave the exact reasons why there should be a restriction on rental property! You said “yes they do need to enforce cc&r's with landlords, but sometimes finding them is hard. The lady we have we had to track down and even then she is not responding to our letters. In the meantime her house and yard look like junk and our only recourse is to fine and place a lien on her home. In the meantime potential buyers see this eyesore and it is particularly disturbing to me since she is right around the corner. I do agree with you there, if rentors are causing issues it needs to be addressed with owners, but they don't care as much because they don't live there. Just like all the rules and laws in the CC&Rs” There are some landlords that will be above and beyond the typical landlords. Just like many of the MC in the world today. Some are good for a community, while others give HOAs and bad name. Not everyone will agree that every CC&R written for an HOA is “fair”, but they have been written to protect the majority of the people. Let me ask you this question. That home being as “nasty” as it is, do you think you would be able to get top dollar if you were to sell your home? You said yourself that “her house and yard looks like crap”. Hypothetically, what if all the rental properties looked like this one does? Would you want to buy a new home in a community that looked like that? Being a first time homeowner, I can tell you that I wouldn’t have even considered putting my family in that type of environment. My main purpose is to provide a safe environment for me and my family. Like many of the laws that are established in the best interest of the people. It maybe intended for everyone, but we all know the there will always be someone, somewhere that isn’t going to be happy. Curfews, Yes on anyone 16 years an older shouldn't have any reason to be outside “after dark” It’s obviously you and many others don’t agree with that. You all have your reasons. There will always be someone, somewhere that is offended and thinks that is just ridiculous! But IMO, it has the potential to benefit an entire community! Again please don’t be offended. I value your opinion on this forum. I appreciate all of your suggestions and responses. If nothing else, “we can agree to disagree” Thanks so much Chuck W.

Charles E. Wafer Jr.

BradP
(Kansas)

Posts:1742

09/01/2006 5:24 AM
Charles: No offense taken, that is my point. If I sold my home right now it wouldn't get what it is truly worth on the market because of the eyesore right around the corner from me. But, hopefully someday the HOA will get her to comply, but it won't be for a while.

GeraldT1

Posts:0

09/01/2006 5:54 AM
ChuckW, Imagine you'd like to sell your home. You're asking $569,900. Your bottom line is that you must, must sell it for no less than $555,000 prior to commissions, etc. Offers come in, and none are above or at $555,000 OR acceptable to you. Now what are your options? They are: 1) Sell below your bottom line 2) Except no offers, and let the house sit on the market until an acceptable offer comes in. 3) Take the house off the market. Renting is not an option if a renting threshold has been reached. Now, imagine that homes in your neighborhood are renting at $3,300.00 per month. That's $39,600.00 per year. After say $8,000.00 in taxes are paid, you've got $31,600.00. Depending on your financial circumstances, $31,600.00 could be enough to cover your current mortgage on the house you're renting out, plus pay the taxes on the place you moved to, you get the point? I'm not denying the reality that property values decline when renters or any owner doesn't maintain the exterior of their homes. IMO, the energy is wasted on creating a threshold rather than develop a good set of Architectural Review Standards that owners and renters are to adhere to. As for curfews, it seems you're all about thresholds. When and if you do ever get elected to the board, keep us informed on the outcome of your concepts. You're the one that opened up the curfews which could perhaps be unconstitutional but certainly is an unrealistic restriction. So answer this, a 16 year old is asked to go walk the dog by her dad (who broke his leg and mom's out of town). I guess the dog has to go in the house because the 16 year old is not allowed outside because there is a curfew. Your zero tolerance policy for curfews cannot factor the outdoor activity of a 16 year old walking her dog and prevent owners from logging a complaint. Deal with each situation in and of itself, a blanket policy of a rental threshold or a curfew will discriminate against 75 - 80% of the law abiding residents. Don't develop policies that will cut your nose to spite your face. Best of luck!! GeraldT1 NNJ

CharlesW1
(Georgia)

Posts:820

09/01/2006 7:02 AM
GeraldT1, I would be a little upset to say the least! Every homeowner’s goal is to benefit financially if and when that homeowner decides to sell. The whole idea of owning a home it’s potential to increase or too at least maintain its value. That particular situation would be very difficult. I agree but, then again I’m not in the situation so I couldn’t tell you exactly what I would do. I would have to be known a lot before I would be able to make such a decision. I would really have to consider my finances at that present time. As far as enforcing a curfew, I’m not denying the fact that it would be difficult to enforce. But I feel if people are aware of the consequences of there action then the rule can be effective. Just like any law or rule. They all can be broken, but unless the consequences are know to the violator, than it would pretty much be worthless. As I have said before it would need to be thought through very carefully. Legitimate reasons for after hours activity isn’t all that ridiculous. Come on, walking the dog compared to what, say playing basketball in the dark. There isn’t any law saying you can’t? If there are lights to see then children could play ball anytime they wish. It shouldn’t matter how disruptive or loud they are? right? "there only being kids" I never said that if and when I get elected to the board, that I would implement any sort of curfew! I’m sorry to hear we are of differences of opinions of this particular issue. That’s why I am on this discussion forum. I’m learning. The opinions from all of you will better educate me. Chuck ~

Charles E. Wafer Jr.

GeraldT1

Posts:0

09/01/2006 7:37 AM
Chuck, Based upon your latest response, it seems you may now be thinking of a renting threshold in a different light? For the sake of your property values, I certainly hope so. You may not currently be in the situation of a rental threshold, but you may one day be in that particular situation, that is if you move into WilliamS1's community, or one that has a rental threshold. If you find yourself in that situation of a threshold that is all maxed out and you are forced to comply, the financial impact upon you and your family will be irrelevant because of the collective decision of the association's members or the restrictions in the Master Deed. Re-read WilliamS1's first couple of posts. Do you, or anyone else consider the concepts to be after the fact machinations. IMO they represent all the reasons not to buy in an HOA. Never underestimate the potential negative impact upon your bottom line, and the loss (irrelevance) of your feelings when living in an HOA/COA. Since we are all leaders, volunteers, or residents in associations, we must all raise the bar and do better to make our communities more beneficial non-hoa residences. Best of success!! GeraldT1 NNJ

DonN
(Michigan)

Posts:242

09/01/2006 7:43 AM
To: WilliamS1 Re: post dated 08/28/2006 3:48 PM It may not be as simple as an amendment to the CC&Rs. Fundamentally, the CC&Rs are a contract among the parties. Normally, such a contract can be changed only by approval of all the parties. For CC&Rs used to create common interest developments (CIDs), an amendment provision is usually included. However, the scope of "amend" may be limited. Amend means to put right; to change or modify for the better; improve by making corrective changes, usually suggesting slight changes. On the other hand reform or change means drastic change, or material change. Is an amendment regarding rentals to the CC&Rs (denial of rights to some owners) in your CID a slight change or a drastic change? A recent decision of the North Carolina Supreme Court comprehensively addressed this issue. Perhaps a summary of the decision is a quotation from another court: "For the reasons stated above, we conclude that the disputed amendment is invalid and unenforceable. In so doing, we echo the rationale of the Supreme Court of Nebraska in Boyles v. Hausmann, 246 Neb. 181, 191, 517 N.W.2d 610, 617 (1994): “The law will not subject a minority of landowners to unlimited and unexpected restrictions on the use of their land merely because the covenant agreement permitted a majority to make changes in existing covenants.”" The full decision including a comprehensive discussion of amendments and enforceability is available temporarily at <http://www.aoc.state.nc.us/www/public/sc/opinions/2006/640-05-1.htm>. The NC decision also suggests the possibility that amendments might be binding on new owners (after amended CC&Rs are recorded), but not on existing owners.

Don Nordeen Governance of Property Owners Associations

CharlesW1
(Georgia)

Posts:820

09/01/2006 7:59 AM
Gerald, I don’t want the responsibility of renting my home out to others. There is a tremendous amount of maintenance required. I don’t have the interest to rent my home to anyone other than a potential “long term homeowner”. I appreciate all your insight. I will re-read the previous responses to WilliamsS1 post once again. Like you said maybe there is something I misinterpreted. Chuck W.

Charles E. Wafer Jr.

You are not authorized to post a reply.

Page 1 of 2

Forums > Homeowner Association > HOA Discussions > Rental Restrictions - HOA Meeting Communication