SandraM7
(Illinois)
Posts:6
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| 02/19/2011 3:42 PM |
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Hi, I am the owner of a condo in a high rise building in Chicago. I bought it on 2003 and have never been late in my mortgage nor my assessments. I used to love it there, but a year ago I had to move to another state, due to losing my job (layoff) and a family emergency, where I was the only care taker.
Anyway, on 2003 there was no regulations in my building regarding renting a unit, if you wanted or needed to. Five years later (2008), the HOA decided to change the rules and now only people that were renting before 2008, are grandfathered and can continue to rent all they please...
I know the building has a 20% rental cap and they said they are above that...however, most of those rental units are owned by investors that had never even lived in the building and are just making money off of their units. I on the other hand, only want to rent so that I can keep the unit and sell it when the economy is doing better. Right now, I will be lucky if I don't have to pay to the bank more than what the unit is worth. I also don't want to default and damage my credit!
My question is can they do this? I didn't buy into this!!!! had I known that I could never rent my place, I would have never bought it. I am in a critical situation now, and can't afford not to rent!!! I also can't afford an empty condo, and my rent at my current residency.
As you probably know, today's economy is forcing people out of their comfort zone and you have to go where the jobs are...why can't the association see that the economy is different now than in 2008??? Please help! I need to know what are my options. Is there any law that can protect me? this rule was established after I bought the condo.
Thanks! |
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BrianB
(California)
Posts:2480
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| 02/19/2011 4:27 PM |
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You can always get a lawyer, and it might come to that.
Prior to doing so, i suggest you obtain and read the By-laws, cover to cover. Obtain and read the CC&R's, cover to cover.
Then, ask the board to see the minutes of the meetings prior to, during, and for two meetings after the decision/vote was made to change the rental rules.
What you are seeking in the reading of the by-laws are the answers: Can they do that. The bylaws will tell you what the HOA can do, and sometimes, what it can't. If you find that the board can, then the bylaws will tell you the rules about HOW they must do it. Then, you can check the minutes of the meetings to see if they complied with the rules in doing so.
If you find explicitly in the bylaws or CC&Rs that the HOA cannot do what they did, arm yourself with the information, and proceed to ask the board to explain their actions per the by-laws and CC&R's, in a nice, calm, rational manner.
You will want to do everything carefully, step by step, so that you lay your case out without error. Be calm, be logical, and be factual.
And, if you find the board can make the rental rule, and they did so legally/properly, and you are stuck, there's always a very nice letter to the board explaining your situation, and asking for an exemption. If you are nice, calm, and thorough in your preparation prior to asking for the exemption, and your letter is rational and logical about why it should be granted, it might happen. It can't hurt.
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LawrenceC1
(Georgia)
Posts:338
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| 02/19/2011 4:49 PM |
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Brian is right about checking your governing documents carefully.
As you are reading, look out for a hardship clause in the rental limitations clause. Most rental limit clauses allow the board to permit rentals under specific hardship circumstances, such as being called out of state.
You could also check board minutes to see if other hardship cases have been granted, and under what circumstances, to see if you ought to qualify based on past actions. |
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SteveM9
(Massachusetts)
Posts:1529
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| 02/19/2011 4:53 PM |
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| Its better to ask forgiveness than permission. Just rent your unit out, and if the association ever catches on, THEN.... you can explain your situation. Others may not agree with my methods, but I don't care. (wink) |
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LawrenceC1
(Georgia)
Posts:338
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| 02/19/2011 5:12 PM |
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Posted By SteveM9 on 02/19/2011 4:53 PM
Its better to ask forgiveness than permission. Just rent your unit out, and if the association ever catches on, THEN.... you can explain your situation. Others may not agree with my methods, but I don't care. (wink)
If someone in our community ignored the rules they would be fined and then subjected to legal action. Our fines can run to $25 per day. After only three months the debt would be enough to file for foreclosure, attachment of bank accounts, or garnishment of wages. I can expect a similar reaction from other boards of directors. It is dangerous just to ignore the rules. |
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PeterD3
(Florida)
Posts:448
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| 02/19/2011 5:21 PM |
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I'm surprised GA law allows foreclosure, wage garnishment, etc. for fines.
Are you sure? Fines are not a result of a contractual default to pay for goods or services received. |
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LawrenceC1
(Georgia)
Posts:338
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| 02/19/2011 5:49 PM |
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Posted By PeterD3 on 02/19/2011 5:21 PM
I'm surprised GA law allows foreclosure, wage garnishment, etc. for fines.
Are you sure? Fines are not a result of a contractual default to pay for goods or services received.
Under our Covenants and Georgia laws fines are a specific assessment treated just as any other annual or special assessment. Once the total owed to the Association reaches $2,000 we file for a judgment in Superior Court. The filing may also ask to include the remedy of judicial foreclosure. Once the judgment is granted we seek license to attach bank accounts or garnish wages with a writ of fieri facias (FiFa). All lawyers fees and court costs for this process are added to the amount owed to the Association.
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SteveM9
(Massachusetts)
Posts:1529
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| 02/19/2011 7:06 PM |
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| I'd like to see you try and foreclose on me for renting my unit. Never going to happen. |
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SteveM9
(Massachusetts)
Posts:1529
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| 02/19/2011 7:10 PM |
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Our fines can run to $25 per day.
Hmmm... $25 per day = $750 month. If I'm getting $1800 month for rent, its profitable to just pay the fine and keep getting a fine. Hehe. |
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SteveM9
(Massachusetts)
Posts:1529
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| 02/19/2011 7:16 PM |
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Oftentimes, bureaucracies will proceed with rules they prefer, but don't necessarily have the authority to enact. Many supreme court decisions fall under this category. You will need to challenge them, forcing them to prove their legal authority to engage in the specific action. Most condo boards cannot arbitrarily prohibit actions.
Another option is claiming a "hardship exemption" (health or financial difficulty) allowing you to circumvent condo restrictions. Oversupply of condominiums has placed added stress on all condominium owners. Try to leverage these positions.
Most condominium boards will want to keep everyone happy and avoid long, arduous, expensive court cases. Collect relevant documentation and research the law. If you start a legal case, your attorney will measure your chances of success. They could also argue that "absent any restrictive language, you should be allowed to rent out your condo while the case proceeds." This would be a temporary victory.
Consider all of these issues. Find facts and cases that support your right to rent your condominium. Eventually, you might want to find a way so both your condominium board and you benefit. Negotiate from a position of strength and fight for your rights. |
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LawrenceC1
(Georgia)
Posts:338
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| 02/19/2011 7:36 PM |
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Posted By SteveM9 on 02/19/2011 7:06 PM
I'd like to see you try and foreclose on me for renting my unit. Never going to happen.
This kind of thinking is at the root of many of the problems reported concerning HOAs. When someone buys into a homeowners association he or she is entering into a contract that is legally binding. Just like a contract to deliver goods or provide services, the terms are enforceable in the courts, with remedies of financial compensation and injunctions. Treating an HOA like a social club whose rules can be treated lightly or ignored leads to serious problems and expensive legal battles. In the end, if the Board of Directors has been doing its job, the HOA will win. It's far cheaper and much less hassle to keep within the rules from the beginning. |
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SteveM9
(Massachusetts)
Posts:1529
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| 02/19/2011 8:28 PM |
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Just like a contract to deliver goods or provide services, the terms are enforceable in the courts, with remedies of financial compensation and injunctions.
Very true.....but many HOA rules are not enforceable in the courts. |
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JanetB2
(Colorado)
Posts:1818
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| 02/19/2011 10:08 PM |
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Hi Sandra:
Here is an article that may help answer some of your questions:
http://www.ksnlaw.com/?t=11&la=1186&format=xml&p=1672
In here it makes this statement:
Under the principles of Apple II and Hinojosa, a rule to limit or restrict leasing rights must (1) be in the best interests of the association, (2) be nondiscriminatory, (3) be applied even handed-ly and not create a hardship, (4) not restrict any owner's rights under the First Amendment or any other constitutional or public policy provision, (5) be binding on all present and future owners, (6) not be antagonistic to the legitimate objectives of the association, and (7) be intended to promote the health, happiness, and peace of mind of the owners.
While a board-adopted policy must meet these tests, an amendment to the declaration is presumed valid unless proven otherwise. Therefore, an association is always better off amending the covenants than relying upon board-adopted policies and then being subjected to a much tougher standard.
As I believe it was Brian stated above, you need to check the documents and see if it is a rule or if they amended the covenants. A rule under (2) in first paragraph cannot create a hardship. An amendment to the declaration is a more strict policy.
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MelissaP1
(Alabama)
Posts:2207
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| 02/20/2011 2:32 PM |
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Honestly, I don't believe ANY HOA has the right to limit or make rules against renting property. (Unless the HOA actually has the mortgage on the house.) ONLY the mortgage company can limit the use of property. I've seen a few FHA type loans with these restrictions on when you can use the property as rental. Sometimes rental property falls under laws regarding excessive "Flipping". Some states don't allow buying/selling a certain amount of properties in a given year. This is due to some illegal activities of some condo flippers in year's past.
A good lawyer can easily fight the HOA's policy on rental property. It would be best to ask for "forgiveness" than permission either way. Worst case you hire a lawyer.
For those who don't like my statement about HOA's NOT having rental policies/restrictions. I understand COMPLETELY the WHOLE issue about rental property and their effect on home values in a HOA. I agree wholeheartedly there should be restrictions. However, the reality is that this is just NOT legally possible thus I wouldn't even open the can of worms... |
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Former HOA President |
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LawrenceC1
(Georgia)
Posts:338
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| 02/20/2011 3:18 PM |
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Posted By MelissaP1 on 02/20/2011 2:32 PM
Honestly, I don't believe ANY HOA has the right to limit or make rules against renting property.
Melissa,
You may be right that morally an HOA should not institute rules restricting leasing property, but legally the right to do so has been upheld in court many times in many states. |
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JohnO6
(Georgia)
Posts:415
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| 02/20/2011 3:27 PM |
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Posted By MelissaP1 on 02/20/2011 2:32 PM
Honestly, I don't believe ANY HOA has the right to limit or make rules against renting property. (Unless the HOA actually has the mortgage on the house.) ONLY the mortgage company can limit the use of property. I've seen a few FHA type loans with these restrictions on when you can use the property as rental. Sometimes rental property falls under laws regarding excessive "Flipping". Some states don't allow buying/selling a certain amount of properties in a given year. This is due to some illegal activities of some condo flippers in year's past.
A good lawyer can easily fight the HOA's policy on rental property. It would be best to ask for "forgiveness" than permission either way. Worst case you hire a lawyer.
For those who don't like my statement about HOA's NOT having rental policies/restrictions. I understand COMPLETELY the WHOLE issue about rental property and their effect on home values in a HOA. I agree wholeheartedly there should be restrictions. However, the reality is that this is just NOT legally possible thus I wouldn't even open the can of worms...
Melissa -
Once again, I find myself forced to call you out on a post of yours. This has absolutely nothing to do with the philosophical stance about whether rentals are good vs. bad nor whether HOAs should have the right to control such activity.
The simple fact is that CCRs are attached to the deed of the property in question and if the CCRs either originally - or can be amended, legally - to grant the HOA the right, then HOA restrictions on rentals are indeed legally plausible.
I did notice you mentioned "policy" not CCRs so you're probably right about a competent attorney being able to wage a good argument. However, if it's the CCRs that convey the right, then there's no question. |
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BonnieE
(Illinois)
Posts:331
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| 02/20/2011 3:57 PM |
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Hi Sandra,
I live in an IL HOA (condos). Our Declaration does not address rental restrictions. We (BOD) wanted to place a rental cap but learned we would need to amend our Declaration which requires a percentage of the homeowners to agree, so we did not pursue it.
Based on what you stated, your HOA has a 20% cap on rentals – where is this written – Declaration or rules/regulations? And you said the rules were changed in 2008. Could you please provide the language for both of these? It would help in answering your question.
Thank you,
Bonnie
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MelissaP1
(Alabama)
Posts:2207
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| 02/20/2011 3:59 PM |
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I didn't say I was against restrictions of rental property in HOA's. It is the actual PRACTICE of enforceability of the rules. If you haven't read your CC&R's you will notice a caveat that says they can NOT supercede local, state, or federal laws. Owner's and Rental rights fall into those catagories.
CC&R's can say pretty much what they want. They just aren't always practical or enforceable when the "bigger fish" come into play. |
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Former HOA President |
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JonD1
(New York)
Posts:771
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| 02/20/2011 4:00 PM |
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Sandra:
Each property has its own documents under which they operate and each state has their own rules regarding the operation of HOAs and condos.
As no one who has responded lives in your state I would guess most have never faced this issue in the state of Illinois.
As to the suggestion you simply rent the property and then ask for forgivness well IMO that would be a bad approach. It could prove costly and in the end you might come up on the losing end. To deliberatly violate a rule which you were aware of well very tough to stand up with that position in court.
As to the suggestion that HOAs or similar properties cannot prevent owners from renting their property that is simply nonsense. And to that point what occurs on other properties has no affect whatsoever with YOUR situation.
Many people express opinions based on limited knowledge and then lay claim that because their property or their state contains such rulings it follows most do the same. This is simply not true.
So now I will give you my opinion. Before you proceed I would meet with an attorney who is well versed in condo/HOA law. Bring along all the documents pertaining to your property and those detailing the rules against renting. Then after they provide a plausible explanation as to what you might be able to do legally with a good chance of prevailing you will need to decide what is the best course of action for you.
I would not advise you taking advice in such a matter provided from this or any other site as in the end it will be you who must answer for your actions and suffer any consequences if any should result.
Good luck.
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JohnO6
(Georgia)
Posts:415
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| 02/20/2011 4:28 PM |
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Posted By MelissaP1 on 02/20/2011 3:59 PM
I didn't say I was against restrictions of rental property in HOA's. It is the actual PRACTICE of enforceability of the rules. If you haven't read your CC&R's you will notice a caveat that says they can NOT supercede local, state, or federal laws. Owner's and Rental rights fall into those catagories.
CC&R's can say pretty much what they want. They just aren't always practical or enforceable when the "bigger fish" come into play.
Melissa -
Can you cite local, state, or federal laws under which "Owner's and Rental rights fall into those categories"?
I will admit, that in Georgia we do have case law in which certain rental restrictions of HOAs (even in CCRs) have been held invalid, but that's only in the case where previous CCRs were amended to make "land use" more restrictive than when the purchaser bought their property. That's because a Georgia statute holds that such "increasing restrictions" are not enforceable upon owners who have not agreed to them. So at least in one state, what you're saying IS true for CHANGED restrictions. However, I am unaware (and certainly looking to be educated by you) of other laws that prohibit HOAs from imposing rental restrictions via deed attachments (e.g. CCRs) upon original purchase. Are you aware of any?
Once the CCRs are LEGALLY (e.g. NOT in conflict with applicable superior laws) the PRACTICE of enforcability doesn't seem to be an issue. Properly worded rental restrictions will clearly define the meaning of "renting" and then the rest is easy. |
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LawrenceC1
(Georgia)
Posts:338
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| 02/20/2011 4:32 PM |
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Posted By MelissaP1 on 02/20/2011 3:59 PM
If you haven't read your CC&R's you will notice a caveat that says they can NOT supercede local, state, or federal laws. Owner's and Rental rights fall into those catagories.
Melissa,
When a homeowner agrees to abide by the Covenants of an HOA he or she gives up the complete freedom to whatever they want. This is the fundamental legal basis of a common interest community.
I know of no local, state, or federal law that gives a homeowner unrestricted ability to lease their property. Covenants that were written to include leasing restrictions, and those that have been properly amended to add them, are entirely enforceable. Saying otherwise is the same specious argument that people use when they say they can paint their house any color they want.
Unless you know of a particular irregularity in the way that a leasing restriction was enacted, challenging the fundamental right of an HOA to restrict leasing is an expensive and losing proposition. |
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JanetB2
(Colorado)
Posts:1818
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| 02/20/2011 7:18 PM |
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Posted By MelissaP1 on 02/20/2011 3:59 PM
If you haven't read your CC&R's you will notice a caveat that says they can NOT supercede local, state, or federal laws. Owner's and Rental rights fall into those catagories.
Hi Melissa:
Per your statement above, this is not true for everyones CCR's. What you need to keep in mind is on this site everyone is from different States; therefore, everyone's state statutes and CCR's will vary greatly.
Be careful to not confuse others into thinking that what you stated is correct when there is numerous case law where individuals lost and cannot rent their units because it violates their Declaration. Having someone think otherwise could encourage them to violate their documents and end up in legal litigation.
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SteveM9
(Massachusetts)
Posts:1529
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| 02/21/2011 5:53 AM |
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| I think we scared SandraM7 away....... |
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JohnO6
(Georgia)
Posts:415
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| 02/21/2011 6:39 AM |
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Steve - Perhaps you're correct that we scared her away .. .. .. .. ..
If so, it's possible that the common malady of "thread wandering" or "thread hijacking" has contributed?
I admit my culpability/contribution to that on occasion, but in my own defense, I must say it's hard for me to restrain commentary when I find someone posting specific cases, experiences, and/or examples and then attempting to generalize them as more all encompassing "truths".
I'm perfectly fine with someone (anyone really) who wants to rein in a galloping thread. |
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MelissaP1
(Alabama)
Posts:2207
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| 02/21/2011 6:58 AM |
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Here is my last post to my "hijacked" posting in regards to Rental property and HOA's. Let's make this personal. You need to rent your property due to losing your job and moving to another state. You have 10 neighbors. The HOA's say that 20% of the members can rent out their property without facing fines/charges. That leaves 2 owners that can rent. 2 of the owners are on the verge of going to a nursing home. 1 owner works out of state/travels. 1 has their property For Sale. 2 members already rent their property out. 1 owner lost their job and is being foreclosed on. 2 owner's owe HOA backdues. What are YOU to do?
If you had to fight your HOA for the right to rent what process would you go through to be able to? THINK about the process if right now you had to rent your home out in the above circumstances. Which by the way are pretty much typical and magnified to a greater number than 10.
Once you work through the process tell me then IF limiting Rental property in a HOA is acually feasable and doesn't already lead to the situation a HOA is already in regarding excessive rental property. There are ALWAYS special circumstances in regards to exceeding any rental capacity. Wouldn't you think your situation would be "Special"?
Would you be willing to face the fines for renting out your property? Would you really sue your HOA considering suing a HOA is suing yourself and your neighbors? What point would you realize that a HOA suing a homeowner is a bad choice on the HOA's behalf? HOA spending money to enforce a rule that fines equal less than legal costs to pursue?
All in all limiting rental property is a good idea but the practice is an entirely DIFFERENT thing... |
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Former HOA President |
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PeterD3
(Florida)
Posts:448
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| 02/21/2011 7:10 AM |
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We have 15 rental properties in a 98 home community.
You can't tell from the outside.
Why?
Enforcement of the docs. with special regard to exterior condition, appearance, etc. In fact I would say a few of the owner occupied homes look worse. |
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SandraM7
(Illinois)
Posts:6
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| 02/21/2011 7:25 AM |
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Hello this is Sandra.
I am sorry it took me a while to reply to your posts. I want to thank everyone of you for taking the time to give your input. I am still confuse and as most people stated I must review the associations rules and I did. It clearly states that from 2008 on only those who were renting before that year will grandfather rental rights and the building only has a 20% cap for rentals. Now my question is, when I bought the property it didn't have this limitations neither did it stated it was a possibility. Had this been the case, at 26 years old, I would have never purchased something I would have been tied up for life, with no possibility of renting. On the other hand, if I am being forced to sell for less than what the unit is worth, and on top of it all I have to disclose to future owners that they will be purchasing something they could never rent out than that limits me even more as a seller! I am so upset! all I wanted was to rent the unit and sell at a better economical time... Thanks! |
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JohnO6
(Georgia)
Posts:415
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| 02/21/2011 7:32 AM |
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Sandra -
IMHO, the best advice you received was from the first two replies to your original post (Brian and Lawrence). I would advise you to follow their guidance thoroughly as a first step.
If that doesn't bring favorable results, you may want to consult legal counsel. However, you'll need to find an attorney familiar with Community Association practice including state laws and prevailing case law in this area. That effort may seem costly right now, but compared against the real estate "beating" you might take, it's small indeed. |
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BonnieE
(Illinois)
Posts:331
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| 02/21/2011 7:33 AM |
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Hi Sandra,
I'm also in IL and in a condo. You probably missed my response & question due to the point-couterpoint that has been going on.
Please provide the excat anguage from your Declaration, Rules, etc. regarding rental restrictions. Then I/we can try to better answer your questions.
Thank you,
Bonnie
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LawrenceC1
(Georgia)
Posts:338
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| 02/21/2011 7:54 AM |
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Posted By SandraM7 on 02/21/2011 7:25 AM
Hello this is Sandra.
...when I bought the property it didn't have this limitations neither did it stated it was a possibility.
Sandra,
Was the leasing restriction established by a resolution of the board, or by following the process for amending your CC&Rs? If it was just a board resolution, it will not be as enforceable as an amendment. Even though the restriction may not have been part of the documents when you purchased your unit, any amendment that is made according to the legal process is just as binding on members as if it was written in the beginning.
As Bonnie asked, you should post the exact language of your restriction here on this thread. You should also post the amendment or resolution that established the new restriction. |
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