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Subject: HOA Rental Restriction in Louisiana
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CathyG3
(Louisiana)

Posts:1


09/13/2017 11:49 AM  
Does anyone know if Louisiana has a rental restriction policy for HOAs?
75 town homes and we are at 25% rentals now, hoping we can amend Covenants to cap at 25%.
Thank you
MelissaP1
(Alabama)

Posts:6650


09/13/2017 3:32 PM  
Do not know for that specific state. However, if you amend your convenants for such restrictions, make sure there is a punishment in place to enforce. Having a restriction isn't the same as enforcing one. Will you fine? Will there be a hardship clause? How do you know the home is a rental or not?

BTW: The best solution so far. Make sure the owners put in their lease agreements to follow the HOA rules. It protects everyone involved. This condition is not in most lease agreements and has to be added.

Former HOA President
TimB4
(Virginia)

Posts:14509


09/13/2017 3:43 PM  
Expecting that you are not a condominium project, per RS 9:1141.6 you will need 2/3 of the membership to agree to this (hence it has to be within the CC&Rs).

GwenG
(Florida)

Posts:488


09/13/2017 4:05 PM  
CathyG3: You should be looking at your Covenants to determine if the HOA has any restriction on rentals, first.

If it has no restrictions, you might look further at the statute, but it is my experience that this would be an internal corporate affair of the HOA and the state would only be concerned with fair housing issues and due process.

If the Covenant has restrictions, be aware that if challenged by those who do not agree to a new, retroactive CAP on rentals, it may cost the HOA a lot of money to litigate. Case law has not prevailed for HOA's with regards to enforcing new (amended) restrictions under existing contracts. HOA's must be very careful not to impair the contractual rights of others who accepted then-existing restrictions on property use attached to their deed.

Such a "cap amendment" would in fact place unilateral new property restrictions on owners if they relied on the rental provision (or absence thereof) in the Covenants when they accepted the deed. If there is already a "cap" on rentals in the Covenants, then changing it through an amendment may or may not be acceptable from a legal standpoint but then a new set of problems will emerge. Who plays Solomon and enforces a cap? Who gets chosen to rent and who is forbidden because they were "capped out"?

I would not go down this road-it sounds expensive and divisive.

Melissa make a fantasy suggestion: ie that the problems of rule-violating renters will be solved by having the lease say tenants have to comply with HOA rules. This is a dubious proposition. If there is no authority for the HOA to approve leases, what owners put in their leases is none of the HOA's business. If the owners do include an HOA rules clause in the lease, the tenants still have the option and the owner is left to deal with the HOA and decide which is more trouble--the tenants or the HOA. It will come down to "evict your tenant" or deal with a grouchy HOA. If I am an owner-investor, I have a lease and income on my real estate, landlord-tenant laws, fair housing laws and would probably choose to spar with the HOA.



MelissaP1
(Alabama)

Posts:6650


09/13/2017 4:35 PM  
Gwen reality check here. As a former landlord in a HOA, it's best to protect yourself by having the renters obey the HOA rules. Why? Because the HOA is going to hold you the owner to the rules your renters violate. Considering there is a thing called "Tenant's rights". A owner can't kick a tenant out of their home for violating the lease IF that condition is NOT written in said lease.

Example: The renter leaves the trash can out after garbage pick up days. This is a HOA violation. The HOA has to go to the owner and fine them for leaving the Trash can out. Well if the lease agreement does not have this written into the lease to obey the HOA rules, then how can the owner pass on the punishment to the tenant? The HOA can't fine the tenant. The owner can't make the tenant pay it. The owner can't evict the tenant if condition not a reason for eviction.



Former HOA President
GwenG
(Florida)

Posts:488


09/13/2017 6:58 PM  
Pretty straightforward stuff. As one who has been a Landlord, Tenant HOA Owner-Resident and Landlord, I appreciate the positions of all. My point is to not invite others to any fantasyfest that HOA and Owner-Landlord have a smooth ride by including HOA rules in the Lease. Owners choose the most irritating agent and respond to that at any point in time. Typically, Landlord can't evict a Tenant and must wait until the Lease term has expired-so everyone must suffer.

Rules are just suggestions until someone suffers a meaningful consequence. The REALITY is that the law protects Tenants and Landlords can't just toss them to the curb because they break HOA rules. This is a good reason for a Landlord to NOT incorporate 3rd party HOA rules into a lease! What happens when the Board du Jour changes a rule? The Landlord has to amend the lease. No thank you. Landlords choose their rules to avoid trying to get tenants to sign a 2 page lease with 3 pages of rules attached.

Owner-investors are not likely to be as responsive to HOA violation letters as Owner-Residents are. Why? Owner-investors simply wrap any monetary fine into the cost of doing business and recapture their costs in future rents.
SheliaH
(Indiana)

Posts:1889


09/13/2017 8:43 PM  
Which is why so many HOAs have trouble with tenants and are talking about rental caps in the first place, if not trying to ban them altogether!

We have A LOT of rentals in our townhouse community and when I was on the board, we tried to get a rental cap for that reason. WE were also concerned that owner occupants (like me) might have trouble selling if the community was full of rentals, thus hurting property values. As you know, many people try to avoid areas with a lot of rental properties in the neighborhood because of the problems tenants cause and they're never addressed by the owner-landlords who don't care what happens as long as the rent check clears.

In many HOA documents, there's language that says the owners are ultimately responsible for the conduct of their visitors and household members anyway, so having a clause in the lease stating the tenant must abide by the rules protects the owner too. Who wants to rent to someone who makes the neighbors crazy, trashes the place and then leaves without paying? That's the downside of renting and if you're in a HOA, you're responsible for any damage to the common areas caused by negligence or abuse committed by you, your household members or visitors. Or tenants.

Of course, the HOA can't kick out the tenant unless the documents contain that language and even then I would think a court would expect it to hammer the owner because if he/she didn't rent the place to the tenant, there wouldn't be any problems. So, the HOA has to do what's in the best interests of the entire community, not just those who bought the place so they could rent it out. If they didn't want to comply with HOA rules, why in the hell did they buy in that community in the first place? I don't give two damns if a landlord has to add a page or two or three to his/her lease requiring a tenant to behave - if that cuts into his/her profits, oh well. Maybe that'll encourage the landlord to take more time in doing some sort of due diligence to get a better idea of what's about to come.

As you can see, this is an issue that really gets me riled up. Owner-occupants who can't/refuse to play well with others are bad enough, but the ones who bring in the riffraff are even more annoying, so whatever can be done to keep EVERYONE in check is ok with me.
GwenG
(Florida)

Posts:488


09/14/2017 8:53 AM  
As an on and off Landlord over the last 40 years--in association communities and not--I have found two realities that cannot be avoided:

1-Tenants play the rental game much more knowledgebly and with great protections than Landlords and,
2-HOA's and Condos march progressively toward a rental community as they age.

Associations can try to close the barn door with amendments and such but the turnover of older communities to renters is inevitable. Landlords can try to get tenants that do not burden them or or their property or pose a problem in a community but the reality is, you can only do so much when your tenant is well-protected by law and tenants need housing and will do what they need to do to get it.

Best solution is for buyers to remove the rose-colored glasses at the front end; if they intend to live "cradle to grave" in a community, buy in one with Covenant rental restrictions in place.
TimM11


Posts:81


09/14/2017 10:07 AM  
Posted By GwenG on 09/14/2017 8:53 AM

Best solution is for buyers to remove the rose-colored glasses at the front end; if they intend to live "cradle to grave" in a community, buy in one with Covenant rental restrictions in place.




Even going beyond rental restrictions, I think people need to understand that very few neighborhoods (HOA or not) remain the same decade after decade. Too many people buy homes and expect nothing to change, ever. I know I've been frustrated with this in my HOA.
JanetB2
(Colorado)

Posts:3355


09/14/2017 8:54 PM  
Posted By CathyG3 on 09/13/2017 11:49 AM
Does anyone know if Louisiana has a rental restriction policy for HOAs?
75 town homes and we are at 25% rentals now, hoping we can amend Covenants to cap at 25%.
Thank you


Your answer if available will be found in your governing documents. If you want to amend now you most likely need to AMEND your current governing documents. Potentially you would have had a better chance if you had tried to Amend before your reached your 25% goal. If you are at your maximum desired rentals at this time you will have hard time getting other owners to agree (especially if they have potential upcoming issues with plans to rent). Essentially others may have been considering renting in the near future and will not want this changed at this time. Potentially to get something passed now you may need to increase your rental percentage allowed.
GwenG
(Florida)

Posts:488


09/15/2017 8:25 AM  
Keep in mind if there is NO CURRENT CAP on rentals in your governing documents or restrictions on leasing units, it will be extremely difficult to "amend" what is a new restriction on rentals. Even if passed, such a restriction will likely not apply to those existing owners who do not agree. It's casually called "grandfathering" but it essentially exempts those owners who do not agree to an additional restriction on their property. Associations should get competent attorney advice to make sure that such a restriction is permitted by the Declaration.

There is case history on this and it could be an expensive lesson to associations.

"Please note, however, that the ability of Condominium HOAs to restrict rental activity may be curtailed. Arizona Revised Statutes (A.R.S.) §33-1227 states:

Except to the extent expressly permitted or required by other provisions of this chapter, an amendment shall not create or increase special declarant rights, increase the number of units or change the boundaries of any unit, the allocated interests of a unit or the uses to which any unit is restricted , in the absence of unanimous consent of the unit owners. Therefore, if a Condominium's CC&Rs currently allow a unit to be rented, then included in the allowed “uses” of the unit is rental activity. As such, any change to that “use” may be subject to the restrictions of A.R.S. 33-1227(D) requiring the approval of 100% of the unit owners to amend the CC&Rs to remove the ability to rent a unit (please note that this applies to Condominium Association subject to the Condominium Act meaning, the Condominium was established after January 1, 1986). "


JeffT2
(Iowa)

Posts:338


09/15/2017 5:42 PM  
Posted By GwenG on 09/15/2017 8:25 AM
Keep in mind if there is NO CURRENT CAP on rentals in your governing documents or restrictions on leasing units, it will be extremely difficult to "amend" what is a new restriction on rentals. Even if passed, such a restriction will likely not apply to those existing owners who do not agree. It's casually called "grandfathering" but it essentially exempts those owners who do not agree to an additional restriction on their property. Associations should get competent attorney advice to make sure that such a restriction is permitted by the Declaration.

There is case history on this and it could be an expensive lesson to associations.

"Please note, however, that the ability of Condominium HOAs to restrict rental activity may be curtailed. Arizona Revised Statutes (A.R.S.) §33-1227 states:

Except to the extent expressly permitted or required by other provisions of this chapter, an amendment shall not create or increase special declarant rights, increase the number of units or change the boundaries of any unit, the allocated interests of a unit or the uses to which any unit is restricted , in the absence of unanimous consent of the unit owners. Therefore, if a Condominium's CC&Rs currently allow a unit to be rented, then included in the allowed “uses” of the unit is rental activity. As such, any change to that “use” may be subject to the restrictions of A.R.S. 33-1227(D) requiring the approval of 100% of the unit owners to amend the CC&Rs to remove the ability to rent a unit (please note that this applies to Condominium Association subject to the Condominium Act meaning, the Condominium was established after January 1, 1986). "




Why would that apply to Louisiana?

I have heard of rental restrictions being added in other states. I think AZ is in the minority of states that don't allow more restrictive CC&Rs.
GwenG
(Florida)

Posts:488


09/15/2017 6:19 PM  
Most states have "similar" case rulings; indeed, other states' caselaw is accessed routinely for use in making arguments (which may or may not be supportive to a point of argument). This one came up closest to the search terms.

OP can take it or leave an AZ case as an example of what other courts have ruled on the question.
JeffT2
(Iowa)

Posts:338


09/16/2017 8:53 AM  
Posted By GwenG on 09/15/2017 6:19 PM
Most states have "similar" case rulings; indeed, other states' caselaw is accessed routinely for use in making arguments (which may or may not be supportive to a point of argument). This one came up closest to the search terms.

OP can take it or leave an AZ case as an example of what other courts have ruled on the question.



It strikes me as unlikely that most states do not allow CC&Rs to become more restrictive.... but I do not have time to find 26 states that allow it to prove the point. Here is one article that lists court cases from many states that do allow rental restrictions to become more restrictive:
https://www.davis-stirling.com/Main-Index/Rental-Case-Law

For Cathy, it is possible either way.
JeffT2
(Iowa)

Posts:338


09/16/2017 12:42 PM  
Find another association in Louisiana that has rental restrictions. Find an attorney who has done this before.

A rental cap will not affect current rentals.

It will help to convince current owner-landlords that new restrictions will help prevent decline and maintain the value and rental-income of their town-homes. You need to win over these owners.

Google hoa lease addendum (or condo lease addendum) for examples of having tenants follow the rules in the lease. You also have to convince owner-landlords that this will help them avoid problems and fines.

I'm not buying Gwen's idea that more restrictions will not hold up in court. Just find an knowledgeable attorney.
GwenG
(Florida)

Posts:488


09/16/2017 1:22 PM  
The "idea" is simple and is the difference between an "amendment" correcting or clarifying a Covenant and a "new" property restriction covenant that would diminish property rights previously conveyed by deed.

Example of the "idea": an amendment limiting pets previously granted by Covenants without qualification can be easily amended to limit #, size, weight etc. But, the "amendment" could not prohibit pets altogether. That would be a New property restriction requiring 100% consent of members.

Even if "more restrictive" is allowable by statute, it does not preclude an owner who believes their property rights have been taken away from taking the HOA/condo to court. Whatever "more restrictive" covenant is contemplated should take the possible consequences into account. Is the 'juice is worth the squeeze' when it all comes apart with future litigation and subsequent problems getting D & O insurance?

If the governing documents have rental restrictions, then rental amendments can be made as long as they do not materially impair property rights. Covenants should not be amended without very serious thought by the PEOPLE who will pay the tab for the decision-not just the HOA attorneys that are only too happy to lend a hand and pick up the billing hours years later.

With all that has been said, OP has not yet responded if her governing documents have a rental restriction, so this conversation cart is waaaay before the horse.
GenoS
(Florida)

Posts:1446


09/16/2017 8:11 PM  
My CCRs are schizo on the subject. They say an owner shall have "the unrestricted right to rent his home", and then goes on to spell out some very significant restrictions.
JanetB2
(Colorado)

Posts:3355


09/16/2017 11:27 PM  
Posted By JanetB2 on 09/14/2017 8:54 PM
Posted By CathyG3 on 09/13/2017 11:49 AM
Does anyone know if Louisiana has a rental restriction policy for HOAs?
75 town homes and we are at 25% rentals now, hoping we can amend Covenants to cap at 25%.
Thank you


Your answer if available will be found in your governing documents. If you want to amend now you most likely need to AMEND your current governing documents. Potentially you would have had a better chance if you had tried to Amend before your reached your 25% goal. If you are at your maximum desired rentals at this time you will have hard time getting other owners to agree (especially if they have potential upcoming issues with plans to rent). Essentially others may have been considering renting in the near future and will not want this changed at this time. Potentially to get something passed now you may need to increase your rental percentage allowed.


Another issue is does the HOA want to pursue this avenue ... after all if an owner is in financial trouble ... would it be best to be able to rent a unit and be able to PAY the HOA assessments vs. NOT having money to pay assessments due to any financial issue? Potentially this is a question your HOA needs to ask themselves.
GwenG
(Florida)

Posts:488


09/17/2017 12:18 PM  
Yes, Janet is looking at the problem "broadly" and not knee-jerking a drastic "solution" and creating more problems down the road.

This situation needs a title search to determine if the member indexed the parcels to the faux Covenants. If the title search cannot find anything attached to a parcel, it doesn't exist. End of story.

If it IS attached and discoverable on a title search, the titles need to be "quieted". The member would then be guilty of a crime against every title in the subdivision and should be hauled into court and pay the damages.

This should be easy to find out by simply looking at a purchaser's title search anytime after 2013 or paying $300 for a title search. This will have to be done anyway if a title suggests that it has been slandered by invalid Covenants and a lawsuit is brought.

This could be a teaching moment to Members; there are legal consequences and harm to people at the hands of neighbors who don't know what they are doing. When this impacts property title, it is very serious and potentially costly to the individual and the HOA.
JanetB2
(Colorado)

Posts:3355


09/18/2017 7:58 PM  
Posted By GwenG on 09/17/2017 12:18 PM
Yes, Janet is looking at the problem "broadly" and not knee-jerking a drastic "solution" and creating more problems down the road.

This situation needs a title search to determine if the member indexed the parcels to the faux Covenants. If the title search cannot find anything attached to a parcel, it doesn't exist. End of story.

If it IS attached and discoverable on a title search, the titles need to be "quieted". The member would then be guilty of a crime against every title in the subdivision and should be hauled into court and pay the damages.

This should be easy to find out by simply looking at a purchaser's title search anytime after 2013 or paying $300 for a title search. This will have to be done anyway if a title suggests that it has been slandered by invalid Covenants and a lawsuit is brought.

This could be a teaching moment to Members; there are legal consequences and harm to people at the hands of neighbors who don't know what they are doing. When this impacts property title, it is very serious and potentially costly to the individual and the HOA.


Gwen ... What the heck are you discussing??? "Faux Covenants"??? Titles needing to be "quieted" ... really? Members guilty of a crime??? OMG ... for real ... when the OP is simply asking about simply limiting the number of rentals in the HOA???
GwenG
(Florida)

Posts:488


09/18/2017 9:09 PM  
Someone woke up grumpy.
JanetB2
(Colorado)

Posts:3355


09/19/2017 12:21 AM  
Posted By GwenG on 09/18/2017 9:09 PM
Someone woke up grumpy.


LOL .. I believe someone woke up potentially not comprehending what was being discussed ... then is trying to change the subject.
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