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Subject: Restricting Rentals
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DoloresC1
(Nevada)

Posts:1


05/11/2019 5:55 PM  
Can an Hoa put in a certain percentage of rentals vs ownership in their CCR'S and the bylaws? (Example) an established community of 6000 homes would like a limit of 30% to be rentals.
WayneN
(Florida)

Posts:21


05/11/2019 7:02 PM  
Our documents give the board to set a percentage of rentals allowed and we just did and set it at 10%. Grandfathered all existing owners
JimB37
(Florida)

Posts:54


05/11/2019 8:21 PM  
Guard that percentage and do not let it get away.
MelissaP1
(Alabama)

Posts:8408


05/11/2019 8:24 PM  
You can write rental restrictions all day every day in your documentation. Is it enforceable? Yes or no depending on your state's laws. Plus so what if you exceed rental percentages? What punishment will someone face? Restricting doesn't mean anyone faces any damages for doing so. That has to be put on a fining schedule and determined when it's violated.

Former HOA President
MelissaP1
(Alabama)

Posts:8408


05/11/2019 8:27 PM  
Computer messed up... A HOA is also a 3rd party to renting. I find the best policy isn't to "restrict" rentals as much as require owners to protect themselves/HOA. That is done by incorporating the renters MUST obey the HOA's rules. That is not in most rental agreements. Otherwise a renter can't be touched by the HOA or the owner for HOA violations. The HOA holds the owner responsible for violations. The owner if not written into the lease, can't evict tenant for HOA violations. Something to consider other than setting a percentage.

Former HOA President
CathyA3
(Ohio)

Posts:338


05/12/2019 6:19 AM  
If your governing docs (CC&Rs) don't address rental caps, and they don't explicitly give the board the right to set such a cap, then in order to impose one you need to amend your CC&Rs. This is a process that requires approval from the majority of homeowners (usually 66% to 75%, not 51%), and the approved amendment must be recorded with the county (same as with the CC&Rs).

So review your CC&Rs. As Melissa noted, a well-written rental restriction will include language that states renters must comply with the community's governing docs plus any rules and regulations. The restriction will also state that leases must be for a minimum length (6 months to a year is common), they must be in writing, and they must state that the owner of the unit is responsible for the conduct of his tenant.

At least in Ohio, the HOA/COA is not a party to the rental agreement. Our attorney has stated that there is no legal relationship between tenants and our COA, and all communication must go to the owner of the unit, not the tenant. Failure to maintain a hands-off approach can expose the association to the risk of a lawsuit from the owner for interference in a legal contract. I've read about other states where boards and property managers must not communicate with tenants for any reason whatsoever, not even for things like social events, so this seems to be a state-specific thing.

Based on personal experience and reading, the important part of a rental restriction is the limit on short-term, hotel type, or corporate housing. Again it seems to depend on your state whether you can forbid the Airbnb style rentals. Whether you can or can't, having such rentals definitely changes the nature of your community and changes the types of buyers your community will attract.
JeffT2
(Iowa)

Posts:479


05/13/2019 9:11 AM  
Yes, you can amend your CCRs to put a percentage cap on rentals (and many other rental restrictions), but with some conditions, such as existing owners will still be allowed to rent (so the new rental cap would apply to new owners).

When set up correctly, the HOA is not a disinterested third party to leases and may enforce the CCRs directly against tenants, including fining tenants directly (and collecting fines) without going through owners.

Any amendment, particularly rental restrictions would require the advice a lawyer, and it would help quite a lot if the lawyer has already done this for another HOA.
CathyA3
(Ohio)

Posts:338


05/13/2019 9:24 AM  
Posted By JeffT2 on 05/13/2019 9:11 AM
... When set up correctly, the HOA is not a disinterested third party to leases and may enforce the CCRs directly against tenants, including fining tenants directly (and collecting fines) without going through owners. ...




I agree that the HOA is not a disinterested party, but in my state any fines are imposed on the unit owner, not the tenant.
JeffT2
(Iowa)

Posts:479


05/14/2019 5:54 PM  
Posted By CathyA3 on 05/13/2019 9:24 AM
Posted By JeffT2 on 05/13/2019 9:11 AM
... When set up correctly, the HOA is not a disinterested third party to leases and may enforce the CCRs directly against tenants, including fining tenants directly (and collecting fines) without going through owners. ...




I agree that the HOA is not a disinterested party, but in my state any fines are imposed on the unit owner, not the tenant.


I don't doubt it. It is much, much easier to impose fines on owners compared to tenants in most states. But how do you know it is never done in Ohio? Is there a court case?

Consider this statement from davis-stirling.com for CA:
'CC&Rs will sometimes have a broad statement that the document is binding upon "each member, tenant, resident, and occupant" and each has a duty to follow the association’s governing documents. If so, penalties may be levied against tenants as well as owners for rules violations.'

If that can be done in CA without a specific state law, then why not in Ohio?

In Nevada the law specifically authorizes fines on rental tenants (when done properly).
MelissaP1
(Alabama)

Posts:8408


05/14/2019 6:35 PM  
It is a membership thing. You are NOT a member if you are a tenant/renter. The rules apply to your fellow members who are the homeowners. Hence why most HOA's punish the owner/member. They are the ones who are to make sure their property whether they live in it or not, is maintained to the rules.

Former HOA President
JeffT2
(Iowa)

Posts:479


05/14/2019 7:12 PM  
Posted By MelissaP1 on 05/14/2019 6:35 PM
It is a membership thing. You are NOT a member if you are a tenant/renter. The rules apply to your fellow members who are the homeowners. Hence why most HOA's punish the owner/member. They are the ones who are to make sure their property whether they live in it or not, is maintained to the rules.


Tenants/renters are occupants. As long as your documents say so, occupants cannot violate the rules. A lease does not give occupants the right to violate the CCRs. Most HOAs punish the owner because it is easier to do so.
MelissaP1
(Alabama)

Posts:8408


05/14/2019 9:32 PM  
Again it is NOT an "Easy" thing. It's the law/rule. A HOA goes after the owner because they are the member. An occupant/tenant/renter whatever you want to call it, is NOT a HOA member. Their agreement is NOT with the HOA. It's with the owner. Who is the member.

So if an owner does NOT have the agreement written into their lease that their tenant follow the HOA rules, then their hands are tied for any/all violations. Because of "Tenant's rights" you can't just evict a tenant or pass along the HOA fine onto your tenant. That isn't part of their "deal" in the lease. The lease terms need to identify they must follow the HOA or else. The tenant can violate a HOA rule, owner be punished, and not evicted if it's not identified as a term of the lease. That is why I always advice a HOA shouldn't concentrate on rental restrictions. They should make it a requirement to put in all leases to obey the HOA rules. It protects the HOA and the owner/member. Plus give the owner teeth to remove the tenant without violating Tenants' rights.

Former HOA President
CathyA3
(Ohio)

Posts:338


05/15/2019 6:41 AM  
Posted By JeffT2 on 05/14/2019 5:54 PM
Posted By CathyA3 on 05/13/2019 9:24 AM
Posted By JeffT2 on 05/13/2019 9:11 AM
...

I don't doubt it. It is much, much easier to impose fines on owners compared to tenants in most states. But how do you know it is never done in Ohio? Is there a court case?

Consider this statement from davis-stirling.com for CA:
'CC&Rs will sometimes have a broad statement that the document is binding upon "each member, tenant, resident, and occupant" and each has a duty to follow the association’s governing documents. If so, penalties may be levied against tenants as well as owners for rules violations.'

If that can be done in CA without a specific state law, then why not in Ohio?

In Nevada the law specifically authorizes fines on rental tenants (when done properly).




I'd stated earlier that things may be done differently in other states, and that's definitely the case here. You can't assume that what passes muster elsewhere would also pass muster in your own state.

Both our Declaration and our association's attorney say that fines are imposed on the unit owner. There is no language that gives the association the right to impose fines on anyone else, including guests, service persons, or any other invitee. The unit owner is held responsible for the actions of anyone that they invite onto our property.

This information is repeated in a number of places in the Declaration, including the rental restriction and in the section that covers remedies for the breach of covenants and rules.

Trying to impose fines on tenants would be asking for trouble in my neck of the woods.



JeffT2
(Iowa)

Posts:479


05/15/2019 9:31 AM  
Posted By CathyA3 on 05/15/2019 6:41 AM

I'd stated earlier that things may be done differently in other states, and that's definitely the case here. You can't assume that what passes muster elsewhere would also pass muster in your own state.

Both our Declaration and our association's attorney say that fines are imposed on the unit owner. There is no language that gives the association the right to impose fines on anyone else, including guests, service persons, or any other invitee. The unit owner is held responsible for the actions of anyone that they invite onto our property.

This information is repeated in a number of places in the Declaration, including the rental restriction and in the section that covers remedies for the breach of covenants and rules.

Trying to impose fines on tenants would be asking for trouble in my neck of the woods.





Thanks for your reply. I looked briefly at Ohio law for condos (not HOA). The law says (paraphrased):

Tenants shall comply with the CCRs, bylaws and rules.
Violations are subject to a civil action for damages, injunctive relief, court costs
and reasonable attorney's fees.
Tenants can be directly evicted by the association as agent for the owner.

The law says nothing about fining tenants, which I suspect is rare but not impossible. It would require amending documents, and may or may not pass a court challenge.
JeffT2
(Iowa)

Posts:479


05/15/2019 9:32 AM  
Nevada law, if it applies to this community, for fining tenants.

NRS 116.31031  ...the executive board may, if the governing documents so provide:
...(b) Impose a fine against the unit’s owner or the tenant or the invitee of the unit’s owner or the tenant for each violation …
RichardP13
(California)

Posts:3781


05/15/2019 10:11 AM  
I have been involved in restating governing documents for a number of HOA's. The newer ones I had been working on did involve punitive actions against the occupants, whether owners or tenants. It might involve specific language in the the lease agreement, what type of information was collected about the tenants, collection of rent if owner fell behind.

Smart lawyers will update their set of governing docs based on the successes of cases going through the court systems across the country.

You can't just give advice on what you may or may not have done in your complex. It is much bigger than that.

Been there, Done that
CathyA3
(Ohio)

Posts:338


05/15/2019 10:50 AM  
One argument against fining tenants is that the association doesn't have many options if the tenants don't pay. A tenant can break their lease and disappear. It would cost the association much more to pursue the tenants legally than the amount of the original fine, and with no guarantee that the association would prevail in court.

Personally I don't believe in having rules for which breaking them has no consequences. At least unit owners have skin in the game because they own their condos and the association place a lien on their property. (This also varies by state, I think. In Ohio we can lien and foreclose based on non-payment of fines. In fact our Declaration says that fines are considered assessments that are charged to the unit owner.)
RichardP13
(California)

Posts:3781


05/15/2019 11:30 AM  
If we go after the init with a tenant that has the proper set of governing docs, we go after tenant and the landlord. Again you have to have the right set of docs to do this.

Second, California does not allow the non-payment of fines to be used to create a lien or part of one. I am a firm believer of that rule. I have worked with two many vindictive Boards and individuals that don't care about due process.

If I were to take it to court it would only be in Small Claims unless it were for an eviction.

Been there, Done that
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