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Can Condominium Association Restrict Rentals?

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rated:
I'm looking at condo documents for a property in VIRGINIA.  The question: Is the condo board acting legally, or is it a runaway board exceeding its authority? 

The condo association is asserting a restriction that prevents owners from leasing their units if more than 35% units are already rented.  This restriction is in a condo board "Policy Resolution" and has never been voted on by the owners, nor is it an amendment to the recorded declarations.  Because the policy resolution was made years after the condo building was built, the current percentage of rented units is well over 35% and current owners when the resolution was made were grandfathered without the restriction.  

My question is: Is this a legal restriction?  The board asserts it can do this because the recorded declaration bylaws generally give the board administration powers [1-below]   and the recorded bylaws contain some limited restrictions on leasing: No leases less than 1 year and leases must be in writing containing some language favorable to the condo association [2-below].  The declarations do not give the board explicit power to restrict an owner completely from leasing their unit.

My understanding is that in Virginia, association boards only have powers to do what is explicitly granted in the recorded covenants and declarations, and taking away owner rights would require owners to vote to amend these documents.  This association needs 67% or 51% of owners to amend the documents, depending on the type of change.

Virginia community association case law in recent years has restricted what Boards can do.  Can the board of this condo legally restrict owners from leasing without amending their declarations?  
 
 
 
References:

[1] The Board of Directors shall have all of the powers and duties necessary for the administration of the affairs of the Unit Owners Association and may do all such acts and things as are not by the Condominium Act or the condominium instruments required to be exercised and done by the Association.

[2] No unit shall be used or occupied for (i) transient or hotel purposes or (ii) in any event for an initial period of less than one year. No portion of any unit (other than the entire unit) shall be leased for any period; provided, however, that a reasonable number of roommates is permitted. No unit owner shall lease a unit other than on a written form of lease: (i) requiring the lessee to comply with the condominium instruments and rules and regulations; (ii) providing that failure to comply constitutes a default under the lease, and (iii) providing that the Board of Directors has the power to terminate the lease or to bring summary proceedings to evict the tenant in the name of the lessor after forty-five days prior written notice to the unit owner, in the event of a default by the tenant in the performance of the lease. The Board of Directors may suggest or require a standard form lease for use by unit owners. Each unit owner shall, promptly after entering into any lease of a condominium unit, forward a conformed copy of the lease to the Board of Directors. The foregoing provisions of this paragraph, except the restriction against use or occupancy for transient or hotel purposes, shall not apply to the Association, the Declarant, or a Mortgagee in possession of a unit as a result of foreclosure, judicial sale or a proceeding in lieu of foreclosure.

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rated:
Yes it is legal to restrict rentals. But only after the recorded documents have been changed. Were the current rules created prior to these new laws going into affect?

http://www.wtplaw.com/documents/2015/05/just-the-facts-virginia-...

rated:
This type of restriction (limit the number of rentals as a %) is quite common.

I have not heard of an owner challenging the HOA about it.

Something to think about. If you successfully challenge the HOA, the HOA may have to pay your legal fees, besides their own legal fees. You will pay your share of that. And so will all the other owners. They are really going to like that. Not.

So, once you won that challenge and place a renter in your unit, be prepared to get a lot of problems. Renter not following parking restrictions, renter decorating using the wrong color of window treatment, renter left garage door open after 9pm, renter did not pull the weeds, trashcans visible after collection, renter has dogs in backyard that attract flies (a proven lie!), renter this, renter that. You are going to lose, just much later.

Yes, I got letters about each of these violations. And I did not even enter a legal battle with the HOA. I don't want to think about how many letters I would have gotten after a lawsuit.

But I know one more thing. Different property, also in HOA. One owner sued the HOA about bad quality of roof repair. 21 owners there. Until said member committed suicide (hopefully unrelated!) ~3 years later, we referred to this person as the lawsuit person, and a few other words that I don't want to post here.

Let's just say that this person won the suit, the HOA bled $120k from reserves, we all had a special assessment, and the neighborly relations were soured.

rated:
It sounds like the Board is trying to keep more owners from leasing their units but they can't get enough votes to pass it.

rated:
ptiemann said:   This type of restriction (limit the number of rentals as a %) is quite common.

I have not heard of an owner challenging the HOA about it.

Something to think about. If you successfully challenge the HOA, the HOA may have to pay your legal fees, besides their own legal fees. You will pay your share of that. And so will all the other owners. They are really going to like that. Not.

So, once you won that challenge and place a renter in your unit, be prepared to get a lot of problems. Renter not following parking restrictions, renter decorating using the wrong color of window treatment, renter left garage door open after 9pm, renter did not pull the weeds, trashcans visible after collection, renter has dogs in backyard that attract flies (a proven lie!), renter this, renter that. You are going to lose, just much later.

Yes, I got letters about each of these violations. And I did not even enter a legal battle with the HOA. I don't want to think about how many letters I would have gotten after a lawsuit.

But I know one more thing. Different property, also in HOA. One owner sued the HOA about bad quality of roof repair. 21 owners there. Until said member committed suicide (hopefully unrelated!) ~3 years later, we referred to this person as the lawsuit person, and a few other words that I don't want to post here.

Let's just say that this person won the suit, the HOA bled $120k from reserves, we all had a special assessment, and the neighborly relations were soured.

  
I understand an association can restrict rentals.  But can a board in Virginia legally assert power to do so in a simple board matter without amending the recorded declarations? 

rated:
My wife is the sec/treasure of our condo association. In the condo rules which are legally filed with the court, it clearly states that a property can be rented, but only if they submit an application and it is approved by the directors. Owner occupied is encouraged.

our rules also contain pet permits as well, anyone who wants to have a pet must get the ok of the board, and meet size and # restrictions.

It would take a 3/4 vote to change any rule in our documents. I like our rules. The next person may not like them.

Anyone looking at buying a condo or a house in an association, should get rules and make sure you can live within them. They protect the owners from those who seek to ruin the peace and safety of their investment.

rated:
It's not only the HOA you have to sorry about, if you want a mortgage the banks also have a similar rule

rated:
Financing will be an issue if to many units are rented out vs owner occupied. 

At least 51% of the units in the project must be owner-occupied. There are other restrictions you probably want to know about, such as:

No single entity may own more than 10% of the units in a project. For condominium projects having more than 30 units, no more than 10% of the units may have FHA insured loans at any given time. Condominium projects consisting of 30 units or less can have up to 20% of the units financed with an FHA insured mortgage under the spot loan rule.

This straight out of the FHA rules.


Let your condo rentals get out of hand and purchasers will not be able to get financing which will lower their value... Easy financing helps raise prices.. 
 

rated:
In Floridah...if you live in a HomeOwner association...your rights are to send in your check forever...that's it.

rated:
When they enact the rental restriction your condo will lose an easy 25% in value. It happened in South Texas at the beach.

rated:
ptiemann said:   So, once you won that challenge and place a renter in your unit, be prepared to get a lot of problems. Renter not following parking restrictions, renter decorating using the wrong color of window treatment, renter left garage door open after 9pm, renter did not pull the weeds, trashcans visible after collection, renter has dogs in backyard that attract flies (a proven lie!), renter this, renter that. You are going to lose, just much later.
 

  You forgot in your example when the renter parks Unregistered vehicles and gets notices ignored and towed.
(Lets see who gets the reference)

rated:
whudgens1 said:   When they enact the rental restriction your condo will lose an easy 25% in value. It happened in South Texas at the beach.
  I would think they would ncrease in value as property value goes down with increase in renters.

rated:
dynocarrot said:   
ptiemann said:   This type of restriction (limit the number of rentals as a %) is quite common.

I have not heard of an owner challenging the HOA about it.

Something to think about. If you successfully challenge the HOA, the HOA may have to pay your legal fees, besides their own legal fees. You will pay your share of that. And so will all the other owners. They are really going to like that. Not.

So, once you won that challenge and place a renter in your unit, be prepared to get a lot of problems. Renter not following parking restrictions, renter decorating using the wrong color of window treatment, renter left garage door open after 9pm, renter did not pull the weeds, trashcans visible after collection, renter has dogs in backyard that attract flies (a proven lie!), renter this, renter that. You are going to lose, just much later.

Yes, I got letters about each of these violations. And I did not even enter a legal battle with the HOA. I don't want to think about how many letters I would have gotten after a lawsuit.

But I know one more thing. Different property, also in HOA. One owner sued the HOA about bad quality of roof repair. 21 owners there. Until said member committed suicide (hopefully unrelated!) ~3 years later, we referred to this person as the lawsuit person, and a few other words that I don't want to post here.

Let's just say that this person won the suit, the HOA bled $120k from reserves, we all had a special assessment, and the neighborly relations were soured.

  
I understand an association can restrict rentals.  But can a board in Virginia legally assert power to do so in a simple board matter without amending the recorded declarations? 

  

The bylaws of a HOA are a binding contract on the owners who are subject to it and the people who run it.  If the bylaws are amended, they must be amended exactly how prescribed in the contract, not on the whim of the officers of the HOA.  If you want to throw a halt to the changes,  spend a few bucks on a lawyer and have them write a letter to the members of the board reminding them that they cannot unilaterally change the terms of  a contract just because they want to.

 

rated:
bopc1996 said:   
whudgens1 said:   When they enact the rental restriction your condo will lose an easy 25% in value. It happened in South Texas at the beach.
  I would think they would ncrease in value as property value goes down with increase in renters.

   there's going to be a glut of condos on the market due to the LLs getting out and selling
Because the policy resolution was made years after the condo building was built, the current percentage of rented units is well over 35% and 

rated:
I would keep looking. You will bleed yourself to death dealing with an HOA and a rental. If it sounds like a hassle, it probably wouldn't be a good rental.

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