HOA townhomes, condos, and single-family homes alike may offer rental opportunities. In general, condominium associations have the greatest oversight among these categories, due to the significant number of shared walls and common areas. Because of this, it is common for condo associations to have property managers. Being a member of a homeowners’ association, and therefore an owner of a residence there, comes with certain rules. One set of rules is around renters. In this article, we’ll examine how it works to both have and be a renter in an HOA.
Do renters pay HOA fees?
HOA fees in associations vary depending on the magnitude of the common areas they oversee, and what amenities or maintenance they cover. Homeowners carry the financial responsibility of the HOA fees. The homeowner may pass this cost on to the renter as part of the monthly rental fee. But if the renter lapses in payment, it is still up to the homeowner to pay the mortgage and association fees. If HOA fees go unpaid, the homeowner could face foreclosure. The renter’s responsibility is restricted to what is in the lease. Here is an example of a condominium lease agreement suitable for Illinois outside of the city of Chicago.
Understanding HOA rules as a renter
It is the homeowner’s responsibility to communicate and enforce to the renter the rules and regulations of the association, and the renter is responsible for following them. The easiest way for the owner to communicate the rules is by sharing the document of HOA guidelines.
Communication between renters and the HOA
The HOA will reach out to the owner, not the renter, if they see the renter violate the rules. Or, if the HOA has a property management company, they will follow their typical process to notify them of violations. The property manager then provides a warning or fee to the homeowner. If there is a fee, the owner will be responsible for it. It is up to the owner to pass the fee along to the renter if they wish.
HOA rental restrictions
A condominium or other homeowners association can choose to implement rental caps or other HOA rental restrictions. It benefits the community to allow renters in that it can help prevent homeowners from defaulting on payments if their situation changes. However, rental restrictions may also be prudent. Legally acceptable reasons for rental restrictions can include intent to:
- maintain property values
- promote community standards
- keep the cost of liability insurance down
- maximize the number of residents invested in the community’s long-term success
- promote compliance with covenants, since renters have a higher rate of disobeying rules and regulations
Two common types of HOA rental restrictions are rental caps and lease restrictions. HOA rental caps limit the percent of homes within the property that can be rented at any given time. Around 20% is common. These are typically available on a first-come, first-served basis and require the homeowner to apply. If an association wanted to discourage purchases of properties within a development for investment, they could require the homeowner to live in the property for a year before renting as an additional or alternative regulation.
Lease restrictions are also common as a means of protecting the members financially. One restriction could be the length of leases allowed. An HOA may require a minimum lease length of six months or a year. Likewise they may limit to a maximum lease length before the owner and renter must re-apply. Christoper Moore, Esq. of the Homeowners Protection Bureau explains another type of lease restriction:
An association’s covenants might also make a renter’s compliance with community standards a mandatory term of every lease, thereby granting the landlord authority to evict a non-complying tenant.
Can the HOA evict renters?
While it can implement rental restrictions, an HOA cannot evict renters. Like with rule enforcement, the homeowner is the responsible party. So, it is up to the homeowner to put in the lease agreement that if the tenant fails to comply with HOA rules or defaults on payments, the landlord can enforce fines and eviction. An HOA or the property management company may choose to review leases to avoid any problems, but requiring this language is optional.
It is in a landlord’s best interest to educate themselves on preventing rental issues and take prevention matters into their own hands.