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Preventing Homeowners’ Association Rental Issues

We’ve previously written about how to handle delinquent tenants and how to deal with bad renters. Here we dive deeper into how to prevent rental issues in condo and homeowners’ associations.

It starts with a rental cap

We previously gave guidance on how to have your homeowners’ association rental restrictions include a rental cap. Another route is to use a Grandfathered Rule. If you want to begin enforcing homeowners’ association rental restrictions, you can restrict future renting but grandfather in existing renters. Specifically, allow owners who are currently renting to continue even though a “no more renting” rules goes into place. But when their unit sells, the new owner would not be allowed to rent. You can also use this rule to bridge the gap from your current state to a future state of only, say, 20% of units rented.

Preventing issues

Below is a list of homeowners’ association rental restrictions that dramatically cuts down any future renter issues that could otherwise arise.

  1. Require updated lease agreements annually. To be even stricter, consider forcing each renter to re-apply for their lease upon each yearly renewal. Create a policy to enforce with fines, and ultimately eviction.
  2. Consider what documentation to collect at that annual juncture in order to prevent issues. For example, collect updated proof of insurance. Other documentation to consider:
    • credit check
    • background check
    • pet details
    • car details
    • crime or drug policy commitments
  3. Do not have your board or property managers deal with renters directly. Use warning letters and fines to communicate issues with owners. The association is not responsible for the well-being of the renter. That responsibility falls on the unit owner.
  4. Allow renters to attend HOA meetings, but do not allow them to speak up, vote, or complain.

Inform buyers of rental restrictions

It is important to inform new buyers of the homeowners’ association rental restrictions before they make their purchase decision. Be sure to tell realtors if there are rental caps. This prevents angry owners later.

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