Last updated on June 14th, 2024 at 06:02 am
HOAs exist to ensure that their communities’ common areas are properly maintained and that guidelines specific to the community are adhered to.
What is a Homeowners Association
A homeowners association is an entity created by developers or property owners residing in a residential community.
It enforces rules and regulations now known as covenants, conditions, and restrictions with the intent of keeping its community in good appearance, quality, and value.
Powers and Responsibilities
Homeowners associations have the authority to adopt and enforce rules to the community.
In general, such rules address a wide range of topics, such as architectural standards, landscaping, noise restrictions, and parking regulations.
HOAs also usually manage communal common areas like parks, swimming pools, and common facilities.
CC&Rs: Significant Requirements
CC&Rs, or the governing documents of an HOA, enumerate the rules and restrictions that must be followed by all the homeowners.
They are legally enforceable and serve to protect the interests of all the residents in the community.
CC&Rs are created when the community is established and can only be changed through an approved process involving homeowner agreement.
HOA Boards and Decision-Making
Typically, HOAs have a board of directors that acts in the interest of the homeowners and is composed of members elected by the homeowners.
The board is ultimately responsible for all decisions regarding policies of the community and enforcement of the CC&Rs.
There are regular meetings of the Board to address important issues, or other concerns, and to vote for changes or amendments to the governing documents.
How HOAs Can Affect Renting Your Home
Among the many questions about HOA’s. Short answer It will be a function of the specific governing documents of the HOA, along with state laws and regulations.
Rental Policies: Most HOAs do in fact have policies governing, or even forbidding a home’s rental.
These may include, but are not limited to, rental caps, minimum lease terms, or, in certain cases, prohibiting short-term rentals altogether.
We have such policies in place, basically, in order to maintain stability, property values, and, of course, the overall quality of life and well-being for everyone in the community.
Types of Rental Restrictions
These-restrictions that keep under-desired character and atmospheres at bay-are unique to each HOA.
Rental Cap: Actually, there are some HOAs which have a rental cap. That is, the number or percentage of homes may be rented at a given time.
This is for providing assurance that the community remains majorly owner-occupied and to avoid too many rentals of houses in the neighborhood.
Some communities will, upon an owner’s request for rental, place a home on a waiting list or perhaps require approval from their HOA board.
Approval of Rentals: Many times, an owner will be required to get approval from the HOA before they can rent.
The association uses the approval process so that the people renting the home are a good fit for its community. They are made to comply with the set rules and regulations of the association.
Rental Restrictions for Specific Purposes: HOAs might also adopt rental restrictions for specific purposes, like restrictions on short-term rentals or ban rentals.
Legal Considerations and State Laws : HOAs can establish its rules and regulations in their communities, but as mentioned earlier, HOAs are still bound by certain legal constraints or limitations.
State Laws and Fair Housing Acts: Each state may have specific statutes that address rental restrictions imposed by HOAs.
Also, federal fair housing acts have a ban on discrimination based on certain protected classes like race, color, national origin, familial status, and much more.
One should ensure that any rental restrictions put forward by the HOA are in compliance with these acts.
Governing Documents and Rental Policies: HOAs are usually governed under a set of documents like bylaws, covenants, conditions, and restrictions, commonly known as CC&Rs. These documents may lay down rules and regulations regarding the community.
These documents may include any provisions on rental restrictions, minimum period of leasing, rental caps, and the procedures on leasing.
Enforcement.
In case of violation of the restrictions, there may be some disciplinary action or a fine.
Methods: The methods may vary from one HOA to another. The enforcement methods may include, among others, the requirement for a lease agreement, enactment of a waiting list for rentals, and rental cap.
State and Local Rental Laws: These can be about, for instance, landlord-tenant relationships, standards of health and safety, termination of tenancies, security deposits, and so forth.
HOA Approval Process for Rentals
Examine the Governing Documents: Homeowners must examine how the HOA handles applications.
The very first thing that the homeowner should do is examine the HOA’s governing documents.
These often include the CC&Rs or the bylaws of the association.
Application Where Required: The majority of HOAs do require a homeowner to application for approval to rent out their home.
This will include information regarding the prospective tenant to include contact details, employment history, and also references. Some associations may also require a background check or credit report.
Attend Board Meetings: After submission, homeowners can be requested to attend a board meeting where the rental application is heard.
Await Approval or Denial: If approved, homeowners may need to sign an additional lease agreement or comply with any additional requirements set forth by the HOA.
Possible Consequence of Violating Rental Restrictions
Fines and Penalties: The majority of HOAs can fine a homeowner who rents their property in violation of the Rental Policy.
These fines can range from minor monetary penalties to substantial amounts, potentially adding up over time.
Legal Action: In cases where violation is considered a more significant offense, then the HOA can initiate legal action against a homeowner for renting their property in violation of the association’s rules.
This can include costly litigation, which can result in serious and long-lasting financial and emotional harm.
Injunctions: In certain situations, a HOA can request that an injunction be issued which will cease all rental activity at the offending homeowner’s property.
This type of legal action would legally prevent the homeowner from renting out their home until such time they come into compliance with the rental restrictions.
Disciplinary Actions: HOAs may impose disciplinary actions on errant homeowners who rent out their properties.
Disciplinary actions range from merely issuing a warning via notices or reprimands to more drastic measures such as the revoking of privileges or even suspension of individual voting rights within the HOA.
Damaged Property Value: The kind of buyers mentioned above might avoid purchasing a home in an HOA that contains numerous rental properties or uneven rental policies.
It means that, in this case, the overall property values can decrease; therefore, all the community homeowners will suffer from getting low resale values of houses.
Balancing Homeownership Rights
Nagivating Short-Term Rental Bans: With the rise of online platforms like Airbnb and VRBO, short-term rentals have become increasingly common in recent years.
The trend has generated debates within HOAs about whether this kind of rental is allowed.
Some of those HOAs have simply outlawed short-term rentals altogether, with increased traffic, noise levels and security issues among the reasons cited.
Final Thoughts
Despite the increasing popularity of renting out homes as an additional source of income, HOAs have the power to impose certain limitations.
While HOAs generally aim to protect property values and maintain the quality of the neighborhood, it’s essential to familiarize yourself with their specific regulations.
Have a property you want to sell in an HOA for cash?
By reviewing the HOA’s governing documents and consulting with legal professionals specializing in real estate, you can ensure compliance and avoid any potential disputes.