“Last May the association, after four attempts that year, finally got enough votes to make an amendment to place a rental cap on the units I own. I was always against it. I was building a new home for myself and wanted to keep the property as a rental. I owned the property prior to the rental cap and feel I have been stomped on.”The subject of condominium rental usually causes owners to cringe. If the governing documents prohibit rental or place rental caps, owners may experience financial hardship. Generally, when people buy condominiums, they plan to live in them. However, there may come a time when rental becomes a necessity.
A condominium unit might need to be rented for the following reasons.
Health deteriorates and forces the owner to move.
The owner is transferred.
The owner needs income due to unforeseen circumstances.
A rental cap is normally implemented to control the type of renter according to his or her financial status. A rental prohibition is normally passed to control the number of renters living on the condominium property. When amendments are created for either of these two issues, those owners who are already leasing their units may be put into a financial crisis.
Here are two examples of associations that passed amendments which handled these issues successfully. One condominium placed a rental cap on those owners who were currently leasing. Another condominium passed an amendment to completely prohibit leasing. In both cases, the owners who were leasing prior to the amendment were grandfathered. In other words, those owners were permitted to continue leasing under the restrictions prior to the new amendments. If and when those owners sold their units, the new owners were under the new restrictions.
Some examples of the possible restrictions for condominium rental.
The percentage of units rented may influence whether lending institutions are willing to carry the mortgage.
There may be a rental fee (not to be confused with rental cap) required by the association.
There may be a limit to the number of people who can occupy the condominium.
There may be limits to the tenants who have a certain number of vehicles.
There may be restrictions about putting up rental signs in the common areas or displaying rental signs in the window of the unit.
Prior to amending the governing documents, economic conditions present and future should be considered. The current economic conditions in the real estate market are disastrous for selling a condominium unit. Owners may be in a real bind if they cannot rent their units for income purposes. No board has a crystal ball for the future, but the worst case scenario can be their guideline. Informal meetings can be called for the board to discuss the rental pros and cons with the owners. The board can then propose an amendment to change the restrictions about leasing, considering the input from the owners.