HOA start enforcing 20% rental cap suddenly

[Calvin Lin]

Hello BP community,

I purchased a townhouse in NC last June as an investment and found a tenant right away. At the time of purchase, my I did know that HOA had a 20% rental cap in the community and that threshold was already reached but the HOA manager we spoke to said it is not enforced. I went ahead and made the purchase and today I got a letter from HOA saying I am in violation of this policy and I have to attend a HOA board meeting next week to explain myself and/or risk a fine of $100 per day. I know this community has a lot of rentals so I am not the only person in this situation.

Questions:

1) Anyone faced a similar situation before or have any advice to give as far as what to say to the HOA?

2) My current tenants is on a month-to-month lease after the 1 year lease had expired. They are looking for a house to buy but nothing so far. So I am thinking if the HOA really pushes me to get rid of the tenants I would ask for a compromise like letting my current tenants have time to find a new place and move out, let's say 3 months. I don't think the HOA board is particularly interested in kicking my tenants out to the curb or fining me $100 per day, they want to get rid of excessive rental units in that community. What do you think of this approach? I will obviously have to stop renting this unit after that.

Thank you in advance