I purchased a condo a little over a year ago, not realizing the HOA has a rental cap. When I bought the property, I was 12th on the wait list... 13 months later and I'm still 12th. While I like living here, I'd like to turn this into a rental within the next few years. I have equity in the home but do not want to sell it.
Lesson learned to read the fine print of the HOA rules prior to purchasing! I also understand condos aren't the most ideal asset class because of dealing with the HOA. With that being said, has anyone dealt with a similar situation in which they rented out a condo while being on the rental wait list? Is it possible? If so, what are the repercussions?
Thanks in advance for the advice!
If you violate the CC&Rs, fines and eventually they can force your home to be sold to pay the fines. And the fines are generally daily or monthly as long as you are violating the rules.
And, if you enter into a lease, you cannot kick out your renters because of the HOA problems. So you will be stuck or paying the renters a ton of money to leave.
As @Leah Stuever says the HOA has a lot of power. I have 1 condo rental. The HOA has escalating fines every 10 days. So if they found out a unit was rented without the approvals, there would be a notice sent to cure with a $25 fine. 10 days later another notice with a $50 fine. 10 days later another notice with a $100 fine. Luckily the fines cap off at $100 but that would still be $300 per month in fines after you hit the cap. I've got no doubt that if the HOA decided to make a point of it they would increase the fine cap or make illegally renting a "superfine" that doesn't get capped.
With HOA's, as Leah said, they always get their money in the end. Best to find out what they'll do but if they had the foresight to institute a rental cap, I'd imagine they'll want to enforce it.
@Tyler Vinsand Unfortunately, I'd chalk this one up to a "lesson learned." Renting out properties in an HOA can be tricky, and there are often a lot of restrictions and rules you have to follow. We all make mistakes, but we learn valuable lessons as a result! I'm just glad when the mistakes I make aren't catastrophic ones LOL.
Good luck, sir!
This was extremely helpful. Thank you all for your responses!
Having been on HOA Boards with similar rules, I can say that you will probably never move up enough in line to get your place rented. The current rentals are likely to stay rentals for long periods of time. Even if the unit is sold, some HOAs operate on providing the unit an exemption and then allowing it to be renewed at the end of the tenant lease, regardless if the unit owner changed hands.
Have you actually talked to the HOA to see if they will make an exception? They usually have them for financial hardships, military deployment, job relocation, and lots of other reasons. The fact that you lived there for over a year may make them sympathetic to the situation. Maybe the HOA is willing to allow the rental in exchange for a payment. It wouldn't be the first time an HOA made an exception in exchange for money.