Can Deed Restrictions be changed by an HOA?

Question

We are under contract on a property in Texas we would like to use as a STR. The Deed Restrictions do not state that the property cannot be used as a Short Term Rental. The City it is in has no Restrictions on STR nor does the county.  In due diligence we asked the HOA for all current Deed Restrictions and read through them there is nothing prohibiting them, they were written in the 1980s.  However the HOA wrote us back that:

The deed restrictions limit the use to single family dwellings and a few commercial lots.  If your intent is weekend rental that would be commercial use and not allowed by deed restrictions.

We found that the State of Texas supreme court ruled in a "broad property rights decision, allows short-term rentals as a Residential Use".

TEXAS SUPREME COURT, IN BROAD PROPERTY RIGHTS DECISION, ALLOWS SHORT-TERM RENTALS AS A "RESIDENTIAL USE" | JPS Law Cases & Issues (jpatricksuttonlaw.com)

It is my understanding based on the fact that the current Deed Restrictions says nothing about Short Term Rentals the HOA has not standing. That said can they change the Deed Restrictions or broadly change the rules on the HOA after someone has purchased in the area? We love the property are in an option period but want to keep the deal. Thoughts?

Ryan Kelly · Answer

@April Clark The HOA absolutely has standing and their rules are generally the most important for property owners in that neighborhood. Deed restrictions are generally older regulations and should be considered the "minimum bar" of restrictions. However, HOA rules also apply as a layer on top of deed restrictions and are far more likely to get updated as new trends apply, such as short-term rentals. In addition, cities can change their STR rules at the drop of a hat, so you want to make sure you understand the political climate in any area you plan to buy an STR to get a feel for their appetite to regulate STRs. I never recommend purchasing a property for short-term rentals in an HOA community as they generally don't favor the practice.

April C. · Answer

Essentially the Land Use Attorney advised that while HOAs can make amendments (if permitted in the deed) they cannot make amendments that run counter to the Deed Restrictions that were in force at the time that the property was purchased. They can also make rules but rules are difficult to enforce (in court) if they run counter to the Deed. Short Term Rentals are not explicitly permitted nor are they explicitly denied so it's open to opinion and how far someone wants to push something.

We live in a litigious country and if someone doesn't like what you are doing they can always sue you. A typical law suit costs 15-30k so is it worth it to them? maybe maybe not - we will do our best to be good neighbors. It's a risk, we are proceeding with it may be a bad idea but every investment comes with risk right? Thanks all.

Bonnie Griffin Kaake · Answer

@April Clark If the current HOA rules allow STR, even if they change those rules, you may get grandfathered in under the old rules if they don’t disallow STR. Best option is to talk to an attorney before committing to the purchase.

April C. · Answer

I spoke with the HOA committee and they say it shouldn't be a problem as long as we are "good neighbors".  I have an appointment with a Land Use Attorney to review later today.  Will let you all know what I learn. I appreciate all the comments, they help me focus my questions.

Dustin Allen · Answer

@April Clark

An HOA can definitely create rules to restrict the use of homes in the HOA. If you buy in an HOA, plan on getting on the board or be ready to be subject to the whims of others.

Wayne Brooks · Answer

An HOA has Additional Rules, which they can change within parameters including prohibiting rentals, that are in Addition to Deed Restrictions....they don’t need to “change the deed restrictions”.

Jonathan Mason · Answer

Restriction on LTR for SFHs you will less often with a SFH than Condo's given the lending restrictions from financial institutions on Condo's on percentage of condo rentals vs owner occupied, etc. within that community HOA. That being said as Bruce pointed out, they could theoretically change to restrict LTR's as well, but I haven't seen that yet personally for SFHs.

HOAs are designed to be restrictive and maintain the community baseline standards for all and help maintain and improve property values for the community, but that sometimes removes a lot of freedoms as the owner's. Give and take for sure with a level of risk.

Jon Crosby · Answer

Usually HOA rules all from a restriction perspective...so the HOA can (and often has) superseded any municipality, county or state 'allowance' of STRs by restricting them for their association(s).

Ryan Kelly · Answer

@April Clark don't forget who owns and sets the rules for the HOA...the homeowners of the neighborhood. The HOA usually has a board made up of residents, so the rules are set and voted on by residents. If you want the rules changed, you need to get board approval. Many residents don't want STR's next door to their home and this is why HOA's generally frown on pure STR's in their community. You can try to persuade the HOA to change their rules, but it will be an uphill battle.

Bruce Lynn · Answer

As far as I know the HOA can change their rules and regs....and they do.   Probably 10-20 years ago they never thought about STR, now many don't like them....and they update the rules and regs or CCR.

Lots of people on here like lots of risk, but if your economic model depends on STR vs LTR, I would not buy this particular home or any in an HOA...unless you know 100% that they are STR friendly.

Most of the condos in my area now prohibit STR.   A handful allow a month or more...not day by day....some people say renting 30 days or more to one tenant can change the STR to someone with tenant rights, so some operators won't do that.

I've also seen condo associations prohibit or restrict even LTR, so that does happen.

You could be entirely right that state law supersedes HOA CCR and R&R, but is that a fight you want to fight and pay to fight and gamble on big lawyer fees?

Can Deed Restrictions be changed by an HOA?

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