Interesting reading. I used to own rental condos, live in one, but I don't anymore due to issues.
I owned condos around 20 years ago, and at one, the HOA limited the rental percentage to 20%. Back then, it had to do with getting mortgages, but thru the years, FHA has changed and raised the percentages.
The issue also has to do with the HOA being tenant friendly or not. The ones I ran across were not when 80% or more are owners. Being a condo landlord, I see both sides of the issue. I rented my condo to a single guy, professional, the condo next door happened to be rented to 2 college students. They party into the night, and my tenant would call my sister, who acts as my PM. She has to call the management company, who has to get the HOA involved, then issue fines to the owner. Finally get the girls evicted, and I almost lost a tenant.
The condo has 104 units, and to keep fees low, they have volunteers, condo owners, doing landscaping, cleaning the hallways etc. My sister who lives there, her husband is the volunteer for checking and changing light bulbs. The management company used to do it, you have to call them, they get to it in a few days, and charges $25.00 per bulb to change it. He also volunteered on the landscaping committee.
So what's the beef with absentee owners? Most of us live far away and don't volunteer for anything. I don't, I live in NY and the condo is in MA. So the attitude of the HOA is that these freeloaders never does anything around here, but yet complain about everything.
Yes, I bought the unit within the 20% limit in the bylaws. Through the years, the HOA tried lowering the rental percentage, not raising them. I get proposed bylaw changes in the mail. I called my sister and she explain the politics to me. Finally, they issue rules where they have to review the leases, approve tenants. So my thought was, if they couldn't get rid of absentee owners by lowering the limits, they'll get you by dragging out the tenant approval process. I'm a landlord in NYC, and rented to many good tenants who patiently waited months for coop board or HOA approvals, so I see it and get it. These people gave up and rented from me instead.
Lucky for me, I bought the condos in foreclosure, and in 10 years, sold it at market for three times what I paid for it. Good riddance.
So the issue is a little more complicated than the HOA wouldn't budge. At the condo where I rented to tenants, they're just tired of out of control tenants, and freeloading absentee landlords. If you get on their bad side from the start, even if you prevail, they could just sit and wait, and inflict financial pain on you later on.
Originally posted by @Joe Splitrock :
Originally posted by @Linda Weygant:
*putting on my HOA president hat*
Yeah, you're in a pickle and the outcome of this completely depends on who you've got on the board. If you've got some regular people, things could go one way. If you've got some self-important folks who are puffed up with their own power and ego, they'll likely go another.
Here's how I would approach this:
1. Don't have your lawyer contact them. Yet.
2. Contact the property manager or board president. Explain what happened. Eat a lot of crow. Call yourself an idiot if you want and use a lot of "aww shucks" and "yeah, I know, I know.... I should have done all of this stuff and I didn't." Then apologize profusely.
3. Explain the scenario with the lease. Explain about your elderly tenants. Talk about what great people they are. Let them know that you won't renew the lease, but talk about the illegality of just putting these people out of the street. Talk about lease breeches, etc and how you are caught between a rock and a hard place.
4. Offer to sign some kind of commitment that you won't renew the lease. Put it in writing. Get it signed and notarized. (Boards love this stuff). The more you put in writing and make it look like you'll follow through, the better.
5. Offer to finance or otherwise make possible some repair or improvement they want to do. Offer to renovate the signage at the front of the property, if it's looking a bit tired or needs painting. Or plant flowers at the entrance. Or some trees. (This probably wouldn't work with me, but it would for some people). Look at the last 6-12 months of meeting minutes to see if they've tabled repairs or improvements due to lack of funds. The meeting minutes are sometimes a good source of information to figure out the types of personalities you have on the board before you meet them.
You are then very likely to have to go to the next board meeting. At that board meeting, you'll have to do the above all over again for the entire board. The board will then render their decision. They could agree that you're a buffoon and agree to what you propose. BUT - they will demand that you then sell or otherwise do whatever is necessary to stop renting the house. I see no way that they'll grant you any kind of permanent waiver. This will be temporary only.
They will scowl and frown and stick to their guns. If this happens, then what happens next will be disclosed in your governing documents, but here is the likely scenario.
1. You'll be issued fines. The amount of the fine will either be in your covenants, your rules and regulations or, occasionally, the by-laws. If you can't pull that out, then it may be in a Policy/Procedure document which you will have to make a special request for.
2. You'll be issued very stern warning letters. They'll get scarier as they go. Eventually you'll get a cease and desist letter.
3. After the cease and desist letter, you'll be served with court documents which will likely contain a Motion to Compel. Once this happens, you can either comply with their demands and then request a dismissal of the case, or you can go to court. Once you're in court, the judge will likely then give you a timeline by when you must comply. If you don't comply, you'll be held in contempt of court.
At no time will the HOA be in a position to foreclose on the house or take your property (probably - doublecheck with your attorney, but here in Colorado, the HOA would not have that ability). The HOA can only foreclose if you're not paying dues or fines - we can't foreclose if the issue is non-monetary covenant violations. So make sure all dues and fines are always paid.
It's more than likely that all the letters, fines and court process will take about 11 months (ish) to complete, so it could be that working through it this way will just run out the clock.
Do you think the judge would issue a motion for him to comply, given a lease with the tenant? Basically, the judge would be directing him to illegally evict his tenant. I could see the judge granting permission for the lease to be fulfilled. By the time it goes to court, it would be within a couple months of the lease ending anyways.
It depends. If a case can be made about putting elderly tenants out in the cold, you might get some extra time. But if the judge wants to, he/she can tell you to stop renting and issue penalties for not complying. It's then up to the owner to buy the tenants out of their lease, somehow provide housing for them or otherwise figure out how to comply with the judges order without also then getting sued for breaking the lease. I'm not a lawyer or a judge though, so **shrug**.
@Mike H. curious if you can give us an update on this. It is a very interesting situation and would be a good learning experience to see how it plays out. Hope it is going well!
Wondering how this turned out as well - hopefully all right.
Don't have to share if you don't want to share... but if willing to share.... than all ears over here and there is no judging from me regardless of how you played this one.
So my offer of 2k to the HOA was enough to let the tenants stay thru the full term of the lease. So now I don't have an hoa suing me and I don't have a tenant suing me. The tenant is now trying to buy the house direct so they can stay there. I'd love to stick the hoa with these tenants and if they buy the house, there's no way for this tiny hoa (something like 18 townhomes) to prevent them from staying.
The hoa has been a pain the butt to be honest. They complained about the number of cars (4) and the number of people. I told them there were four bedrooms and there was nothing they can do. The two older sisters live upstairs and had their own rooms. And the one sister's daugther and her boyfriend are in one bedroom in the basement and her two kids in another bedroom in the basement.
We'll see if the tenant can qualify for a loan or not. If yes, then I agreed to sell the house for 145k (it appraised out at 160k). If no, then I'll list it for the 160k or maybe even 165k because I think its worth a little more.
I think I was all in at 120k or less so I'll take the numbers.
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