I've got a friend who is buying his first single family home. They are planning on putting a kitchen in the basement and renting it out to friends/family. Its zoned as a single family home and has everything necessary to be a legal accessory as far as the city goes, but there are a few problems with the HOA.
This is what the HOA has to say about renting out part of the home. Any thoughts on how he could get around these rules? Anyone see a loophole?
They were thinking about either not having a written contract but an under the table verbal agreement, or renting out their home as a whole and just telling the renters to stay in the basement. Any constructive feedback would be appreciated.
@Tim Clark You can try this but you will run into major issues when (and it is a question of when, not if) your HOA finds out. Furthermore, with verbal agreements different people have different understandings of what things mean. Hence, a few months/years down the line your friend might be facing a big issue.
Best bet: Avoid this situation completely. No need to take on extra headaches.
Just don't do it. Not worth the headaches of violating HOA rules or putting oneself in legal jeopardy to do so, better or equal investments can likely be found.
Have them try it and let us know how it goes...
Worst case scenario we'll have some good reading!
Whatever happened to doing the honorable thing and sticking to the agreement they are about to make?
@Tim Clark you don't really indicate the duration of the rentals to "family & friends" - these rules don't prohibit terms of 6 months or longer. Is your friend only considering short term rentals?
I would question the policy of not renting rooms (you cannot have a roommate? Your elderly parent? Your fiance? Other than minor children everyone in the household has to be all "owners" or all "tenants") Probably not enforceable. In fact, it teters on violation of the Fair Housing Act in relation to Familial Status protections. Any HOA worth its salt will want to avoid a Fair Housing violation - very expensive. If your friend wanst to create a somewhat segregated space for a long term roommate inside the residence I don't know that the HOA can really do anything about that without violating federal law... (no, I am not a lawyer - just an experienced HOA manager)
@Phil G. is correct - if you buy in a covenant protected community then be prepared to follow the rules as written. But the rules need to be enforceable.
Thanks everyone for your replies. I appreciate it very much. I want to make sure I steer him in the right direction and help set him up for success.
"set him up for success."
For this to happen they must never consider attempting to get around HOA rules or seek out loopholes. That is a recipe for failure for sure.
Consider a landlords position when a tenant seeks to get around of find loop holes on their lease. A HOA contract is no different.
ROFL It might really bother people who like HOAs but that rule would not keep me from opening a sober living home or possibly even a halfway house in that HOA development.
I often roll my eyes at HOA rules. I consider this one to be similar to one that says "No Negros".
That being said. Do not cause a parking problem or any other issues in the neighborhood. If you do then expect a fight.
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The terms say that you can't do short term rentals. You can't rent out parts of the unit. But you can do long term rentals of the whole unit so long as it is in writing and a copy of the lease is given to the HOA. It says nothing about roommates or which family members can live there.
It would make a difference if they were renting to friends or to family. Having an adult son or daughter move back in after college or having your mother in law move in when she is old would be permissible, even if they agreed to pay you. If the HOA allows them to put the kitchen in and create an ADU then they will have a pretty good argument that the HOA is allowing them to use it as an ADU. Whether or not the HOA allows others to have boy or girl friends move in, or allows others to get roommates is relevant. I would venture to bet that the HOA only meddles in peoples intimate affairs when the HOA decides they do not like the owner - that is when they pull out the rule book and start to play 'gotcha'.
However, most HOAs are tyrannical. They are generally run by grey haired busy bodies and control freaks who have no understanding of their own rules or the law that governs them. Unless your friends are prepared to lawyer up and fight when it becomes necessary, it is best to just not do this.
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