HOA stops new owner from renting in first year

14 Replies

I recently purchase a SFH in an HOA community (Melbourne, FL). Everything went smooth with the purchase and initial property turn over until I received a letter from the HOA management stating they knew that I was going to rent the property and that I had to wait a year before doing so.

I was surprised by this requirement. No where was that stipulation ever disclosed and I had to read the 129 pages of the HOA rules and regulations to find it. Only 20 words stating that rule.

I have never heard of such a thing before. Has anyone else run across this situation? What would be some of the possible solutions to this challenge? 

I did reach out to the HOA president about this, but nothing yet.

Hi Tim,

I see it all the time! That’s why it’s so important to ask the Association if any approval is required, time frame, special assessments, etc...  the due diligence is of the utmost importance! 

This post has been removed.

@Joseph Bogart Well, you found a way to fly under the radar, for now.

@Tim Chase Yes, this is common with FL hoa’s, assuming your agent was aware of your intent, she should have warned you and checked it out.  Typically, in the mls it will reveal rental restrictions, but not always.  If buying at auction, obviously you need to check into before hand.

Originally posted by @Joseph Bogart :

Kim... Thanks for useless. That was awful "help". Tim, no one is going to read through 129 page document before buying a place in hopes of finding the one sentence deal killer. What are the repercussions of the HOA if you do rent it out? Why do they need to know? I had one that they claimed I had to wait two years. I just dropped the price on the rent a little below market and I worked with different people until I found a tenant that was fine with getting their mail at a post office for the reduced rent. They have been renting for almost three years now and not a word from the HOA. If I did hear from the HOA, I would just say it is my sister.

 I would read that as part of my due diligence.... And I'd also start a conversation about renting and special assements like previously mentioned.

And for the record, I'm sure there were plenty of pages you could skip...

As for the reason why they're probably trying to balance the owner occupancy percentage...

Tell them you plan to move in with your roommate , tell them you travel a lot for business . By the time they figure it out a year will have passed 

@Tim Chase I purchase a lot of condo's and Townhome's, I will usually see this in the smaller projects as they are trying to protect the Owner Occupied versus Investor ratio so future buyers have an easier time using all available types of financing to buy from the current sellers, basically the HOA protecting the exit strategies for the sellers. The other thing to look out for is the Short-Term Rental clause, Due to the increase of STR's HOA's are enforcing this so the properties don't get rundown faster with vacationers.

How many properties are in the HOA?

Depending on the size of the community you may be able to work with them if it isn't going to hurt them on the OO versus Investor ratio for financing.

@Tim Chase You are kind of stuck if you plan to do a regular lease. You could do a contract for deed and get around the requirement.

Hoa's can also change their by-laws whenever. You will find that typically the boardmembers have rentals and they will make life difficult for outside investors. Frankly I just move on if an HOA is involved just is not worth the trouble having them get between me and my prospective tenants.

@Tim Chase I’ve been in this situation and once the board is onto you, it can be very difficult. That said, they can do very little to prevent you from having a “roommate” or havIng a relative live there - you’ll have to find a tenant willing to support that they are sharing the unit with you if questioned and you could draft a roommate “share” agreement rather than a lease for that fIrst year. LowerIng the rent a bIt to offset the need for the tenant to stIck to the scrIpt Is also a good Idea
Originally posted by @Ericka G. :
@Tim Chase I’ve been in this situation and once the board is onto you, it can be very difficult. That said, they can do very little to prevent you from having a “roommate” or havIng a relative live there - you’ll have to find a tenant willing to support that they are sharing the unit with you if questioned and you could draft a roommate “share” agreement rather than a lease for that fIrst year. LowerIng the rent a bIt to offset the need for the tenant to stIck to the scrIpt Is also a good Idea

 So, you're advising someone to lie, be deceptive and coerce a tenant with financial incentives to follow a script; which you refer to as "a good idea."  ?? 

Yell at your lawyer, they should've known WHY you're buying the property and spotted that clause.

@Tim Chase yes this is fairly common rule for HOA’s. You can ask for an exemption but not likely to get it. In the future, when you buybin an HOA you can always ask the selling agent or management company prior to closing. In CA rental terms are very disclosed to buyers!
Originally posted by @Christian Nachtrieb :

Yell at your lawyer, they should've known WHY you're buying the property and spotted that clause.

 $20 says he didn't have an attorney review this purchase

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here