HOA rental restrictions are an essential consideration when leasing a home. Homeowners’ associations have varying rules when it comes to rentals. Its residents may not always have free rein. As a homeowner, it’s best to familiarize yourself with a few rules before renting out your home in an HOA.
Can an HOA Restrict Rentals?
Homeowners have to follow several HOA rules to live peacefully in the community. These include regulations regarding lawn maintenance, pets, and parking. But, one lesser-known rule concerns renting. More specifically, rules that impose conditions and limits to renting or the prohibition of renting altogether.
This may seem unfair because it violates a person’s right to free use of property. But courts throughout the nation have continued to uphold HOA rental restrictions. They uphold these prohibitions as long as they were made for a legitimate purpose or to promote the HOA’s interests. As a result, homeowners cannot lease their homes if the HOA prohibits it for a good reason.
On the other hand, some states have more fine-tuned HOA rental restrictions regulations. For example, California disallows common interest developments from prohibiting or unreasonably restricting rentals of separate interests, accessory dwelling units, or junior accessory dwelling units. It also prevents HOAs from imposing rental caps below 25%.
Meanwhile, Arizona’s law states that HOAs cannot prohibit homeowners from leasing their homes unless it is expressly forbidden in the declaration. It also states that rental restrictions cannot be applied to pre-existing homeowners. Other regulations prohibit HOAs from requiring homeowners to submit the tenant’s lease agreement, rental application, credit report, and other private information.
Why Do HOAs Impose Rental Restrictions?
Generally speaking, rental restrictions aim to protect property values and promote community standards. An HOA with more renters usually sees higher liability insurance rates and lower property values. Other financial institutions, such as banks, are also more hesitant to offer loans to HOAs with more renters.
Moreover, HOA rental restrictions ensure the community’s residents are invested in the neighborhood’s success. Permanent residents are likelier to comply with community rules and maintain the property. Meanwhile, renters are more likely to violate HOA covenants because they will eventually leave.
Finally, rental restrictions usually promote stability within the HOA. They also foster a better sense of community. Homeowners typically want to live in a place where they know all their neighbors. It offers more security and brings them peace of mind.
HOA Rental Restrictions Homeowners Should Know Of
Homeowners must familiarize themselves with their HOA’s rules on rentals. Here are some sample HOA rental restrictions that are common in HOA communities.
1. Rental Caps
HOA rental caps restrict the percentage of properties that can be rented out at a time. Each HOA board can meet to define a suitable percentage for the community. But, as a standard, most homeowners’ associations impose a 20% rental cap. To enforce the limit, the HOA board has to approve rental requests. It usually comes on a first-come, first-served basis. After meeting the cap, the remaining applicants can be waitlisted.
The HOA may also impose a limit on who is eligible for application. Oftentimes, only homeowners who have lived in the community for a set period are qualified. This prevents investors from simply buying up community homes and renting them out.
2. Lease Restrictions
HOA lease restrictions are limitations that must be included in any lease agreement. Common restrictions include a minimum lease period of 30 days. Some restrictions also compel the tenant to comply with the HOA’s standards, allowing landlords to evict defiant tenants.
3. HOA Short Term Rental Restrictions
Does an HOA allow renters to stay only for a short period? Most communities impose short-term rental constraints. Sample HOA short-term rental restrictions include prohibitions on Airbnb rentals or nightly rentals. Others may impose a minimum rental period of 30 days.
4. Rental Duration Restrictions
Some communities may impose constraints on rental durations. For example, they might allow homeowners to rent out their property for only two years. Meanwhile, others have more specific conditions. For instance, the HOA may require homeowners to live in the home for 3 years at a time in between renter transitions. Regardless, the HOA will usually include these requirements in their CC&Rs.
5. Commercial Rental Restrictions
Homeowners’ associations may impose commercial rental restrictions. These prohibit homeowners from renting out their property for commercial use. With these restrictions in place, tenants cannot lease the property to use it as an office or retail shop.
6. Room Rental Restrictions
A homeowner may think renting out a room does not violate an HOA’s rules. After all, they still live on the property. But, some HOAs do impose rules on room rentals. With these restrictions in place, homeowners cannot rent their spare room — even to friends.
7. Condo Board Approval for Renters
Owners of condo units may need to contend with specific rental restrictions in condominiums. These condo rental restrictions include the requirement of having the condo board approve the rental request. The condo board usually observes the same approval process as HOAs.
Other HOA Rental Rules and Regulations
Some HOAs also impose regulations on the rental process. These aren’t restrictions per se, but they are things homeowners must abide by if they want to lease their property.
Homeowners associations may charge rental fees to cover associated fees. The HOA member pays this monthly, quarterly, or annually. Typically, associations charge 5-20% of a homeowner’s monthly maintenance fee.
Many homeowners’ associations screen prospective tenants. This allows the HOA to avoid renters that might harm the community. Often, the board will implement this by asking for the tenant’s application form. The board will then review the application before the homeowner can finalize the lease agreement.
However, some states do expressly prohibit tenant screening. As such, homeowners must familiarize themselves with state law if their HOA board asks to see a tenant’s application form. In addition, HOAs must follow the Fair Housing Act when screening tenants. They cannot discriminate against people due to race, religion, national origin, disability, family status, or sex.
Besides screening application forms, HOAs may also run a credit check on prospective tenants. They may not allow tenants with poor credit or those who have been evicted before. Alternatively, HOAs may charge higher fees to homeowners when there is a greater risk.
Do HOA Rental Restrictions Need To Be Public?
State laws vary when it comes to disclosing rental restrictions. Therefore, homeowners should check their respective local and state laws before accusing the HOA of noncompliance.
But, as a general rule, homeowners’ associations will include rental restrictions in their public declarations. Most homeowners should have received a copy of these documents before closing on the home. Deed titles also come with the HOA’s covenants and restrictions.
How To Get Around HOA Rental Restrictions
Homeowners often want to get around their HOA’s rental restrictions. They want to be free to use their property and profit from it. But, homeowners should exercise caution as violation may result in legal action. They should take care to make sure they are not directly violating any prohibition.
How should a homeowner get around rental restrictions? The best way is to carefully read the rules, restrictions, and covenants. Homeowners should also consult the HOA board or HOA manager before they begin their rental plans. When in doubt, they can also review the rules with a legal professional to understand what they can and cannot do.
The Consequences of Renting Without HOA Approval
An HOA can enforce rental restrictions when a member does not comply with the rules. But, they can only impose penalties and other disciplinary actions on the homeowner. They cannot penalize or evict the tenant because they are not a association member.
One way an HOA enforces its restrictions is by imposing fines. It can also enact other disciplinary actions stated in the governing documents. If all of these methods fail, homeowners’ associations can also file a lawsuit against the homeowner.
Always Check Your HOA’s Rules and Regulations
HOA rental restrictions are often a source of conflict within communities. But, reasonable restrictions do benefit the community. Moreover, noncompliance can come with some unpleasant consequences. Before a homeowner leases their property, they should always check the HOA’s rules. They should also understand local and state laws to ensure both they and the HOA board comply with legislation.
Condo Manager provides premium solutions for HOA management. Contact us today at (800) 626-1267 or get in touch with us online for a free demo!