How To Get Permission From a Home Owner's Association To Create Corporate Housing
Some homeowners associations (HOAs) place limitations on how, when and if property owners in the HOA can rent out their condo or home. Many property owners are unsure of whether or not their HOA allows them to rent out their condo/apartment. In most cases, renting out your condo, apartment or home for 30+ days is allowed.
Read on below if you're looking to maximize profit for rental property lease.
How can you find out for sure whether your HOA allows rentals? Attorney Beth Grimm notes: "To be enforceable, I believe that a rental cap, based on some guiding principles gleaned from cases in California and other states, should be in or in an amendment to the Declaration of Covenants, Conditions, and Restrictions which are called CC&Rs, or the equivalent recorded agreements, rather than the Bylaws or rules."
So at some point, you would have had to sign off on this restriction. If there was no such restriction when you purchased your condo, the HOA can't impose the restriction afterwards without getting your approval. You are automatically grandfathered in to the rules that applied when you made the purchase.
What kind of rental restrictions are most common? Beth points out "some of the types of limiting amendments that have been approved in California HOAs:
- Limiting rentals to a percentage of the total Units/Lots. (The most common limits seem to range from 20-30% but I have seen 0-10% and 40% as well.)
- Alternating the right to rent homes so that the percentage is limited but everyone gets a turn.
- Setting a minimum rental period to 30 or 60 days to prevent vacation rentals or hotel type of rentals."
You'll notice that there's an important difference between short-term housing and corporate housing—or nightly vs monthly rentals. Short-term housing is usually defined as less than 30 days. Many HOAs are trying to limit the amount of short-term rentals permitted. Monthly corporate housing tends to attract a more professional tenant and as such, most HOAs are more open to those kinds of rentals. After all, if an HOA decides to over-regulate the rental of units, it can reduce the average sale price.
If your HOA is concerned about wear and tear, Kimberly Smith of CHBO notes that you should remind them that monthly "renters create less wear and tear on a building than a traditional year-long renter despite what many think. Year-long renters move furniture in and out year after year. A short-term renter brings a few suitcases, gently uses the property, and then leaves."
Are you a real estate investor considering buying a rental property that is part of a homeowners assocation? This video from Clayton Morris of Morris Invest is a great run down of the pros and cons. At 2:35 he reviews what could happen if the HOA decides not to allow rentals after you've already been running a rental property.
- Great CHBO white paper here: https://www.corporatehousingbyowner.com/pdf/CHBO-%20Kimberly%20Article.pdf
- California Condo Guru has an in-depth legal analysis here: http://www.californiacondoguru.com/hoarticles/lease.html