Condo Association Management Blog

If your byklaws do not address that type of restriction the association may not impose such a restriction without first amending the bylaws. I do not know how a potential purchaser needing a mortgage would fare in obtaining same in light of the number of units already being rented.

Generally, the higher percentage of rental units, the more difficult to get a mortgage. A lot may depend on the lender but you can probably forget FHA loans which account for a large percentage of buyers right now.

before offering a comment I need to know if your are in the stgate of Washington or in Washington DC. Please post reply.

Right- unless your docs specifically impose a restriction, you can't arbitrarily enforce one. In addition, condominium legislations in some jurisdictions do not allow rental restrictions at all. 
 
What some groups are able to do is impose a "Leasing Levy" which is a deposit the owner of the unit must leave with the condo corporation if he or she wishes to to rent it out. This acts not only as security for other owners in case the tenant trashes the common elements, and as a disincentive for owners to lease their units, depending on how large the levy is.

The "Washington Post" last week reported that at least 25,000 condos are on the verge of losing FHA certification. This will impact the resale of units to owners planning to live in the condo project.  
Mortgage standards are a concern especially with condo projects that do not meet lending standards. Lenders consider insurance coverage, review budgets, dislike special assessments and litigation, look for minimally funded reserves, delinquency levels, and high ratio of investor owners.  
Delinquency issue drives property to become investor owned. While investors are limited in the number of units owned when applying for financing, there is no control over the number of units that can be purchased without financing. This is causing the loss of entry level home ownership.  
Until recently boards often were unaware of the relationship between their actions are directly responsible for purchasers' inability to receive financing. Today's financial market requires a positive action by boards to maintain FHA certification and address the requirements of Fannie Mae, etc.  
There is nothing in documents addressing this obligation of the board and the condo - which compounds the challenge to have board members take necessary actions to meet financial standards.  
The inquiring condo and all others need to notify all owners of the shared necessity to maintain the condo project as owner occupied and of the requirements required to be met. This still does not mean that the condo project can restrict the sale of an individual unit to an investor owner. Once the scale is tipped, all of the owners need to have a frank discussion of the direction the project is taking. It may be that each investor owner also wants the project to qualify for resale financing.  
 

For Mr. Adler. Thanks for your response. We are located in the State of Washington

Bill McCollough 
 
click on 
 
http://www.silverfirstownhomes.com/index.php?option=com_content&task=view&id=14&Itemid=35 
 
 
 
You will have copy of the State of Washington Condominium Act. Scan thriough this state law for provisions relative to the question you asked.

I've heard that the associations insurance can also be impacted by the number of units that are leased.

Good info. We are going through the process bylaw change now. We have 22 Townhomes in a project in the State of Washington. Four of the townhomes are rentals and two others want to be rentals. We have initiated a bylaw change to cap the rentals at three as well as forwarding lease contracts to the board for review and approval before renting. The majority of the votes voted yes. Obviously all of the rental owners with the exception of two voted no. I suspect we will have legal challenges, but are prepared for that.  
 
 
 
Anyone else expierenced this? So far good info on this blog.

Be safe and follow the dictates in your state law. Cheaper to obey the law than try and fight off a lawsuit.

I live in Atlanta Ga. The board & management company of my condo complex are allowing rentals even though our documents clearly state rentals aren't allowed. I have complained in writing, sent emails, & have had meetings with the board about this matter. They have done nothing. Because of the real estate market the price of my condo has lost about 60 percent of its value. Because they are selling at such a low price, investors are coming in, buying them cheap, and renting them out. What can I do to make them stop allowing illegal rentals. I didn't purchase here to live in a rental community.