Our condo By-laws stipulate owner occupied, 21 and over, no renters so I assume you can change your By-laws to protect your investment.
In my Condominium complex in NY, the Board added a rule to the Bylaws which requires 2 years owner occupancy before the homeowner may rent the unit. Should the homeowner decide not to live in the unit, the unit must remain vacant for the term of the rule.
I now live in a Condo and have lived in many HOA controlled communities. Most HOA by-laws stipulate terms regarding rentals and other issues regarding investors purchasing units in a community. It is true that the higher percentage of renters in a community, the harder it is to obtain a new mortgage. If mortgage money is hard to get, it is harder to sell. That drives prices down. Not good for any community. When a community is dominated by investors, it is hard to get owners to attend meetings and vote for a board and other important issues. Most communities go down in value as the percent of renters goes up.
Many reules can be put in place to discourage investors from taking over your community. Many communities require ownership for 2 years before the unit can be rented. This keeps most investors away but is fine for owners that want to rent our their home after living there for a while.
Before you change your gov docs to state "no renters" you should check your state laws to ensure there are no laws against restricting or prohibiting rentals. Also, instead of prohibiting rentals you may want to place a cap of no more than 20% or whatever. Is it really fair to tell members they cannot rent their unit. Oftentimes a prop owner has no choice but to rent the unit especially if his job requires a relocation and he cannot sell the unit.
One other very important point: restricting or prohibiting rentals would require an amendment to the CCRs which would require a vote of the membership.
The changes in homeownership are a topic of concern for legislators, the professionals in the residential association industry, and most importantly the owners who are affected by these changes.
For most homeowner associations (not condos), the ownership of a lot within the development is not within the prevue of the association. The primary and often only controlling issue is that the property must continue to be single-family occupied and short-term rentals are not permitted - often a zoning requirement that the local government will enforce to prevent units from becoming group homes.
However, as an example, a townhouse owed by 3 single women may also be occupied by their (3) partners and may be within authorized zoning and covenant requirements. Many communities twenty plus years ago amended the zoning to permit a zoning variance for "parents" to maintain an apartment only as long as the parent(s) were the occupants. Other zoning may permit a person to rent a bedroom as long as the tenant does not have separate cooking facilities.
Condominiums that did not contain rental restrictions in the covenants, as has been previously mentioned, would require an amendment and may require mortgage institutions to concur in this amendment. The inability to rent a unit can result in loss of assessment income as the owner does not have cash flow to pay assessments over an extended period of time. Financial institutions generally are accepting a rental ratio of as high as 50% of the complex.
Just coming to the attention of officials and boards is the problem of a single investor buying into a complex and owning sufficient number of units where the selling price for the remaining units is forced downward. The very strong large investor partners have begun to focus on the ownership of a condo complex as a means of obtaining rental property without having to develop new apartment complexes. These investors continue to operate the condo as such. However, the minority individual owners are reporting a lessening of details to maintenance, etc., and it is perceived as a means of encouraging the sale of these units to the investment group.
The investment senario is of grave concern to those becoming aware of this problem.
We are having a problem with illegal rentals at my condominium in Georgia. The by laws specifically state no rentals allowed, but the board & management company are ignoring complaints by owners about this and closing their eyes when it comes to rentals. I have been complaining about this for over 4 years & nothing has been done.
Many condo associations are making exceptions to the rules and bylaws governing rentals due to the economy. It is called a 'hardship exception' in many cases. Remember that for FHA loans, you must keep the percentage of rental units below a specific point. If you lose FHA approval, you significantly decrease your ability to sell.
New HUD rules implemented this year limit investor ownership to 10% of units for any one investor and 50% overall.
Below these precentages, condo associations need to consider a number of factors beore adding such restrictions.
For example, in economically distressed areas these restrictions are driving down prices 20% to 30% below what an investor-owner would pay.
The new, lower owner occupied purchases push down comparables and the ability of existing owners who are "under water" on their mortgages to refinance.
This can force more foreclosures, and a new wave of selling at even lower prices.
Memebership ia concerned about rental issues fearing decreasing values, lack of attendance at meetings by owners etc.
Do Illinois condo laws address rental issues or prohibit bylaw restrictions on rentals??? Anyone know??
We live in a small condo community- 51 units. Investors began buying them up when the condo market tanked. They are now trying to force their way on to the board and have tried to cancel landscaping contracts , telling owners we can save money by having landscapers come in only several times a month. They are renting to almost criminal types and doing all they can to blight the property. Some owners have their units paid for and won't leave. I fear they will give them no other choice. This amounts to stealing property and something needs to be done about it.