Spoiler alert: yes, it can.
If you own a property that you want to turn into a rental, be sure to go over your homeowner’s association’s (HOA) Declaration of Covenants, Conditions, and Restrictions (CC&Rs). Under South Florida law, HOAs can choose whether or not to allow homeowners to rent out their properties to others. Allowing renters into your unit without the association’s ‘go signal’ could get you in legal trouble.
In this article, we’ll outline a few instances where an HOA can create rental restrictions. That way, you can avoid violating the HOA’s covenants.
What are the CC&Rs?
The CC&Rs or the Declaration of Covenants, Conditions, and Restrictions outline the HOA’s rules. In other words, it describes what homeowners can and can’t do. The CC&Rs are created to protect the interests of property owners and to preserve property values. It’s worth mentioning that the CC&Rs cannot go against federal, state, or local laws. If the CC&Rs aren’t aligned with the law, they are considered illegal. For instance, an HOA cannot discriminate against a resident due to their religion or national origin, as that would go against the federal Fair Housing Act (FHA).
Why do HOAs restrict rentals?
It wouldn’t be fair to consider the HOA as the “antagonist” to property owners. This is because HOA restrictions on rentals aren’t baseless at all. While HOAs can affect the future of your real estate investment, they don’t deserve to be vilified either. To understand your HOA, here are a few of the reasons why they create rental restrictions:
- Rental restrictions protect the community from the endless entry of tenants that don’t understand the rules.
- Rental restrictions prevent “bad” tenants from moving into the neighborhood.
- Rental restrictions limit the amount of maintenance that the association or property management company has to allocate funds for.
Therefore, before you buy a property in a neighborhood with an HOA, be sure that you’re willing to abide by their rules and regulations. Often, homeowners fail to see that a specific community isn’t a fit. That’s why you should always consult a company that provides investment services.
What are some samples of HOA rental restrictions?
Rental restrictions are not the same across all associations in the United States. Generally, the important condition is that your HOA’s rules and regulations don’t go against the law. To illustrate, let’s take a look at some samples of rental restrictions in an HOA:
An HOA that allows property owners to rent out their houses can create rules against short-term rentals. For instance, an HOA can prohibit Airbnb rentals that don’t meet their minimum rental period of 30 or 90 days.
Commercial Rental Restrictions
If you’re planning on using your property for commercial purposes, for instance, to rent it out as an office, be sure to obtain permission from your HOA board. It’s common for HOAs to prohibit commercial use because of the traffic that it brings. Instead, purchase a unit in a commercial area, and hire a commercial property management company to help you get it off the ground.
Nightly Rental Restrictions
As you might’ve guessed, HOAs tend to avoid transient guests. HOAs can prohibit homeowners from turning their properties into B&Bs or hostels.
Single-Room Rental Restrictions
Even if you live on the property, your HOA can stop you from renting a single room to a friend. If the CC&Rs state that all types of rentals aren’t allowed, you will find yourself in hot water if your friends move in as renters.
Can an HOA screen potential tenants?
Although property management companies screen potential tenants meticulously, an HOA can create a rule, stating that tenants need to be screened by the board. In this situation, you’ll have to get the board’s approval on who gets to move in. However, this isn’t allowed in all states, so be sure to consult a lawyer.
If it is allowed in your state, and if your HOA enforces it, your potential tenants will have to:
- Meet the HOA’s financial criteria. The HOA can ask the potential tenant to prepare bank statements and conduct a credit check.
- Go through a background check. The HOA can conduct a background check, like looking into the potential tenant’s sex offender registry. The HOA can also call their past landlord to find out if they were responsible tenants.
- Be interviewed by the board. A member of the HOA board can meet the potential tenant in person so they can verify certain details.
If you’re worried that your HOA will turn down your potential tenant due to their religion, national origin, etc., don’t fret. HOAs are well-aware of anti-discrimination laws, and it’s unlikely that they’ll risk going against the FHA. They also understand that they can’t deny a tenant due to their criminal records.
What if the property owner wasn’t aware of the rental restrictions?
Rental restrictions are contained in the association’s CC&Rs. When a homeowner purchases a property in the HOA-governed community, it’s given that they agree to abide by the bylaws. That’s because the HOA expects homebuyers to understand what’s expected of them before they buy a property.
Cliche as it sounds, ignorance isn’t an excuse. So, if you rent out your property and the CC&Rs clearly state that you can’t, you could face a hefty fine. Furthermore, your HOA can terminate the rental immediately. You could also lose access to community amenities such as pools, gyms, etc. The worst-case scenario is your HOA filing a lawsuit against you.
Do you need a real estate attorney?
HOAs can restrict rentals in South Florida, but they have to be reasonable, too. If their rules and regulations go against federal and Florida law, you should fight for your potential tenant’s rights by consulting an attorney. Alternatively, you can hire a property management company that provides legal services.
At Luxury Property Care, our experts can determine whether or not your HOA’s CC&Rs are lawful. If not, our team of in-house attorneys is prepared to go up against the HOA. This is because we not only care for your property but your tenants, as well.