Do you own a condo, townhome, or single-family house in an area with a homeowner association? If so, there might be rules you need to follow if you’re considering renting it out.
What are homeowner associations?
“Homeowner associations (HOAs) are entities that enforce the rules for living in a community that chooses to be governed. They are common in planned developments; you join them and agree to their terms and fees when you close on a home in a community with an HOA.” Investopedia
What is the role of a Homeowner Association (HOA)?
“Homeowners associations are designed to manage common or shared property, protect owners' property values, provide services to residents, and develop a sense of community through social activities and amenities.” - Community Association Living (a CAI publication)
What might my homeowner association require from tenants?
- They may require you to use their lease or a specific lease or add an addendum to a lease you use.
- They may require copies of tenant’s credit checks at the time you’re approving tenants but also possibly during renewals.
- Sometimes rules for tenants may be different than rules for owners who live in their property. For example, homeowners that live in the community might be allowed to shave let’s while tenants may not be allowed.
- They may require tenants to attend an orientation to make them familiar with the building or community.
- They may have rules about how many times the property can be leased without a homeowner living there. For example, they may allow a tenant to lease the home and renew it one-time but after two years maximum then the property needs to be occupied by the homeowner or be vacant for a year before it can be leased again.
- There might be a certain percentage of properties allowed to be rented at a time in the community and if your tenant moves out, you may go to the bottom of the list, and it could take months or even years before you’re allowed to lease your property again.
What can you do if you’re not allowed to lease your property, but you need to move and can’t afford for it to sit vacant?
Occasionally, homeowner associations will consider hardships and if you appeal then you might be able to get an exception for your property.
What happens if you are still not allowed to rent your property?
If moving in is not an option for you and you need rental income to be able to afford to pay the expenses, then you might be in a situation where selling is your best option.
The rules can change on a regular basis so don’t assume that what was allowed five years ago is still the case and hasn’t changed. You need the current rules and regulations for your homeowner’s association for not only you but any future tenants as well, so they have a chance to review the rules if you expect them to abide by them.