Townhouse rental ban challenged

DEAR BENNY: I own a rental townhouse in a local community. The board of directors of the homeowners association has put to a vote of homeowners a proposal that would forbid any owner from renting his or her unit once the current lease expires, thus forcing owners to sell the property in what is not only a depressed market but is in competition with many other properties for sale. Can this possibly be legal? --Doris

DEAR DORIS: Unfortunately, if the legal process is followed correctly, it will be legal. This issue has been litigated in many states, and to my knowledge, all the court cases have held that community associations have the right to limit -- or even prohibit -- the number of renters in those associations.

What owners within condominiums and homeowner associations do not understand is that they are bound by the legal documents and the rules and regulations of their association -- as they currently exist and as they may be properly amended from time to time.

In a condominium, your legal documents are generally called (1) the declaration and (2) the bylaws. In a homeowner association, those documents are called covenants, conditions and restrictions (or CC&Rs).

A board of directors has the right to enact reasonable rules and regulations, so long as those policies do not directly conflict with the legal documents. For example, if the bylaws allow pets, the board can enact a rule requiring pets to be on a leash while walking on common grounds.

However, if the bylaws prohibit pets, there is nothing the board can do to change this. It would take an amendment to the legal documents to make this change.

In order to amend legal documents, it usually takes a supermajority vote of all of the owners. Sometimes this is a 66 2/3 vote and sometimes it is as high as 75 percent. Why? The reason is because you and all the other owners bought into the association based on the existing documents -- and only you and a supermajority of owners can make any changes.

In the area involving restrictions on renters, the courts have held that a board cannot make the change merely by a rule enacted by the board. It takes a bylaw amendment to do this.

If your association is following the rules regarding amending your legal documents, and if that vote is positive, you and the other owners are legally bound by those changes.

I tend to agree that a blanket prohibition on leasing makes no sense -- especially in today's marketplace. If an owner loses his or her job and can't make the mortgage payment and the association fee, why force that owner to sell, especially in a depressed market? Or, if an owner is temporarily transferred to a job in another city, that owner should be permitted to lease -- at least for the duration of the temporary job. ...CONTINUED

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