Homeowners Association & Tenants

home-magnifyHOAs usually have to deal with a lot of problems, most of which are linked to renters. Now there are several ways to deal with these renters, which include banning them outright, limiting their number or letting them live as they wish. However, the fact is that HOAs have no direct authority; the only way they have of communicating with these renters is through their landlords since they are the ones who are answerable to the HOA. This lack of direct communication and need to deal with a third party makes the relationship of HOAs and tenants highly difficult to manage.

Luckily, homeowners and HOAs can limit their tenants-related issues with the help of a reliable property Management service like Metro Property Management San Jose. Read on to discover how this works.

Enforcing the Rules

Despite having no authority over their behavior, HOA has the right to expect that all the residents in the apartment complex, be they owners or renters, abide by the rules it had outlined. However, since they can’t force the renter to behave according to these rules, they should outline some additional policies for homeowners who are planning to rent their property. These homeowners should provide the HOA with all the governing documents related to the renters and a copy of the rules communicated to the renters as a part of their leasing agreement.

The HOA should also be assured that homeowners are forcing renters to abide by HOA regulations by making this a necessary part of their rental agreement. If the tenants then violate a rule, the HOA can inform the landlord immediately and urge them to take necessary actions at the earliest. If there is a penalty or fine for the action of a tenant, the landlord will be responsible for collecting that sum. With the help of Metro Property Management, both HOAs and landlords can avoid awkwardness and extra work since we manage all the necessary paperwork and carry out necessary actions on your behalf.

In some cases, the HOA may have the authority to take direct action without the help of a third party. For instance, if the tenant parks their vehicle illegally (e.g., in the fire lane), HOA has the authority to get the vehicle towed away and the tenant will be required to pay the necessary fines to get it back. Similarly, in all cases where a tenant crosses the line and infringes civil law, HOA can call the proper authorities (e.g. FBI, police, drug enforcement and fire safety) to deal with the matter.

Long and Short Term Rentals

There are two types of tenants that HOAs usually have to deal with. First off, there are long-term tenants who have a rental agreement of 30 days or more. These types of rental agreements are usually required by most governing documents to avoid turning the apartment into a hotel operation. However, in areas where tourism is a major source of income, there are several apartment buildings that are built for the sole purpose of short-term rental for individuals on longer vacations.

However, for such operations, it is important that all owners agree on short term renting so that HOA can devise rules and regulations accordingly. If only a few owners are renting their apartments on short-term agreements, a disagreement between tenants and permanent residents can occur. This usually happens because short term renters aren’t too keen about the community sense, have little knowledge about their neighbors and are usually in a party mood, making loud noises and creating a disturbance in the complex.

Therefore, for short-term rental agreements, it is important for all apartment owners to reach a consensus before such an operation can be pursued. If everyone decides to go along with a short-term rental, an onsite manager will be required to handle any issues that might occur with the tenants, including housekeeping and key exchange. Again, Metro Property Management can provide ample assistance in this regard. As for the funding of the on-site managers, both homeowners and HOA can contribute equally towards it, creating a win-win situation for everyone.

Controlling Tenants

The underlying cause behind most ongoing problems in an apartment complex is the lack of proper landlord standards or the enforcement of these standards by the HOA. Here are some landlord standards outlined by Mike Sarvis of Metro Property Management that should be adopted by HOAs to ensure no trouble with tenants.

  • A set of governing documents should be provided to all tenants by the landlords before they sign the rental agreement or move in.
  • Following the rules identified in the governing documents should be highlighted as a necessary step in all rental agreements.
  • Landlords should be held accountable for any infractions carried out by the renter.
  • Any requests that the renters need to make to the HOA should be communicated through their landlords due to authority issues.
  • In case a tenant violates several rules over a specific period of time, the board of HOA has the authority to terminate their rental agreement.
  • Landlords must provide HOAs with a copy of the rental agreement to ensure that they have complied with the landlord standards of the association and for contacting them in case of emergencies.

Fees and Surcharges Associated with Renters

In some cases, HOAs charge landlords a Renter Fee, which is also known as Move In/Move Out Fee. However, this fee can be regarded as discriminatory if not taken from all the residents of the apartment complex, whether they are living there themselves or renting it to a third party. If damage is caused by the renter to the apartment property while moving in or out, the HOA can ask the landlords to pay for those particular damages alone and for no other additional fee.

Communication between Landlords and HOA

If a tenant violates any regulation specified by HOA, the landlord should be notified through a written notice that includes the exact ICS, date and time of the violating action. The landlords should also be notified in writing of the necessary course of action they should adopt in dealing with particular renters. Just keep reminding the landlord that dealing with the renter is their responsibility and not the HOA’s.

Limits on Rentals

Often, an HOA places a limit on the number of houses that can be rented within an apartment complex. There can be both right and wrong reasons for taking this step, but the HOAs should try and stay away from the wrong ones, the top one being that tenants are undesirable at the apartment complex. Whether they are tenants or owners, they can be equally problematic for HOA and hence, they should be dealt with as individuals. The only valid reason the HOA can limit the number of rentals in an apartment complex is the protection of financing and market values.

Properties that have high number of rentals are often considered as investment properties and getting investor loans can be harder and more expensive in a tight market. This decreases the demand of their property in the market. While there are no specific rules regulating this aspect, it’s best to maintain at least a 2:3 ratio of owner occupancy in an apartment complex. If the number of renters exceeds that limit, lenders often subject the property to a closer scrutiny, resulting in higher interest rates or lender’s fees. This ultimately lowers the demand of that property.

While limiting rentals for this purpose is a worthy rationale, it can result in some issues. Giving permission to some owners rather than all will make the latter feel discriminated. To avoid this kind of issues, the board of the HOA must come up with proper rental restriction policies and guidelines that decide who can rent their property and when. They should also identify hardship cases when these rules can be bended; these include unemployment, disability or real estate downfall.

However, in case the owner of the property completely ignores HOA regulations on renter limitations and rent their unit, the association would have no control over the tenant. They can only hold the owner responsible for this action. This is limitations on rentals should be fair for all owners. Implying a total ban on renting can be perfect at times to ensure that everything is fair for all owners. With the help of Metro Property Management, you can create a sample restriction policy that is applicable to owners when they rent.

The Rights of Renters

In the end, the HOA should remember that all the tenants living in the apartment building have their own rights and those should be respected. In case of unreasonable rental restrictions, such as those based on race, culture, faith or sex, both the Landlord-Tenant laws and the Fair Housing Act protect the owners.

If you’re facing difficulties managing your property due to your tenants and would rather handle issues in a more professional way, Metro Property Management San Jose can help you tackle them without any trouble.