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Condos’ attempts to limit unit rentals can create issues

Many condominium associations want to limit the owners’ ability to rent their unit to tenants. But doing so is often more complicated than it sounds.

There are lots of reasons why condo associations might want to restrict rentals. For instance, tenants generally aren’t as careful as owners to take care of the property and respect other residents’ right to peace and quiet. Owner-landlords who don’t live in the property might be less willing to help financially with needed improvements. And a high percentage of renters might make it more difficult for owners to sell their units, in particular by making it harder for potential buyers to qualify for certain types of home loans.

The advent of multiple short-term rentals through websites such as Airbnb.com also raises the prospect of a continuous revolving door of tenants, which could attract partying, disorder and crime.

There are a number of approaches that can be taken to restricting rentals, including:

  • Banning rentals altogether;
  • Setting a maximum number of units that can be rented at one time;
  • Requiring a minimum duration for leases;
  • Requiring owners to live in a unit for a year before leasing it;
  • Requiring prior trustee approval of any lease, and/or requiring certain language to appear in any lease; and
  • Requiring trustee approval of the tenants.

It can be a good idea for the condo to allow the trustees to make exceptions in the case of a hardship, such as an owner who becomes unemployed, suffers an injury or illness, or has a job transfer to another part of the country.

The toughest question arises when a tenant misbehaves, and disturbs other owners or engages in drug use or other illegal activity. What can the association do? Fining the owner might or might not solve the problem if the owner isn’t willing to break the lease, or if the owner disagrees about the extent of the problem.

In some cases it might be possible for the association itself to bring eviction proceedings. But that’s not always clear. In addition, tenants can often defend themselves against eviction by making claims for breaches or misconduct by the landlord – and how will the association respond to that in court if the landlord is absent or uncooperative?

The bottom line is that rental restrictions are complicated, and it’s good to work with a real estate attorney to come up with a solution that meets everyone’s needs as well as the legal requirements.

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