Sunday, February 22, 2009

Renters: The Conversation

From experience, I can tell you that living in a condominium as a renter is a second-class-citizen experience.

Condominium living as an owner and board member highlights a few of the dilemmas inherent in renting condominium units to renters.

In today's economy, sometimes it's either rent a unit or abandon it to the bank. Other hardship situations may dictate the same option.

What's a board to do?

First, because this may vary with time, understand what the Federal guideline is for owner/occupancy percentage in order to qualify for federally-backed mortgage loans. If you can't find this detail on the Internet, your association's attorney or association manager is a good source.

Second, include renters in your community. There's really no good reason to exclude them from communications, events, or civility guidelines.

Third, find a way to install effective rental guidelines for owners to follow.

Here's a to-do list for a board considering adjusting or altering existing rental guidelines in your governing documents:

  1. Read your governing documents. You may find sections in your CC&Rs, your By Laws and in your Rules and Regulations.

  2. Understand your rental caps.

  3. Poll local banks and understand their lending rates and rental cap limits.

  4. Change and adjust your rental cap, as necessary.

  5. Publish a welcome packet for (new owners and) new tenants. Include parking, garbage, pet, noise, common area use guidelines, interior maintenance guidelines, and whatever else may be particular to your property.

  6. Establish owner guidelines for renting that includes but may not be limited to:

    • Written agreement with the owner that if a tenant fails to pay rent, the the owner remains solvent enough to continue paying assessments and the mortgage, if any, on the unit
    • Written leases in which the board can include language that covers inclusion of CC&Rs, By Laws and Rules by reference (require a copy of the lease for the board)
    • Reserving the board's right in the lease to evict any tenant who is apparently 'uncontrollable' by the owner
    • Minimum lease term limits
    • Tenants being screened by a professional tenant screening service (require that a receipt of payment with no tenant name attached be delivered to the board)
    • Move-in and move-out fees, to pay for restoring the exterior assets owned by the community.
    • Tenants and their vehicles and pets being registered by the board
    • Tenants signing for copies of CC&Rs, By Laws and Rules (produced at the expense of the owner)
    • Tenants receiving a copy of named violations and fine schedules
    • Defining hardship situations that could permit the board to offer an exception to the rental cap.

  7. Formalize the results of your conversation and review them with your attorney to insure the viability of your guidelines.

  8. Present the rental package at a board meeting and include all the parameters in the minutes, so that every owner understands the guidelines for renting a condominium unit.
Practically, tenants need to understand the process by which damages are repaired, civility guidelines are enforced and so forth. 

For example, if a tenant breaks a window, the tenant needs to know that the first call is to the owner, to report the damage. Then the owner can work with the board to install a replacement window that is the same model, style and specification of all the other windows in the community. 

When excessive noise emits from a unit -- whether occupied by a tenant or an owner -- neighbors need to understand who to call, when to call and what to expect from a report of excess noise. 

Owners need to understand that they are liable for damage and for violation fines their tenants incur, and that how they collect such monies from their tenants is their own charter and cannot involve the board or the managing agent.

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