HOA changing rental rules (real estate, rentals, condominium)

[badman70]

Hi,

I've lived in my unit for many years and when I had to move on the value of the property was too low for me to sell. So I rented it out hoping to recap my lost value in time. The HOA bylaws allowed owners to rent which is the agreement i signed when I bought many years ago. Now there is a rumor that the board will outright ban renting. This of course makes me very upset since it's not the rules I agreed to.

Anyway, does IL law allow me to be grandfathered in to the original rule?

If not, what is to become of my tenant if they have a signed lease?

What are my options here if renting is suddenly banned?

[MSchemist80]

With HOA's your options are always little to none. Sell your house, learn your lesson, and never buy a property with a HOA again.

[yousah]

You'll need to ask an attorney for sure. But sometimes the no-rental clauses kick in after a certain % of other owners have already rented out their units.

Lenders have restrictions on lending money to owners of units in complexes with too high a number of non-owner occupied units. So the prohibitions against not renting out units keeps financing available for your complex. It's really tough to sell if buyer's can't get the typical Freddie/Fannie backed financing.

[jlawrence01]

Originally Posted by badman70

Hi,

I've lived in my unit for many years and when I had to move on the value of the property was too low for me to sell. So I rented it out hoping to recap my lost value in time. The HOA bylaws allowed owners to rent which is the agreement i signed when I bought many years ago. Now there is a rumor that the board will outright ban renting. This of course makes me very upset since it's not the rules I agreed to.

Anyway, does IL law allow me to be grandfathered in to the original rule?

If not, what is to become of my tenant if they have a signed lease?

What are my options here if renting is suddenly banned?

First, what do the HOA declarations say on the subject. In general MOST HOAs require a 2/3 or 3/4 vote from ALL owners in order to modify the HOA rules.

The board does have the ability to make such a rule. Of course, there is a decent chance that such a rule would be challenged in court and overruled.

Do remember that is a condominium association becomes over 50% rentals, that it is very difficult for new buyers to get FHA mortgages which will significantly affect your ability to sell.

This is where you might decide to start attending the HOA meetings and express your opinion or heaven forbid, get on the board to stop the change in the rules.

If all else fails, hire an attorney BUT ... good RE attorneys are quite expensive.

[Chris_H_2]

Originally Posted by jlawrence01

Of course, there is a decent chance that such a rule would be challenged in court and overruled.

On what do you base this statement?

[jlawrence01]

Originally Posted by Chris_H_2

On what do you base this statement?

My wife has been on the board of several condominium associations over the past twenty years and has retained several fine real estate attorneys who are very familiar with the Illinois Condominium Association Act. It is there opinion that the boards decisions to forbid renting would be successfully challenged.

And what do you base your implied opinion on?

[middle-aged mom]

Originally Posted by badman70

Hi,

I've lived in my unit for many years and when I had to move on the value of the property was too low for me to sell. So I rented it out hoping to recap my lost value in time. The HOA bylaws allowed owners to rent which is the agreement i signed when I bought many years ago. Now there is a rumor that the board will outright ban renting. This of course makes me very upset since it's not the rules I agreed to.

Anyway, does IL law allow me to be grandfathered in to the original rule?

If not, what is to become of my tenant if they have a signed lease?

What are my options here if renting is suddenly banned?

Rather than react to a rumor, attend board meetings and ask the question.
It's substantially more challenging to get sold when more than 50 % of unites are not owner-occupied because of a lack of financing. How many units in your association are owner- occupied?

Where exactly does your association address unit rentals? If it's in the declaration/ by-laws, the board cannot change these documents. Instead, a super majotiy of owners would need to agree to the change.

Most condos trend towards capping the number of rental units and most have some element of grandfathering.

Again, get information and rational from the horse's mouth instead of reacting to rumors.

[cully]

Have you said whether there are actual board meetings that residents are notified of and can attend? Are these meeting minutes online anywhere or can they be picked up at the office? Perhaps it is an unfounded rumor or a point of discussion...and, some would say, a good point for discussion...and one where home owners can weigh in.

[jlawrence01]

Originally Posted by cully

Have you said whether there are actual board meetings that residents are notified of and can attend? Are these meeting minutes online anywhere or can they be picked up at the office? Perhaps it is an unfounded rumor or a point of discussion...and, some would say, a good point for discussion...and one where home owners can weigh in.

The state of Illinois requires at least an annual meeting.

[Lookout Kid]

I was on a condo board that discussed passing a limitation on rentals, and our attorney advised us that the people who bought in to the association prior to the rule change would have a good legal case to be grandfathered, since the limitation of rental rights constitutes a limitation on the value of their property.