More and more people are becoming interested in real estate, especially real estate as a source of passive income. One of the most common ways is to purchase a property and then rent it out. Pretty straightforward until you have a property that is part of a Homeowners Association (HOA). Not to worry! This post has many tips and tricks to assist in having renters in an HOA property.
As a property owner, it’s important to remember that you’re not just responsible for your own home but also the homes of your renters. This means that you need to have a plan in place for how you will handle rule enforcement. While some rules may be obvious (no smoking in the house, no pets, etc.), others may be less so, like, what happens if someone throws a party? By establishing and enforcing clear rules, you can help to keep your renters happy and minimize any potential conflicts.
HOA Governing Documents
What happens if you don’t have a plan? Conflicts can arise between neighbors, and as the property owner, you could find yourself in the middle of them.
Solution? Check your HOAs governing documents. Many HOAs have specific procedures for handling rule enforcement, which can help to minimize conflict and confusion. If your HOA doesn’t have specific procedures, consider creating a plan yourself that outlines how you will handle different situations that may come up. The main governing document types are listed below.
Governing Document Types:
One of the most important tasks on your HOA duty checklist is sending out annual disclosures. This includes sending out notices to all homeowners reminding them of important dates and events, as well as updating them on any changes to the community such as changes to the rules and regulations. It’s a good idea to also include a financial statement so homeowners can see how their dues were spent. Make sure to send out these disclosures as early as possible in order to give homeowners enough time to prepare.
1. Landlord-Tenant Laws
The relationship between a landlord and tenant is governed by a variety of laws. In many cases, the rules are specific to the state in which the property is located. As a landlord, it’s helpful to be familiar with the laws in your area. The following are some general tips:
Lease Requirements: A lease should specify the terms of the tenancy, including the amount of rent and when it is due. The lease should also include a description of the property, including any restrictions on use.
Notice Requirements: Landlords must provide tenants with written notice before taking action against them, such as evicting them or increasing the rent. The amount of notice required will vary depending on the law in your area.
Security Deposit Requirements: In most cases, landlords are required to return a security deposit within a certain amount of time after the tenant moves out. The amount of time may vary depending on the law in your area. Landlords may also be required to provide written notice before taking any action with respect to a security deposit.
2. Property Management Laws
Landlords must comply with specific laws when it comes to property management. These laws may include requirements for security deposits, notice periods, and other actions landlords can take regarding their tenants. To learn more about the specific laws in your area, contact a local property management company or real estate attorney.
3. HOA Regulations
Many homeowners associations (HOAs) have regulations in place that restrict or prohibit tenants from certain behaviors. For example, some HOAs may prohibit smoking or pet ownership. Tenants should review any HOA regulations before signing a lease, as violating them can lead to eviction.
Landlords are typically responsible for paying HOA fees, though this can vary depending on the agreement between the landlord and tenant. As the property owner, it’s important to be aware of any specific rules or regulations that your HOA may have regarding the payment of fees. By ensuring that everyone is aware of their responsibilities, you can help to avoid any potential conflicts or misunderstandings.
A good idea is to create a renters policy outlining the rules and regulations that tenants must follow while living in your property. This policy should be clear, concise, and easy to understand. Be sure to include information regarding things such as payment of HOA fees, noise levels, pet policies, and parking restrictions.
Remember that while you are not required to have a renters policy, it can help prevent any potential conflicts or misunderstandings between you and your tenants. Include information regarding what will happen if a tenant does not comply with the rules and regulations outlined in the policy. This could include penalties such as fines or eviction. You may also want to specify the consequences for breaking specific rules, such as noise levels or pet policies. Make sure you are clear about what is expected of your tenants and what will happen if they do not comply with the rules. This will help to avoid any confusion or conflict.
Communication Between Renters and HOA
While more often than not renters would come to the landlord first, they sometimes may need to contact the HOA directly. There are a few ways that renters can reach out:
Transferable and Non Transferable Rights
One of the key things to keep in mind when enforcing HOA rules is that there are both transferable and non-transferable rights. Transferable rights can be transferred to another person, whereas non-transferable rights cannot. This is an important distinction to make when it comes to enforcement, as it can help clarify who is responsible for a particular violation.
Transferable Rights would be: common areas policy, and pet policy.
Non-Transferable Rights would be: Board member potential, voting opportunity, and meeting attendance. These ones are typically tied with owning the property, which means they can’t be transferred to renters unless stated otherwise in the HOA.
If a renter violates an HOA rule, the board should first contact the renter to try to resolve the issue. If the issue cannot be resolved, the board may then take further action, such as issuing a warning, scheduling an inspection and/or fining the renter. Interested in learning more about violation procedures? Our previous blog, HOA Violation Notice- How Long to Wait Before Reinspection, expands on what to do if your HOA runs into a violation by renters that requires an inspection or reinspection.
If a tenant does not comply with the rules, you may need to evict them from the property. Make sure that you are familiar with the eviction process in your state and that you have the proper documentation in place. You should also have a plan for finding a new tenant if necessary.
Nothing to Fear (With the Right Knowledge!)
Hopefully this post has shown that while renting out a property that is part of an HOA is slightly different from renting out a non HOA property, there is really nothing to fear! With the right preparation you can set things up to make the renting process smooth sailing for everyone.
Interested in learning more about Homeowner Associations and HOA best practices? Check out our blog where we share information on HOA’s, how to manage an HOA, and so much more. If you’re an HOA looking for help or guidance, you’ve come to the right place. HOA management companies, like AMC (Association Management Concepts), are great resources to help guide new or established HOA’s to create the best possible community. Contact us today!