Community Associations increasingly seek to regulate or limit rentals within their communities. Whether the goal is preserving neighborhood character, maintaining property values, or reducing turnover, associations have several approaches available when amending their governing documents. Understanding these options—and their practical implications—can help boards choose the right fit for their community.
Complete Rental Prohibition
The most restrictive approach is a complete ban on rentals, with an exception only for leases already in place when the amendment takes effect. Even where full prohibitions are adopted, boards should consider including a hardship exception. This allows the board discretion to approve temporary leases in circumstances such as a death in the family, job relocation, or military deployment.
Prospective Rental Prohibition
A more moderate approach applies the rental prohibition only to owners who purchase after the amendment is recorded. Existing owners retain the right to rent their units or lots, typically subject to reasonable conditions such as minimum lease terms, providing a copy of the lease to the association, and ensuring tenants receive the governing documents. Over time, as properties change hands, rentals will naturally decrease. This option is often easier to pass because it does not strip rights from current owners.
Occupancy Requirements
Some associations require owners to reside in their property for a specified period—one, two, or three years, for example—before becoming eligible to rent. While this approach can deter speculative investors, it can be difficult to determine how long an owner may have resided at the property. Tracking residency and verifying compliance can be administratively burdensome and may lead to disputes.
Rental Caps
Another option is limiting the total number of rentals permitted in the community at any given time. For instance, an association might allow only ten units to be rented simultaneously. While this provides some flexibility, it requires ongoing monitoring and can create confusion about waitlists, priorities, and eligibility. Rental caps can be a difficult option to administer effectively.
Additional Lease Provisions to Consider
Regardless of which approach an association adopts, certain supplemental provisions can help protect the community. Common additions include prohibitions on short-term rentals and timeshares, requirements that owners provide copies of leases to the association, mandates that leases incorporate the governing documents, minimum lease terms, and a clear statement that owners remain responsible for tenant violations.
Choosing the Right Approach
There is no one-size-fits-all answer. Boards should weigh the community’s goals against practical enforceability and the likelihood of owner support. Consulting with legal counsel familiar with your state’s laws and any recent case developments is essential before adopting any rental restriction amendment.
