HOA Rental Restrictions...What Does that Mean?
It means everything if you are an investor looking to purchase a townhouse or condo in a Community Interest Development (CID), or an owner who currently lives in one and, do to circumstances, needs to rent it out.
Home Owner Associations (HOA) have Rules and Regulations to govern the CID. In those rules there are often restrictions or prohibitions on how many units can be rented out in the development. With the recent down turn in housing many HOAs are really enforcing the number of units that can be rented. What happens to the homeowner who must relocate but cannot sell their unit? What about if the owner already has renters in the unit but their lease is up, can he rent it to someone else?
In order to protect the current owner of a condo or townhome in a CID, Governor Brown passed, this summer, a law that went into effect January 1, 2012. It is SB 150. You can follow the link to read the analysis of the bill.
"This bill exempts an owner of a unit in a common interest development (CID) from any prohibition on renting or leasing the unit, except if the prohibition was effective on the date of purchase."
In other words, if the owner bought the property and there was no prohibition against renting it at that time, the owner, their spouse, family members, heirs, business partners, and/or beneficiaries of the property through trust, would be "grandfathered in" and be exempt from the current prohibition and be allowed to rent out their property. However, if the owner decides to sell the unit to a different party, the new owner would be subject to the prohibition.
Therefore, if you are an investor, and you come across a Community Interest Development that has prohibitions regarding renting or leasing the unit, you will not be able to rent out the property. The best thing to do is move along and find another development that does not have rental restrictions. They may be hard to find but yes there still are some in the East Bay Area.
