BACKGROUND  

The state of the economy, more specifically the mortgage industry and the regulatory responses thereto, can focus attention on the issue of investor-ownership and tenant occupancy of units in residential common interest communities. In a changing economy, past owners may even become tenants. It is necessary and prudent for many associations to regulate the number of investor-owned or tenant-occupied units. It is also important to ensure that tenants within the community adhere to the restrictions and regulations governing all residents. In so doing, it is advisable that associations:  

• Consult with legal counsel to determine if there is any statute or government regulation that impacts an association’s rental policy.  

• Establish and publish a policy that welcomes tenants as members of the community and invites them to participate in activities open to all residents. Receipt of the association newsletter or access to the public portions of an association website sends a positive message. A benefit of this approach may be to encourage tenants to behave like owners.  

• Develop a resolution that informs all owners of rules and regulations governing rentals and suggest language owners might consider that have proven successful in tenant agreements to reduce future conflicts in the association.  

• Consistently and uniformly enforce all standards related to rental properties, including notice to tenants and owners, when appropriate and lawful.  

• Require owners to notify the association when the tenancy will commence. The tenant names and phone, e-mail, or other contact information, including emergency contacts, should also be provided. This enables the association to contact all residents when events dictate communication on important, unforeseen matters.  

• Make it a policy that owners arrange for tenant(s) to receive copies of the rules and regulations or other information important for all residents to have.  

• Amend association documents to include an assignment of rents provision, which will enable the association to collect directly against a tenant if an owner is delinquent.  

RECOMMENDATION  

Laws governing leaseholds and rental restrictions vary in jurisdictions. Keep abreast of changes in federal law that may link the high number of rentals in any one community to greater risk in lending to buyers. Be sure that any rental restrictions are adopted properly. Because rental restrictions affect basic property rights, most jurisdictions require that any rules or regulations that prohibit rentals exist by amendment to the declaration, not merely documents that may be amended or adopted by the governing board. Boards may, by resolution, impose restraints on leasing, but these policies must be reasonable, uniformly applied and based on objective criteria. Most of all, communities should continue ongoing dialogue with legal counsel and regularly communicate with members in the association regarding the policies. CAI has adopted policies on Reasonable Occupancy Standards and Fair Housing. These may impact tenancy in any housing situation.  ​

Adopted by the Board of Trustees, April 8, 1983