Homeowners Association (HOA) may impose rental restrictions that landlords must be aware of. Rental restrictions can limit your ability to rent out your property, which can affect your rental income. 

The laws related to HOA and rental restrictions can vary depending on the state in which the property is located. However, some general principles apply across the United States.

HOAs have the right to impose rental restrictions as part of their CC&Rs, subject to certain limitations. These restrictions must be reasonable and in compliance with fair housing laws. For example, an HOA cannot prohibit rental to families with children under the age of 18.

 Some states have additional laws that limit the extent to which HOAs can restrict rentals. For example, California law limits an HOA’s ability to ban rentals altogether and requires the HOA to make reasonable accommodations for disabled residents who need to rent out their property.

Landlords must be aware of the laws related to HOA and rental restrictions in their particular state, and ensure that they comply with these laws. It is always a good idea to consult with an attorney who specializes in HOA law if you have any questions or concerns.

Declaration of Covenants, Conditions, and Restrictions (CC&Rs)

A Declaration of Covenants, Conditions, and Restrictions (CC&Rs) is a legal document that outlines the rules and regulations for a particular neighborhood or community. To put it simply, it outlines what homeowners can and can’t do. The developer of the community typically creates the CC&Rs, which are legally binding for all property owners in the community. The CC&Rs cover a wide range of topics, including property maintenance, architectural standards, and rental restrictions.

The purpose of the CC&Rs is to safeguard property owners’ interests and maintain property values. It’s important to note that the CC&Rs cannot conflict with any applicable municipal, state, or federal laws. If the CC&Rs do not comply with the law, they are deemed unlawful.

Reasons why HOAs restrict rentals

To label the HOA as the “antagonist” to property owners would be unfair, as there are valid reasons for their restrictions on rentals. While these restrictions can impact the potential return on your investment, it is not reasonable to demonize the HOA for them.

 HOAs restrict rentals for several reasons. One of the main reasons is to maintain the quality of the community. HOAs often hold the belief that owner-occupied homes are better maintained and cared for than rental properties. Additionally, HOAs may be concerned about the potential negative impact that renters could have on property values or the quality of life in the community.

Rental restrictions protect the community from the endless entry of tenants that don’t understand the rules. They also limit the amount of maintenance that the association or property management company has to allocate funds for.

Examples of HOA rental restrictions?

Airbnb Restrictions

Some HOAs prohibit short-term rentals, such as Airbnb, in their communities. This is because short-term renters may not be as invested in the community as long-term residents and may be more likely to cause disruptions. 

One example is when an HOA imposes restrictions on Airbnb rentals that fall short of the minimum 30- or 90-day requirement.

Nightly Rental Restrictions

Some HOAs prohibit nightly rentals, which typically define rentals for less than 30 days. Nightly rentals can cause similar concerns as short-term rentals, such as noise disturbances and a lack of investment in the community.

Commercial Rental Restrictions

Some HOAs prohibit commercial rentals, which include businesses such as offices, retail stores, or restaurants. Commercial rentals can create additional traffic and parking concerns, which the community may see as detrimental. Make sure to get approval from your HOA board if you intend to use your property for a business. 

Single-Room Rental Restrictions

Some HOAs prohibit single-room rentals, such as renting out a spare bedroom in your home to a friend. It doesn’t matter if you reside in the property yourself. HOAs typically associate this type of rental with a higher turnover rate and have concerns about the quality of tenants.

Can an HOA screen potential tenants?

Yes, HOAs can screen potential tenants. However, the screening process must comply with federal and state housing laws. For example, an HOA cannot discriminate against potential tenants based on their race, religion, or family status. Additionally, some states have laws that limit the amount of information that can be requested from potential tenants during the screening process.

If the tenants must be screened by the board, you’ll need the board’s permission before letting anyone move in. However, not all states permit this, so make sure you speak with a lawyer.

Assuming that such requirements are permissible in your state and enforced by your HOA, prospective tenants will need to comply with the following criteria:

• Meet the HOA’s financial standards, which may involve submitting bank statements and undergoing a credit check.
• Undergo a background check, which may include reviewing the tenant’s status on the sex offender registry and contacting previous landlords to verify their track record as tenants.
• Participate in an interview with a member of the HOA board, who may use this opportunity to confirm certain information.

Violation of CC&Rs

If the property owner was not aware of the rental restrictions, they may be subject to fines or other penalties for violating the CC&Rs. It is the responsibility of the property owner to be aware of any restrictions that may apply to their property. Before purchasing a property in an HOA community, it is important to review the CC&Rs and understand any rental restrictions that may be in place.

This may sound cliché but ignorance of the law excuses no one. If the CC&Rs state that rentals are prohibited, you could pay a hefty fine if you violate the rule. The HOA has the authority to terminate the rental agreement or ban you from using common amenities such as gyms, swimming pools, etc. Furthermore, they can file a lawsuit against you.

By understanding the CC&Rs and any rental restrictions that may be in place, you can make informed decisions about renting out your property. If you have any questions about rental restrictions in your community, it is best to consult with an attorney who specializes in HOA law.

Once you are clear on your HOA’s rental rules, you can freely head on to Padleads and publish a listing for your properties. Once you upload it, you can easily syndicate it to high-traffic websites. That would make it more visible to potential tenants.