RESTRICTING RENTALS IN ASSOCIATIONS?
Scare Tactics and/or Fairy Tales?
An Opinion By Jan Bergemann
Posted August 2, 2004
The newest and latest hype in associations seems to be the attempt to restrict owners in associations from renting their property. The restrictions come in all shapes and sizes, vary by reasoning, but always end up restricting private property rights!
You hear the wildest stories to justify ratifying these restrictions: From renters destroying property values and bringing crime into the community to restricting the ability to mortgage property and limit possibility of sale.
This is not supposed to be a legal opinion. It's just a summary of arguments and opposing views being brought in prospective, trying to use some common sense.
In my opinion the recent hype was caused by three factors:
The Supreme Court Decision of Woodside vs. Jahren seemed to have given condo associations the right to change their own rules by amending the deed-restrictions. But the opinion of Judge J. Quince, which urged the legislature to revisit the issue, and a public outcry of owners and investors, made legislators think again and caused them to add the paragraph:
26 718.110 Amendment of declaration; correction of error
27 or omission in declaration by circuit court.--
28 (13) Any amendment restricting unit owners' rights
29 relating to the rental of units applies only to unit owners
30 who consent to the amendment and unit owners who purchase
31 their units after the effective date of that amendment.
into two different bills. When Governor Bush signed both bills -- SB 1184 and SB 2984 -- into law on 06/23/2004 the final rush to beat the given deadline on 10/01/2004 started. Attorneys quickly got busy mailing out letters to boards warning them about the looming disaster of being unable in the near future to amend their deed restrictions, disallowing rentals.
Many different reasons are given to paint a bleak picture for the future of the association, if rental restrictions are not quickly enacted:
What most people seem to forget: Nearly all of us have been renters at one time!
Renters destroy property values: The "holy" property values are generally used as excuse for anything the industry doesn't want to see happening. So far the proof for this argument is still lacking. When you were a renter -- did you destroy your neighbor's property values?
Renters bring crime into the community: Meaning, if someone is just a renter, he/she attracts crime? Or renters are criminals? Please don't forget: crime pays pretty well as long as you don't get caught. And especially drug dealers make enough money to buy the property. They don't have to rent!
Renters in the community restrict ability to mortgage property: Another scare tactic used to convince owners to agree to restrict rentals. Attached a letter from HUD dealing with this issue, showing clearly that this is just another fairy tale. And the PLANNED UNIT DEVELOPMENT RIDER from Fannie Mae. Any mention of renters?
Renters are noisy and don't care about neighbors: That is a matter of attitude towards neighbors -- it's not renters or owners!
Here is a list of possible arguments against rental restrictions:
Rental Restrictions limit ability to sell: If your association has rental restrictions, you eliminate for yourself a big group of potential buyers. Investors, and/or snowbirds, who would like to rent out the property during the summer month, will not buy the property. And potential buyers, planning to retire to Florida in the future, will not be able to buy, since they can't rent out the property at this time!
Renters can be kicked out faster: A renter who doesn't obey the rules can have his lease terminated, especially since the board can approach the owner and explain the existing problems. Try this with an owner. If you run into an obnoxious owner, your association will be involved in a lengthy court battle!
Renters can be a good source of income for an owner in need: We have here in Florida many elderly people, who might suddenly be confronted with the possibility of moving into a nursing home. In order to supplement the income, mostly necessary to afford the cost of a nursing home, renting out the property is a very good source of extra income. And considering today's interest rates, rental units provide a better yield for your money than selling the property and investing the money.
Restriction of personal property rights: And last not least -- it restricts your personal ability to do with your property whatever you like! Agreeing to rental restrictions may be very short-sighted and may come back to haunt you one day in the not so far future!
And if the argument in condos isn't already causing enough confusion, attorneys now carry this problem into homeowners' associations -- often with success, using the same scare tactics as described before.
These attorneys are using the same argument they used in condominiums:
Florida Supreme Court
Decision of Woodside vs. Jahren
Quote: "From the outset, courts have recognized that condominium living is unique and involves a greater degree of restrictions upon the rights of the individual unit owners when compared to other property owners.
In White Egret, we quoted favorably from Hidden Harbour Estates, Inc. v. Norman, 309 So. 2d 180 (Fla. 4th DCA 1975), to further explain the restrictive nature of condominium ownership and living:
[I]nherent in the condominium concept is the principle that to promote the health, happiness, and peace of mind of the majority of the unit owners since they are living in such close proximity and using facilities in common, each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property. Condominium unit owners comprise a little democratic sub society of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization. White Egret, 379 So. 2d at 350."
But, as usual, you can try to push it until you finally find somebody fed up with being forced to give up vested rights and go to court to fight a lengthy court battle. And you can be sure that this will happen one day, because many people who invested their savings into rentals instead of Wall Street are being pushed into a corner.
And if the Florida Supreme Court is true to its word -- see above -- they will turn down the ability of homeowners' associations to restrict rentals like in condominiums. Because: "Condominium unit owners comprise a little democratic sub society of necessity more restrictive as it pertains to use of condominium property than may be existent outside the condominium organization."
But single family homes or even villas and town-homes are NOT condominiums and don't need to be more restrictive.