Worries move in - HOA RENTAL ISSUES!

Article Courtesy of the Sun Sentinel
By Beth P. Krane
Posted  June 20, 2004

Boynton Beach Rows of pristine white houses with pastel shutters greet today's visitors to Palm Beach Leisureville, much as they did when the community attracted its first snowbirds 35 years ago.

Near dusk, retirees -- some already enjoying their second or third decade as such -- sit on front-yard patios, taking in their tidy green lawns and making small talk with neighbors.
"If you drive through, you'll not even see a cigarette butt on the ground," said 10-year homeowner Arthur Withers, 76. Withers served on the community's landscape committee for years and still volunteers once a week at the golf course and for the Citizens Observer Patrol.

Withers and other Leisureville residents fret, however, that their idyllic community may not stay that way much longer.

Investors have swooped in, snatching up multiple properties and turning them into rentals. A growing number of absentee landlords is eroding the nature of a community that has aged so well due largely to the attentiveness of hundreds of volunteers, some residents say.

Their labor keeps up the community and holds down monthly maintenance fees, which is crucial for those on fixed incomes. But some residents worry that renters, especially short-term ones, aren't as apt to volunteer.

"In the minds of an investor, this is a prime location," said Tim Hare, Leisureville's property manager. "We paint the homes every few years, do roofs and the maintenance. Somebody can buy a home and never even come here.

"These homes are like ripe strawberries in a little green patch."

Roughly 7 percent of the 1,803 houses in the 55-and-older community are now rentals, said Shirley Jaskiewicz, a community association board member. A number of those have been turned into rentals only within the past year or two, she said. The 2003 county tax rolls listed 11 owners with multiple properties in Palm Beach Leisureville.

Some residents have received letters from investors offering to buy their properties sight unseen and have brought those letters to the board's attention, Hare and Jaskiewicz said. Jaskiewicz showed one letter sent to residents by a local investor named Steve Lamm. Lamm did not return a phone call seeking comment.

Residents have petitioned the association's board to restrict the growing number of rentals. Still, the community's main concern is stopping investors from buying multiple properties rather than blocking those who inherit their parents' homes and rent them until they are old enough to retire, Jaskiewicz said.

The board would like to curb rentals by requiring buyers to live in their houses for at least one year or allowing owners to rent for only so many months a year, she said.

The Florida Supreme Court ruled in 2002 that a condominium's governing documents may be amended to restrict an owner's right to rent a unit and some legal experts think that ruling applies to homeowner associations, too.

An association's governing documents put owners on notice that the community's rules could change, said James Krivok, a West Palm Beach attorney whose firm represents hundreds of homeowner associations in Palm Beach County. The firm has had many inquiries about how to restrict rentals because of similar concerns about investors, he said.

Leisureville, however, still has some tough hurdles to clear before it can address the situation.

Its bylaws and articles of incorporation require two-thirds of owners to vote for an amendment, but a third governing document, its declaration of restrictions, also requires the approval of original mortgage holders. Krivok said that is an incredible burden to overcome, because many of those institutions may no longer exist.

Leisureville community leaders are now trying to determine who the original mortgage holders were while the board consults its attorney. In the meantime, the community has taken down its Web site because some residents feared that it attracted investors from places as far away as Colorado, Jaskiewicz said.

"I don't like the way it could become," said Donna King, a homeowner who launched the community's volunteer-run flea market that nets about $60,000 a year to help cover maintenance costs.

Jan Bergemann, who served on the Homeowners' Association Task Force that Gov. Jeb Bush convened last year, said he thinks associations shouldn't seek to restrict an owner's right to rent his property.

"If I'm paying the mortgage, I should have the right to do with it what I want," said Bergemann, president of an advocacy group called Cyber Citizens for Justice.

Bergemann argued that older communities seeking to restrict rentals may discover an unintended consequence of their actions.

"They're limiting their own market for sales," he warned. "Thirty-five years is already an older house. Houses in an older community might not sell as easily as all the newer units being built around them."