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Does your HOA get to approve your sales/rents?
Old 01-08-2019, 10:42 AM   #1
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Does your HOA get to approve your sales/rents?

I live in a "normal" SFH community (not a condo, still cut my own lawn, no gates, no club, but common areas, a small park and dock, are maintained). Low fee, low service kinda normal. Rules are somewhat loose and haven't changed much since the 80's.

Suddenly, our board proposes that they want amendments to require applications for any new rental or sale, with 30 days to approve, and include background checks, credit reports, etc. IOW, when i go to sell, I have to tell a buyer he must wait for a month and submit to a background check, before I can take the offer, potentially making another neighborhood with no wait seem far more attractive... Same for rentals even if the owner does their own checks (as I'm sure many do). And if I owned a rental in the neighborhood I'd look to sell and get rid of it vs. this malarkey.... (selling any time soon for me is not an option, but will be in about 5 years).

I'm concerned this will slow property sales, which hurts sale prices, and sounds like the sort of thing that hurts 100% of people for a potential .01% "catch" of someone with a dodgy past.

Anyone have an HOA with similar rules? I'm going to the board meeting tonight so arm me with good stuff!
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Old 01-08-2019, 10:53 AM   #2
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I would think this would be torpedoed by any mortgage lien holders
unless they exempt bank foreclosure sales from the restrictions.


I would think this would also run afoul of fair housing laws.
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Old 01-08-2019, 11:00 AM   #3
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I live in a "normal" SFH community (not a condo, still cut my own lawn, no gates, no club, but common areas, a small park and dock, are maintained). Low fee, low service kinda normal. Rules are somewhat loose and haven't changed much since the 80's.

Suddenly, our board proposes that they want amendments to require applications for any new rental or sale, with 30 days to approve, and include background checks, credit reports, etc. IOW, when i go to sell, I have to tell a buyer he must wait for a month and submit to a background check, before I can take the offer, potentially making another neighborhood with no wait seem far more attractive... Same for rentals even if the owner does their own checks (as I'm sure many do). And if I owned a rental in the neighborhood I'd look to sell and get rid of it vs. this malarkey.... (selling any time soon for me is not an option, but will be in about 5 years).

I'm concerned this will slow property sales, which hurts sale prices, and sounds like the sort of thing that hurts 100% of people for a potential .01% "catch" of someone with a dodgy past.

Anyone have an HOA with similar rules? I'm going to the board meeting tonight so arm me with good stuff!
Wondering what they are teyong to achieve. Preventing rundown properties? Avoiding registered sex offenders as residents? I would look to the root cause. Sounding more like a condo board approval then a low-key HOA
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Old 01-08-2019, 11:05 AM   #4
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No, although all sales require a release from the HOA to ensure all association fees have been paid by the seller and are not in arrears. Does your HOA require a majority approval by the members to pass something like that? Can't imagine members supporting such an amendment.
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Old 01-08-2019, 11:17 AM   #5
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Our HOA requires 70% approval from all members to pass, so I'm hoping if nothing else, it will fail from lack of enough votes and turn out. They weren't even smart enough to provide prepaid postage for the voting forms.

And yup there's another amendment to lower that threshold for future votes to 60% - I'm voting against that one too!

But you know how people get - this is being marketed as "to protect our family neighborhood", and yes.... there is a current owner who is a registered sex offender. But 5 mins of googling shows that was a relatively tame incident 15 years ago, not a pedophile or rapist situation. Seems to me like a major overreaction, and they aren't even specifying what would constitute a denial in the new bylaws (yes they are written by the lawyer, so I presume they might be legal).
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Old 01-08-2019, 11:17 AM   #6
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Quote:
Originally Posted by Aerides View Post
I live in a "normal" SFH community (not a condo, still cut my own lawn, no gates, no club, but common areas, a small park and dock, are maintained). Low fee, low service kinda normal. Rules are somewhat loose and haven't changed much since the 80's.

Suddenly, our board proposes that they want amendments to require applications for any new rental or sale, with 30 days to approve, and include background checks, credit reports, etc. IOW, when i go to sell, I have to tell a buyer he must wait for a month and submit to a background check, before I can take the offer, potentially making another neighborhood with no wait seem far more attractive... Same for rentals even if the owner does their own checks (as I'm sure many do). And if I owned a rental in the neighborhood I'd look to sell and get rid of it vs. this malarkey.... (selling any time soon for me is not an option, but will be in about 5 years).

I'm concerned this will slow property sales, which hurts sale prices, and sounds like the sort of thing that hurts 100% of people for a potential .01% "catch" of someone with a dodgy past.

Anyone have an HOA with similar rules? I'm going to the board meeting tonight so arm me with good stuff!
Sounds to me like most of the board members don't plan to either rent or sell and want to have total control over everything..I'm not sure its legal as to the selling hold and fair housing laws.
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Old 01-08-2019, 11:29 AM   #7
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Spock's point is good. I would ask them if they have buy-in from the lien holders, and insist on this as a condition to pass it. They'll never get it. Nor should they.
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Old 01-08-2019, 11:37 AM   #8
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No, never heard of such a thing.

We would not consider buying into a HOA that had any restrictions like that.

I would not worry. I think that common sense will prevail over the outlandish wishes/proposals of what is probably a few people on the board.

I wonder if the Board has bothered to get some legal advice on this.
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Old 01-08-2019, 11:46 AM   #9
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No, never heard of such a thing.

We would not consider buying into a HOA that had any restrictions like that.

I would not worry. I think that common sense will prevail over the outlandish wishes/proposals of what is probably a few people on the board.

I wonder if the Board has bothered to get some legal advice on this.

Having attended several HOA meetings, I would in no way rely on common sense, either in the board or the residents, to prevail. One person whispers "keep out sex offenders" and all the soccer moms will rally around it.
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Old 01-08-2019, 12:40 PM   #10
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Yes, my HOA requires that all rental agreements be long term and approved by the HOA. This was passed by the homeowners years ago to protect themselves from rental units that were filled with people who did not give a dang about the community. Cars illegally parked, illegal modifications to the outside of the building, trash left outside for critters to get into, violations of various rules and CCRs, etc.

We limit rentals to long term (6 month minimum) and no more than 20% of the total units. So no Airbnb rentals. There are exceptions. For example, one can rent ones home to immediate family - children, parents, grandkids.

However, our rules do make it impossible to get FHA financing. So far that has not been a problem.
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Old 01-08-2019, 12:40 PM   #11
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I remember an HOA meeting at our weekend house where one member was proposing a vigilante committee be deputized to tear down some trees a neighbor had planted that the self help proponent complained obstructed his view.
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Old 01-08-2019, 12:56 PM   #12
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Our HOA needs to approve rental agreements to make sure they are complaint with HOA rules and the CCRs. We limit rentals to 20% of the units. It has worked well for all involved. In particular all rentals must be a minimum of 6 months. No Airbnb stuff allowed. There are exceptions - anybody can rent to an immediate family member - kids, parents, grand-kids, and it is not counted as part of the 20%.
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Old 01-08-2019, 01:02 PM   #13
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This could affect home your home values.

Both My DM and DB live in coops. The coop boards have this kind of power and use it. It REALLY slows down sales and many potential sales are rejected. Which explains why the coop units are generally cheaper than non coop condos.
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Old 01-08-2019, 01:15 PM   #14
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One of an HOA's main objectives is to enhance/maintain property value. This rule would not do that.
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Old 01-08-2019, 01:18 PM   #15
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I'd suggest going door to door an making sure that everybody effected knows about this. There is a tendency for owners to become complacent, and not participate in the process of understanding and questioning the decisions of those who are in power. Consequently, there is a tendency for those in power to come to consider their constituents as their personal domain. We have seen this in our area. One guy went to the meetings, and he couldn't believe what was being considered. He made sure we all knew, and when we all showed up and voiced our dissension, that was the end of some pretty crazy ideas.
I'd bet that when you explain how these restrictions could effect their property values, most will be eager to get more involved.
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Old 01-08-2019, 01:26 PM   #16
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Our association documents require both sales and leases be approved by the association. The approval process is routine in my experience... if they ever denied an application they would need to make sure that they are on solid ground to avoid a discrimination lawsuit.

The documents further provide that if the Board disapproves or fails to approve that within 15 days and the Owner intends to close anyway that the Board gets an additional 30 days and the Board or any other owner has a right of first refusal to buy the property under the same terms as the subject sale. It gets more complicated from there.

In our situation, it doesn't impede the sale process.... we agreed everything and went under contract as any other transaction... it is just at the same time that we excuted the P&S we also did the application to purchase a unit. The application is pretty simple... one page... and just has contact info, employer, occupation, title, 2 bank references, 2 credit references, personal references, who will be living there, etc. No SS# or financial info required.

To be honest, I don't think that they do much with it but it is more to weed out people who are unwilling to apply. I know in our case the application got lost in the shuffle but our closing agent did receive approval and the transaction happened anyway.... I know this because when I emailed a member of the board to add us to the list for the newsletter that he had no knowledge of our purchase... also, they never charged us the $100 fee they were supposed to... I didn't include payment with the application assuming that it would be charged to us on the closing statement and it wasn't on the closing statement.

There is a delicate balance between wanting to screen certain undesireables from buying but at the same time being careful not to discriminate and get sued which is costly to the association.
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Old 01-08-2019, 01:33 PM   #17
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While we live in an HOA community, the HOA is pretty laid-back and reasonable. I've never heard of such a proposal and would be vehemently opposed to any such proposition. And it is unlikely that I've consider buying into a community with such rules because it would make it such a pain to sell.
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Old 01-08-2019, 02:17 PM   #18
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We sold a house, and then a townhouse, in a planned community with several layers of governing associations.

We rented out the townhouse. Leases had to be for one year or more. Nobody told us whom to rent to - that would have been seen, rightly, as discriminatory. We sold in 2014, though, and I wouldn't be surprised to see a sex-offender clause in the governing docs now. The townhouse HOA retained an attorney.

The associations conduct independent periodic inspections, which always found something we had to fix, or something the renters were doing (e.g. install a window a/c unit) that violated some guideline. We then had to get the tenants to comply.

The townhouse HOA could put liens on properties, which prevented selling. The liens could be if the property owner had fees in arrears, or violated any architectural guideline. To put the townhouse on the market, we had to paint the front porch a different shade of white, replace all the outdoor lighting fixtures with brand-new ones, and various other things.

Now it is coming back to me that the HOA probably could not legally stop a sale for "violations." But any new owners would immediately be hit with "noncompliance," and few people would want to buy under those circumstances.
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Old 01-08-2019, 02:23 PM   #19
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I am on our HOA board. I would think it would depend on how the HOA is structured and what powers are granted to the HOA. Our HOA gets it's power for covenants/deed restrictions. If we wanted to invoke this type of restriction we would need a change to those restrictions, which would require a majority vote of the subdivision owners. Each subdivision is set up differently. I have never see an HOA with this type of power. We did pass an amendment to our deed restrictions that said the HOA needed to be notified of renters within 60 days of the lease. i.e. before or after. The purpose of the amendment was to have contact information for residence in the neighborhood.
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Old 01-08-2019, 02:52 PM   #20
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I've certainly heard of the rental restriction rule, but never a for sale rule.

If OP had more time, OP could go around door to door and collect proxy forms from owners not going, then OP would have many votes.
I wonder if the Board has collected proxies, and already has enough votes to win. ?
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