Question: Our members approved a Rental Restriction Policy at the most recent annual meeting which grandfathered existing rentals. Should this policy be put in the recorded bylaws? If a unit is occupied by an owner’s relative, is the unit classified as a rental or as owner occupied?
Answer: Since the ability to rent one’s property is considered a basic right, informing prospective buyers of the policy through recorded bylaws is essential. A Rental Restriction Policy is considered a major change in ownership rights and should always be handled as an amendment to the bylaws. As such, the appropriate number of members (as defined by the governing documents) must vote to approve the policy. The appropriate number may be a super majority (more than two thirds) or even 100% of all members, not just those that show up to a meeting. Amendments must be noticed to all owners in advance of a special meeting, Annual Meeting or special ballot. The issue cannot simply be raised as a motion from the floor of a meeting. Whenever bylaws are being amended, all members must be advised in advance so they have an opportunity to vote. Check with a knowledgeable HOA attorney to make sure this policy is enacted properly.
If the majority feel that a rental restriction policy is desirable, it is highly recommend that the policy should apply to all members with no exceptions. Allowing some members to have a privilege that others don’t is bound to create conflict and an administrative nightmare. All rental restriction policies should have a hardship provision for military deployment (owner is away temporarily), down real estate market (few buyers or selling at a substantial loss) and other reasonable exceptions approved by the board.
To qualify as â€œowner occupiedâ€, an owner on the title must occupy the unit. A cousin or daughter may also occupy the unit but they do not qualify as owners. If an owner is not actually living in the unit, it is not owner occupied.