Question: I manage a large unit condominium complex. Several years ago, the board tried to pass a rental restriction and did not get the member votes needed. Now, in light of the foreclosure crisis, investors are buying foreclosed units and renting them out. We have one homeowner who is in the process of buying his fourth unit. Can an HOA limit the number of units owned by a single entity? And how does this affect our association as a whole?
Answer: Yes, the HOA can limit rentals but it is subject to an appropriate vote of the members as defined by the governing documents which may be a super-majority (2/3 or 3/4) or even unanimous. Of course, the more rentals you have, the tougher it will be to get the vote. But now, lenders are more closely scrutinizing the number of rentals within condominiums. FHA, Fannie Mae and Freddie Mac all impose rental restrictions on loans they insure (FHA) or underwrite (Fannie Mae and Freddie Mac). FHA’s limit on rentals is 15% and 49% on the other two. Since these entities are responsible for the lion’s share of condo loans, failing to adhere to the rental restriction limits could severely compromise the ability to sell or refinance a unit.