Can CA HOA's enforce rental limitations on property purchased by investor in auction?


#1

An investor buys property in auction for rental purposes and finds out later that there are rental restriction as part of the HOA CCRs, The unit had tenants residing there at the time of the purchase which the new owner & HOA honored as hold over tenants after foreclosure. Once that lease expires, can the HOA legally prevent the new owner from getting new tenants in there?


#2

Hi FRUser,
I have never personally seen a rental restriction written into the CC&R’s. I would probably review the CC&R’s with the assistance of a real estate attorney to verify that this is a valid restriction.
If it is a valid restriction then the CC&R’s would predate the Deed of Trust you purchased and you are bound by the terms of these restrictions since they run with the property. I would assume that the CC&R’s would also address the sale of a currently rented property and the “grandfather” rights of a holdover tenant. Keep us posted on how this works out.


#3

Upscale condos often do have some kind of restrictions on renting. Eg. You might have to rent for at least a year. (The idea is to stop short term vacation rentals.)
Or, the prospective tenant may even have to be approved by t he Board.
Such restrictions would have to be in the CC&Rs. A Condo with almost total occupancy by owners, rather than tenants, is more valuable and that’s why buyers and lenders often ask what % of units are owner occupied.


#4

Restriction on short term, vacation rentals is a common restriction in Hawaii. The condos that allow short term vacation rentals are usually worth a lot more than those that don’t.


#5

thanks. The restrictions are real and amended and recorded as part of the CCRs before the date of purchase. the question is about any court cases where the owner may have been able to successfully fight the enforcement of this rule based on hardship or fair use. thank you


#6

The condo we have and use in Miami has both the restrictions I mentioned. Like Hawaii, most of the better condos prohibit short term rentals. I have seen some term limits on rentals here - but not board involvement. OTH, I don’t get involved with high end properties.


#7

What about CC&Rs that were changed years after you paid for the condo and were it’s legal owner when you decided to rent it?