Category: HOA/Property Management

If you own a condo or home but want to rent it out to earn some passive income, you may be wondering, “Can my homeowners’ association (HOA) prohibit or restrict rentals?”

The short answer is, “Yes.” A homeowners’ association can prohibit or restrict rentals. For example, many HOAs in Florida limit the number of leases per year or impose mandatory waiting periods before a homeowner is allowed to rent their unit.

If you are having disputes with your HOA or COA regarding rentals, you should contact our Tampa homeowners’ association attorney at HD Law Partners to discuss your particular situation.

Can HOAs prohibit rentals in Florida?

Generally, yes. Homeowners’ associations can either create rental restrictions or prohibit homeowners from renting out their units. However, under Florida Condominium Law, homeowners’ associations cannot amend their governing documents – known as a Declaration of Covenants, Conditions, and Restriction – unless at least two-thirds of the members approve the new measure.

Unfortunately, homeowners’ and condo association lawsuits against Florida construction companies and developers for construction defects and other abuses (breach of implied warranties, negligence counts, violation of minimum building codes, etc.) are far too common.

In June, when the “Loft 2” condominium in downtown Miami was constructed with some serious flaws—such as defects in the air conditioning, heating, and ventilation, and malfunctioning fire sprinkler heads—the association filed a lawsuit against the general contractor, Whiting-Turner Contracting Co., as well as a number of associated subcontractors, such as the fire sprinkler contractor, Century Fire Protection Inc., alleging the companies failed to build the condo according to building plans and Florida Building Code standards. Other problems facing the association included defective longitudinal seam welds in the piping, improperly condensed water systems, lack of water treatment, premature unit pump failures, and rusting and scaling of pipes; all of which failed to meet minimum standards. Below, we discuss some of these claims in greater detail.

It seems like every day, there are disputes between homeowners associations and its members, even though these disputes are supposed to be avoided by specific, detailed covenants and restrictions agreements residents agree to when they buy into these associations.

There are always going to be circumstances under which homeowners associations and property managers must take emergency action in order to secure the safety of the entire community. However, as highlighted by a recent news article, residents aren’t always happy about these actions, and sometimes resort to suing the association.

This Particular Proposal

In this particular circumstance, the association found itself in need of taking traffic enforcement into its own hands and proposed sanctioning residents if they were caught speeding because the local police department could not possibly manage the issue on its own, given the breadth of their jurisdiction. Under this proposal, repeat offenders could even have the bar codes that get them into the community suspended, forcing them to wait for a security guard to let them in. A first offense would simply produce a warning, but any other subsequent offense could result in a resident’s barcode being suspended.

Tenants filing for bankruptcy is less of an issue for residential landlords, but an increasingly frustrating problem for commercial landlords as we get further into 2018. As a result, it is important—now more than ever—that commercial landlords know what their rights are when it comes to how tenant bankruptcy affects lease agreements.

Rules: Before & After Filing for Bankruptcy

First and foremost, it is crucial to understand that, once a tenant files for bankruptcy, landlords and other parties are prohibited from taking any action against the tenant (i.e. debtor) unless it is first approved by the bankruptcy court. However, if a tenant is in default prior to filing for bankruptcy, and the landlord takes every step required under state law to terminate the lease before they file, the lease is then not subject to the tenant’s bankruptcy case. This is because it is the act of the tenant filing for bankruptcy that imposes an automatic stay against any actions by landlords and other parties (where actions are any activities involving collecting, demanding, or otherwise seeking to recover amounts due).

As attorneys who regularly represent homeowners associations and property managers, we frequently get questions about what the board can do with and without membership approval. These types of questions ultimately come down to distinguishing between what is and is not a “material alteration.”

The general rule is that if the proposed change is a palpable change to the appearance, function, or use of the association property and/or its common element, it constitutes a material alteration. If a homeowners’ association wants to make a material alteration, it must first obtain membership approval. Some examples of material alterations that require membership approval include painting the color of a common area (such as a clubhouse), or placing carports over parking spaces.

What About Landscaping?

There are sometimes questions in the gray areas, such as changes to landscaping. Typically, landscaping decisions are not considered to involve material alterations, and are thus left up to the board’s discretion. This includes decisions involving whether or not certain plant species should be replaced with others, or whether shrubs or vegetarian can be moved, changed, etc.

In some circumstances, FEMA is also empowered to authorize payments to policyholders even before inspections are done if the policyholder needs to cover an emergency expenditure (such as temporary housing) after the disaster.

HOA Contracts & Emergency Powers

The process of repairing and mitigating damages under programs like these can be very confusing. For example, while policyholders have an obligation to mitigate damages as much as they can, they are also told not to enter into any contracts without first running them by the homeowners’ association (HOA) and/or board first.

In addition, homeowners association should ensure that there are separate contracts for each unit and, if possible, have the owner of that unit separately contract for any emergency services such as water extraction from their unit. However, if this is not possible due to emergency circumstances, homeowners associations should exercise their rights under Florida law to ensure that any contract signed indicates that the HOA is only acting as an agent given the emergency circumstances. These powers are available on a very limited basis for the sake of protecting public health and safety.

When it comes to monthly dues and homeowners’ associations, questions come up frequently; both from executives dealing with homeowners who aren’t paying yearly dues; and from homeowners wondering whether there are circumstances that allow them to withhold monthly dues.

When it comes to homeowners’ dues, property managers, presidents, and other executives have a fiduciary duty to ensure that all owners stay current with their dues. The failure to do so could lead to a Pandora’s Box of issues, whereby other owners follow suit and fail to pay dues as well.

Owners Failing To Pay Dues

Most legal documents signed with homeowners’ associations, as well as state laws, allow associations to file liens against owners for failing to pay their dues. Another option for the association is to foreclose on the owner. Regardless of the option pursued, working with an experienced homeowners’ association attorney in your area is necessary, noting that, in most circumstances, the association can also recoup its legal fees for having to file against the owner.

There have been a number of disputes around the country of late between landlords and homeowners associations and tenants/homeowners of late over what rights homeowners have to display particular items; for example, flags that others may find offensive. As a result, we thought we would provide some background on what rights both landlords and homeowners associations have in limiting certain types of displays in communities.

When these types of disputes reach litigation, landlords typically file a claim arguing that tenants contractually gave up any free speech rights by their execution of the lease agreement, which bans objectionable conduct; the unreasonable conduct being actions that are unreasonable in character. In the instance of homeowners associations, buyers agree to certain restrictive covenants when they purchase their home, which associations then have the right to enforce.

When it comes to running a homeowners association or condominium and all of the upkeep and operations associated with these types of properties, it is important to understand the ins and outs of insurance coverage and liability.

For example, “bare walls” insurance plans are often discussed in associations that want to limit the cost of water damage claims because each owner (versus the homeowners association) restores their own unit interior (including cabinets, walls, and floor coverings, as well as other interior finishes).

What Is “Bare Walls Coverage”?

“Bare walls” coverage is a type of insurance coverage purchased by condo or homeowners associations which typically applies to communally-used features in buildings (such as entryways). Associations typically use costs that they charge in HOA fees to cover this type of insurance policy. However, it is the most limited type of coverage that an association can purchase. Individual unit owners are required to purchase their own insurance to cover anything that is damaged within their units (for example, toilets, appliances, etc.).

Nothing is perhaps more effective in ensuring that there is a smooth relationship between landlords and tenants than carefully drafting and negotiating the contract that governs that relationship and the rights that each party has.

One of those terms includes the terms of “enjoyment” covenant, also known as a covenant of quiet enjoyment. This aspect of the lease refers to what extent the tenant and/or landlord is able to possess the premises in peace without disturbance by others. In other words, it’s the right to undisturbed use, and if it isn’t expressly spelled out with the specifics in the lease, it is automatically implied by the courts. This means that if the landlord “interferes” with this quiet enjoyment in any way, this can provide the tenant with the right to withhold rent and, in some circumstances, even terminate the lease itself.

One thing you will notice is that, even though this covenant is implied, it is usually written into every lease. This is because both parties (landlord and tenant) always retain the right to modify the condition and enforcement of this covenant by the tenant. Thus, when it does appear in a lease, its purpose is typically to restrict the conditions of the tenant’s rights. While this typically looks like language referring to a tenant’s requirement to pay rent and perform all of their lease operations before they enjoy quiet enjoyment against the landlord, contract law actually allows for two parties to contract to pretty much anything as long as it’s legal; thus, a landlord has a significant amount of leeway in building flexibility into this provision in the lease if need be.

As recently covered by the Miami Herald, the issues created by short-term rentals (as facilitated by websites like Airbnb and others) have become one of the most pressing challenges facing both homeowners and condominium associations during the last several years. Specifically, multiple legal issues have arisen from the blatant disregard of association governing documents clearly prohibiting short-term rentals.

And yet, enforcing these restrictions has proven to be extremely difficult, warranting the development of strategic legal measures to address them. This is particularly of concern in Florida, which is one of the top home-sharing markets in the country due to the number of tourists that come through the state on a regular basis.

In response, a number of Florida municipalities are now adopting stringent restrictions and regulations. For example, Miami Beach allows for some short-term vacation rentals in certain zoning districts, but bans them outright in all single-family homes and in some zoning districts. Recently, fines were also raised to $20,000 for first-time violations of these restrictions.