Below is a helpful tip from the Davis-Stirling.com Newsletter by ADAMS | STIRLING PLC regarding rentals and investors . . .
QUESTION: How can we restrict investors from buying and renting condo units? Can we require owners to occupy their unit and not rent it? Can we limit the number of rentals? -Roshan H.
ANSWER: Unfortunately, there is little you can do. Associations used to be able to limit rentals. Doing so was important in preserving property values and the character of the community.
Lenders. A high percentage of rentals creates instability as people move into and out of a community at a higher rate than homeowners. It can lead to higher crime rates, deferred maintenance, and lower market values. The percentage of rentals in an association is one of the criteria lenders use when offering loans insured by Fannie Mae.
Insurance. The insurance industry also recognizes the problems associated with renters. Claims histories have shown that associations with high rental populations have more claims. As a result, associations with excessive rentals may be charged higher premiums.
Rules Enforcement. The insurance Rules enforcement also becomes difficult because renters don’t have an ownership interest. With the passage of AB 130, fines are now limited to $100, which effectively eliminates rule enforcement for most communities. To learn what can be done, search for relevant and up-to-date answers regarding “Rent Restrictions, Vacation Rentals, and Room Rentals” at Davis-Stirling—click on “Search Davis-Stirling.”
Bad Legislation. Our legislature seems addicted to bad legislation. Legislators decided that forcing associations to allow investors to convert units into rentals somehow helps the housing market. It does not. The way to make more housing available is to allow more to be built. Another solution is to elect business-oriented representatives at all levels in the state. In addition, the legislature should be limited to meeting every other year and only for sixty days. It would slow down the flow of bad legislations.
DISCLAIMER. The Davis-Stirling.com Newsletter by ADAMS | STIRLING PLC provides commentary only, not legal advice. For legal advice, you’ll need to hire legal counsel. You can hire ADAMS | STIRLING PLC; Keep in mind they are considered corporate counsel to associations only.
