Can Association Limit Number of Rentals?

QUESTION: I live in a large association in Orange County. Some association members would like to limit the number of units that can be rented to either 30% or 50% of the total number of units. Owners who wish to rent their units would be unable to do so once the approved percentage has been reached.

The declaration of covenants, conditions and restrictions (CC&Rs;) states that “nothing in this document shall prevent an owner from renting his/her condominium out” to a tenant. Can the association prevent an owner from renting out a unit? Can the association charge a higher monthly assessment to the owners of units that are rented?

ANSWER: The declaration is your association’s “constitution.” It is the highest authority among your association’s governing documents and it is very difficult to change since it requires a high percentage of owners’, and often the lenders’, approval.

If your declaration prohibits the restriction of rentals, then any conflicting rule passed by the board of directors would be invalid. The only alternative would be to change the declaration by a vote of the owners, following the amendment procedure that is stated in the document.

Charging an absentee owner a higher assessment would probably be illegal since the monthly assessment is based upon the percentage of ownership or the square footage of the owner’s unit. Again, the declaration will typically state the procedure for establishing each person’s obligation for the maintenance of the complex. For example, if the association has 10 units and the declaration states that each of the 10 unit owners pays an equal amount of the association’s expenses, then each owner is responsible for one-tenth of the total expenses. Any other method of sharing the expenses is invalid, and therefore, unenforceable.

The association could charge an extra fee, separate from or in addition to the monthly assessment, only for specific services that are above and beyond the services provided to the other owners. The extra fee must be fair and justifiable. It cannot be an exorbitant fee that is simply used as a penalty to discourage rentals.

Use Caution Trying to Enforce Age Restriction

Q: In our condominium association, one of the owners now has a daughter and a grandchild living in her condominium unit. Our association’s documents specify that it is a “senior citizen” condominium. What can be done to evict the residents who do not comply with our occupancy restrictions?

A: Be very careful about trying to enforce the age restriction until you seek the advice of an attorney who can analyze your particular association’s rights. Even though your association’s documents prohibit children, there are state and federal laws that may make your association’s age restrictions illegal.

In 1988, the federal Fair Housing Amendments Act was adopted. The law specifies that a residential complex must have specific services or amenities for senior residents in order to qualify for senior housing status. This federal law supersedes your association’s legal documents.

The penalty for age discrimination can be as high as $50,000 so I urge you to spend the necessary funds to obtain expert legal advice before you or your board of directors tries to evict the young woman and her child.

Board Members Mum About Suing Developer

Q: My association is in the midst of suing the developer for construction defects. The board of directors will no longer allow our board meetings to be taped. When the owners ask questions about the building or equipment replacement or financial reports, the board members say, “We can’t discuss that. The lawyers are handling it.” What are the owners entitled to know about these matters? Please give us your comments.

A: In my opinion, a tape recording of a meeting is an invitation to trouble. Sometimes, taping a meeting is necessary but the tapes should not be saved as a permanent record. Tapes should be erased after the minutes, the official record of the association, are written, approved and filed.

Under normal circumstances, owners are entitled to have access to the association’s records and they are entitled to be informed about board meetings so that they can attend. However, when legal action is pending, it is necessary that the association’s interests be protected. Therefore, the board is allowed to hold “secret meetings,” called executive board meetings or executive sessions and the minutes may be sealed until the legal issues are resolved.

The board has an obligation to disclose, in general terms, the types of problems that are the basis for the legal action, but the specifics of the case are privileged information.

The board has the power and authority to act on behalf of all of the owners. The owners, who elected the board members for that purpose, sometimes get concerned about all that power when legal issues arise. However, the owners should be very cautious about interfering unless they have irrefutable evidence that the board is not acting in their best interests.