DEAR BENNY: I own a rental townhouse in a local community. The board of directors of the homeowners association has put to a vote of homeowners a proposal that would forbid any owner from renting his or her unit once the current lease expires, thus forcing owners to sell the property in what is not only a depressed market but is in competition with many other properties for sale. Can this possibly be legal? –Doris
DEAR DORIS: Unfortunately, if the legal process is followed correctly, it will be legal. This issue has been litigated in many states, and to my knowledge, all the court cases have held that community associations have the right to limit — or even prohibit — the number of renters in those associations.
What owners within condominiums and homeowner associations do not understand is that they are bound by the legal documents and the rules and regulations of their association — as they currently exist and as they may be properly amended from time to time.
In a condominium, your legal documents are generally called (1) the declaration and (2) the bylaws. In a homeowner association, those documents are called covenants, conditions and restrictions (or CC&Rs).
A board of directors has the right to enact reasonable rules and regulations, so long as those policies do not directly conflict with the legal documents. For example, if the bylaws allow pets, the board can enact a rule requiring pets to be on a leash while walking on common grounds.
However, if the bylaws prohibit pets, there is nothing the board can do to change this. It would take an amendment to the legal documents to make this change.
In order to amend legal documents, it usually takes a supermajority vote of all of the owners. Sometimes this is a 66 2/3 vote and sometimes it is as high as 75 percent. Why? The reason is because you and all the other owners bought into the association based on the existing documents — and only you and a supermajority of owners can make any changes.
In the area involving restrictions on renters, the courts have held that a board cannot make the change merely by a rule enacted by the board. It takes a bylaw amendment to do this.
If your association is following the rules regarding amending your legal documents, and if that vote is positive, you and the other owners are legally bound by those changes.
I tend to agree that a blanket prohibition on leasing makes no sense — especially in today’s marketplace. If an owner loses his or her job and can’t make the mortgage payment and the association fee, why force that owner to sell, especially in a depressed market? Or, if an owner is temporarily transferred to a job in another city, that owner should be permitted to lease — at least for the duration of the temporary job. …CONTINUED
So, you should mount a good old-fashioned political campaign. Talk to your neighbors, get the names and addresses of all current absentee owners, and try to convince them to vote against the pending proposal.
Hint: Boards are properly reluctant to provide owners with the names and addresses of the absentee owners. Prepare a talking paper explaining why this proposal is not in the best interests of your association. Accordingly, tell the board that you will pay for the postage if the board will send your paper to all owners. In my opinion, the board has to comply with your request.
DEAR BENNY: I am writing to you because I am confused about the homeowner tax credit. I bought my house in September 2007, before … the incentive for the first-time buyer program, and now it looks like we don’t qualify for the new "longtime resident" credit. So what happens for people like us who don’t qualify for either? –Melyssa
DEAR MELYSSA: That’s a fair question and unfortunately there is no answer — and no assistance — for "people like you." You bought a couple of years too early to qualify for the $8,000 first-time buyer tax credit, and you have not owned your home long enough to qualify for the $6,500 tax credit for existing homeowners who purchase a new primary residence. In order to qualify for the latter, a buyer must have owned and used the same home as a principal residence for at least five consecutive years during the eight-year period ending on the purchase date for the replacement principal residence.
Congress and the Obama administration created these tax credits for the primary purpose of stimulating the real estate economy. Although you are not able to take advantage of either credit, hopefully the stimulus that the credits have already created may assist in keeping the market value of your house from declining.
DEAR BENNY: My wife and I have been happily married for almost 40 years. Over the last five-plus years my wife has owned the house where we both live. Her name is the only one on the deed.
If we jointly buy a residence in the new law time frame, can my wife claim the $6,500 existing homeowner tax credit and can I claim the $8,000 first-time homebuyer tax credit? My name has not been on any deed for the past three years. We normally file joint tax returns, but might have to file separately? –Don
DEAR DON: Nice try, but unfortunately that won’t work. The Internal Revenue Service — and the new law — makes it clear that when a person is married, his or her spouse has an interest in the house, even though he or she is not on title.
According to the IRS, you and your spouse are not first-time homebuyers because your wife "had an ownership interest in a principal residence during the three-year period ending on the date of purchase. …CONTINUED
"Similarly, both you and your spouse must be longtime homeowners of the same previous principal residence in order to qualify for the longtime resident homebuyer credit." As such, neither of you qualifies.
For more information, go to www.irs.gov and type in "first time homebuyer" in the search box.
DEAR BENNY: When does a landlord have the right to enter one of his rental properties? For example, the smoke detector was going off and the renters were away for the weekend. Or the lease says that three adults can live on the property, yet the landlord knows that four adults are now living on the premises. Can a landlord enter the property (without the consent of the renters) at any time? –Barbara
DEAR BARBARA: While I do not know the laws in every state, I suspect they are the same. You — as a landlord — own the property and clearly have the right to enter the property.
However, most leases I have reviewed contain the following language: "The landlord shall have the right to enter onto the property for any reason on reasonable advance notice to the tenant; however, in the event of an emergency, the landlord may enter at any time."
Some leases spell out what a "reasonable time is" — such as 24- or 48-hour advance notice. So, review your lease. It may contain such language, and if it does not, your future leases should have it. And if your lease is silent, I suggest you follow the guidelines of the language of those common leases.
But let’s look at your two examples. If the smoke detector is ringing and the tenants are not at home, I consider this an emergency, which would give you the right to enter without notice. But to check on the number of tenants living at the property, in my opinion, is not an emergency.
I suspect you will respond and say, "Well, if I have to give them advance notice, when I show up they will hide the fact that there is another tenant in the property." Yes, that’s a possibility, but even though you are the landlord, your tenants deserve a modicum of privacy.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@sandbox.inman.com.
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