Many condominium associations are currently suffering from high rental rates. This is the result of underwater owners who cannot sell but have moved out of their units and foreclosures that have been bought up very cheaply by investors. It's not unusual to hear about small buildings with only a handful of owner occupants remaining. This can make condo living especially challenging for those owners. 

Imposing caps on leasing in your association is one way to preserve owner occupancy rates. Condo attorneys have generally advised that an amendment to the association's Declaration is the best way to ensure the enforceability of rental caps. However, an amendment requires a positive vote of a super majority of owners (often 2/3), and if that majority is already renting, they are unlikely to vote for a cap. 

A board may be able to work around an amendment and impose rental caps through Rules & Regulations, which are only voted in by the board, if their Declaration  specifically includes language allowing for the creation of rules and regulations related to leasing. 

A court opinion last February addressed the issue of rental restrictions via Rules & Regs. An owner sued the association for attempting to evict his tenant, as the association had Rules & Regs in place restricting rentals to 30% of units. However, because the association's Declaration did not include language allowing the board to establish restrictions on leasing, the owner prevailed. The court held that in order to impose any further restrictions on leasing, the association would have to amend the Declaration. Creating Rules & Regs was not a legally viable way to impose leasing restrictions because it was not expressly allowed by the Declaration.

Key takeaway.... Before giving up on restricting leasing because too many owners are already renting, check your Declaration! It may grant the right of the board to impose leasing restrictions via Rules & Regs, thereby circumventing an owner vote on an amendment.

You can read more about this case here. Understanding the hierarchy of authority of an association's governing documents can also help you to navigate many legal questions. 

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