50 PerCent Rentals In Your Ct Condo Complex Could Prevent You Selling Your Unit
As the result of the recession and the millions of foreclosures, renting is safer and more affordable than buying for many.
But be careful, if you complex is starting to approach the 50 percent mark, your association might want to consider putting a freeze on allowing more unit owners to rent their condos.
As MarketWatch’s Lew Sichelman explains “Fannie Mae, Freddie Mac and the Federal Housing Administration all shy away from backing mortgages in condo buildings where half or more of the units are not occupied by their owners. That could change, either up or down. But for now, those are their rules, and these days the primary lenders who fund new loans play by those rules, to the letter.”
In answering a readers question, he wrote “For that reason alone, I would be in favor of the bylaw change, even if you are not interested in selling at the moment. But there are other reasons to limit rentals.”
“One is that values tend to fall in buildings where the majority of occupants are renters. Well, perhaps not fall, but apartments certainly don’t rise in value at the same rate as those in buildings where owner-occupants predominate.”
I see some problems and considerations with this.
1. Bylaws may not be enough, it might require a change to the declarations which can take a much more rigorous process.
2. Sounds nice except if you are an owner ready to lease your unit or only able to sell it to someone who wants to lease it out. That can effect values too.
3. How does the Board arbitrate that last available lease? Will multiple leases show up to claim that last slot and will you face legal challenges no matter what is done?
4. What happens when a lease is up…can the same owner lease again or is there a waiting last for owners ready to lease? Can a unit be sold with the lease intact?
Lots of leases may be a symptom and a solution, more than the problem.
Happy Owner,
Why do you say ByLaws may not be enough?
J
Lenders have frowned upon this type of restriction/rule. Has this changed.