Rentals in an HOA Community: A Guide for Boards

Rentals in an HOA Community: A Guide for Boards

About 26 million households in the United States live in an HOA community. The vast majority of these households own the property they live in; the rest are renters.

The phenomenon of rentals in an HOA community is as old as the idea of HOAs. However, rentals can hurt HOA property value and even lower the quality of life of residents. It's the duty of HOA boards to ensure proper regulation of HOA rentals.

In this article, we share a few best practices for handling the issue.

Banning Rentals in an HOA Community

Placing a complete ban on renting HOA property seems the most straightforward way to deal with the matter. You can make a strong case for a total ban.

Renters don't have any vested interest in the HOA community. They can move out whenever they wish, after all. As such, they're more likely to violate the HOA's rules.

However, in any free and fair society, property owners have a right to unrestricted use of their assets. It's not ideal to deny them the right to rent out their homes if they so wish.

So, are there any laws on rentals in the HOA community? In some state and local jurisdictions, HOAs cannot ban rentals. In others, Alabama included, HOAs are given the power to decide how to go about the issue.

Placing Restrictions on Rentals

Most HOAs across the country allow rentals, but place various restrictions, putting the community's best interests first. You'll find these restrictions in the HOA's governing documents.

For example, an HOA can restrict the number of properties that can be rented out at any given time. This helps limit the number of renters that can reside in the community.

An HOA can also restrict certain types of rentals. In most cases, HOAs favor longer-term rentals. On the other hand, short-term rentals are rarely allowed.

Working With Landlords to Ensure a Smooth Stay

The role of an HOA management team doesn't end with policy formulation. The team needs to work with owners who are letting their homes to better enforce the community's rules on rentals.

For example, all prospective renters must be screened to make sure that only suitable tenants are allowed into the community. The HOA can set up a screening service that all landlords must use when they want to bring in a tenant.

It can also help with the onboarding of new tenants, ensuring they're familiarized with the HOA's rules, their rights, responsibilities, and the consequences of violating the rules.

Embrace Best Practices for Managing Rentals in an HOA Community

Ideally, rentals in an HOA community shouldn't exist, but that's not practical. HOA boards must find ways to help homeowners successfully rent out their homes while making sure rentals don't negatively impact the community and its residents.

Embracing these best practices is a good place to start, but there's a lot more you can do, such as hiring a professional HOA management company.

PMI Birmingham Region offers association management services in Central Alabama, and it's part of a worldwide property management franchise that has over 20 years of experience. Contact us to learn more.