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Can condo board restrict rentals?

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By : Nick Fury    99 or more times read
As the real estate market worsens, the legal right - of being able to "rent" out condominiums - is becoming an even more important issue. Decreasing real estate values have placed added financial burdens on condominium owners who live in their units or want to "flip" these short term investments for profit. All seek to achieve maximum financial gains.

The "rental of condominiums" raises many essential legal concerns. Firstly, United States courts have granted condominium boards wide latitude in establishing "uniform" laws governing their associations. The "Burgess versus Pelkey" case argued that these "communal" arrangements permit boards to ensure that all members follow the same rules.

Secondly, basic law directs that "basic rights exist, unless specifically forbidden". If a condominium declaration does not specifically limit member activities, then the members still "retain the right to lease (rent) the condominium".

Consider the United States Constitution. It doesn't detail every single right or freedom for every citizen. It would be impossibly absurd to try to tell everyone exactly what they can and can't do. Good law places precise reasonable borders and guidelines around acceptable behavior.

Thirdly, most lower legal authorities can pass new laws, unless restricted by higher authorities. The "Bill of Rights" was written to protect "certain fundamental rights". This was meant to prevent future amendments to violate these rights.

Condo boards should know that rental of a condo is a possibility. Still, the law does allow condo boards to pass "amendments" after a contract has been signed, as long as the restriction serves a "useful, reasonable purpose."

Some condominiums restrict all rentals; others allow a percentage of units to be rented below 49%. Others demand that renters be approved by the board. Generally, courts have deemed rental restrictions to be an acceptable authority of condo boards. See what condo rental arrangements are occurring in your locale.

Federal, state and local laws govern condominium association actions. The "hierarchy of the power source" orders that "higher authorities" or "higher levels of government" have more power to "overrule" lower entities. For example, the federal government can overrule state governments. Research these levels of hierarchy, consider court precedents.

Read the "Bylaws of the Condominium Association" to see what powers they have. Also, check out the "Rules and Regulations of the Condominium Association" to discover what the "Amendment" process is. If the board amends the contract, must all member sign new contracts?

Oftentimes, bureaucracies will proceed with rules they prefer, but don't necessarily have the authority to enact. Many Supreme Court decisions fall under this category. You will need to challenge them, forcing them to prove their legal authority to engage in the specific action. Most condo boards cannot arbitrarily prohibit actions.

Survey neighbor opinions. Chances are very good that someone else cares about the same issue. Even neutral neighbors will not want to "lose" their rights. There is strength in numbers.

If you have a solid foundation, you can ask the condominium board to consult a lawyer for his opinion. Tread lightly, so as not to bruise egos.

Another option is claiming a "hardship exemption" (health or financial difficulty) allowing you to circumvent condo restrictions. Oversupply of condominiums has placed added stress on all condominium owners. Try to leverage these positions.

Most condominium boards will want to keep everyone happy and avoid long, arduous, expensive court cases. Collect relevant documentation and research the law. If you start a legal case, your attorney will measure your chances of success. He could also argue that "absent any restrictive language, you should be allowed to rent out your condo while the case proceeds." This would be a temporary victory.

Condominium associations are governed by multiple levels of rules, regulations and laws. Condominium boards have the authority to establish "uniform" laws governing their association. They can restrict condominium rental with amendments that serve a "useful, reasonable purpose."

Consider all of these issues. Find facts and cases that support your "right to rent your condominium". Eventually, you might want to find a way so both your condominium board and you benefit. Negotiate from a position of strength and fight for your rights.
Nick writes articles and works for For Sale Owner Homes.

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