Homeowner Associations Clamp Down on Rentals

Allan Ferguson

California Suburbs

Neighborhoods around the country are hiding the welcome mat from renters in a bid to offer protection to property values, a trend that has put a strain on renters and homeowners alike.

Some homeowners complain local laws and neighborhood association covenants are getting too restrictive on renting in an economy that already makes it tough to sell a house.

?It?s really bad here in Florida, and i have talked to plenty of property managers all around the country,? says Jayci Grana, president of the National Association of Residential Property Managers. ?Some areas have more associations than others, but for people who do, they?re just tightening down ridiculously hard on tenants.?

The rise in restrictions comes at a time when renters already are being squeezed. With apartment vacancies at a ten-year low, in step with real estate research firm Reis, the price of renting have been on a gradual incline since 2010 as more families choose renting over buying a house.

Nearly a year has passed since Tiana Patterson put her three-bedroom home in Madison, Miss., out there, but even after a $30,000 price cut, there?s still a ?on the market? check in the yard. She and her husband can?t rent their home due to strict rental prohibitions, so instead they spend $36,000 a year to preserve it and pay their mortgage and property taxes.

Patterson thinks fewer restrictions might enable you to discover a buyer, too. ?If covenants are too restrictive it is so difficult,? she said.

Madison, an affluent suburb of Jackson, Miss., has most of the strictest restrictions inside the state, however the broader trend isn?t confined to the city?s limits. The fad is nationwide, says Madison lawyer Mike MacInnis, who draws up covenants for homeowners associations. ?Studies show that once you?ve lots of rental properties, individuals are more transient and do not care about upkeep. That makes property values go down.?

In 2009 in the middle of the housing crisis, the Madison neighborhood of Brisage saw four of its 57 houses go into foreclosure. One was rented out, and the folks didn?t even move in furniture, said Carl Crawford, president of the Brisage Homeowners Association.

They slept on mattresses they plopped at the floors. Crawford said the neighbors ended up paying another $3,000 into the association to hide the upkeep costs on that rental property.

Consequently, the neighborhood amended its covenants in 2009 ?to ban leasing unless it was to the immediate family and for a limited period of time,? Crawford said.

Grana acknowledges those concerns, but says restrictions go too far.

?, it is a bit a Catch-22,? she said. ?In case you make it difficult for homeowners to hire out their properties, they don?t seem to be going to have the income to take care of with their mortgage; it will go into foreclosure, and that is the reason also going to drive down property values.?

Others complain that it?s unfair for all renters to be branded as neglectful or unwilling to keep up their properties. Barbara Van Poole, who operates an actual estate firm inside the Dallas/Fort Worth area, said she?s worried that the craze is thriving in an economy that has left many folk unable to purchase a house.

She said Plano, a Dallas suburb, is thinking about not just inspections before occupancy but periodic checks afterward for so long as someone rents one. That?s something Madison already does. Grana said other cash-strapped municipalities try to monetize the increase in renters by charging property managers for brand spanking new permits and other fees.

?A few of the covenants for new neighborhoods in the previous couple of years have leasing restrictions,? MacInnis says. He says neighborhood associations are only attempting to protect homeowners. ?That is what covenants are all about.?

Tags:homeowner associations, national association of residential property managers

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