Tuesday, April 3, 2012

Renter Education

Many homeowner associations have restrictions on leasing (rental caps) that, among other items, make the renter liable for unpaid assessments.  Unfortunately, many landlords do not realize this, and even more fail to provide copies of the Declaration, Bylaws, and Rules & Regulations to the tenant prior to signing the lease. 

With the help of legal counsel, each of Association should draft a mandatory addendum to be included with all leases (signed by both the landlord and lessee) with this assessment obligation, along with notice of typical community violations (such as pet restrictions & acceptable move-in times).

In practice, landlords frequently overlook these required addendums.  Several times each year the Association should provide notice of this regulation to keep it fresh, with copies delivered to all residents, in the event that the landlord is not forwarding mail to the tenants.
Sample assessment liability wording for the addendum could be something such as:
If the landlord is delinquent on Association assessments, the tenant must send monthly rent payments directly to the Association until the notified that the delinquency is paid in full.  If the tenant refuses to send these rents, the full annual assessment amount becomes due, and the tenant is liable for the entire amount and can be pursued in collections as if he/she were the owner.  The Association will also continue pursuing the owner payment.
Per the State statutes the tenant can't be evicted by the landlord while paying the rent garnishment to the Association.

Whether or not the Association’s Declaration has a covenant that permits it to evict tenants for any type of violations, by having such a condition in the above lease addendum, the Association obtains a contractually enforceable right to do so – definitely consider having this included!

A final thought:  Some landlords circumvent rental cap restrictions by making the tenant a temporary “owner” – the tenant should be aware of the additional legal exposure he or she is putting himself/herself in by agreeing to this.  Even after the “lease” ends and the tenant has moved off property, he/she can be pursued for any debt, violations, damages, etc. that occurred during his/her time as an “owner” or “trustee”!

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