Navigating Rentals in an HOA Community: A Guide for Board Members

Navigating Rentals in an HOA Community: A Guide for Board Members

Members of an HOA have one thing in common - they all own a house in the planned community. However, in most HOAs, not everyone who lives there is a homeowner. Other residents are renters.

Although rentals in an HOA community aren't a new phenomenon, these communities are faced with the challenging issue of handling the rentals. Having too many rentals in a community defeats the point of having an HOA in the first place, and restricting rentals can quickly become a legal issue, as it can amount to a violation of property rights.

As members of a homeowners association board, knowing how to manage this issue is critical to building a thriving community. Dig in for a few tips and pieces of advice.

Understand Local Laws

Whether an HOA can allow or disallow rentals in the community is determined by the laws of the state.

In Georgia, the law doesn't prohibit HOAs from imposing rental restrictions. So, from the onset, you need to know that banning rentals is an option at your disposal, but the condition has to be put in the community's governing documents (bylaws). This usually means subjecting the proposal to a vote.

While disallowing rentals might seem like the easy thing to do, it's not necessarily the right thing for your community. Your HOA rental policies will have long-term impacts on the community and can affect property value.

Best Practices for Rentals in an HOA Community

In most cases, the right approach is to set policies that allow, but regulate, rentals in a community. To do that, follow these best practices:

Placing a Cap on Rentals

Having an open policy for rentals is akin to giving away the community to outsiders. Unlike homeowners, tenants don't have any vested interest in the community, so they're far more likely to break HOA rules.

A good approach is to cap the maximum number of rentals that can be in the community at any given time. For example, you can place a 20% cap, such that if the community has 100 homes, only a maximum of 20 homes are available to rent out.

Short-Term Rentals

If rentals in an HOA were to be an evil thing, long-term rentals would be the less evil, with short-term rentals being the devil! That's because short-term rentals have a high turnover of tenants, meaning there will be a constant inflow of strangers into the community.

Most HOAs ban short-term rentals, or require minimum stays of several weeks.

Develop Tenant Policies

Individual homeowners who are renting out their properties will have their own set of tenant rules, but the community needs its own rules as well. You need policies touching on issues like tenant screening, for instance.

Build an Inclusive Community

Having rentals in an HOA community isn't a bad thing. In fact, it can increase the demand and value of the homes. What you need, besides good rental policies, as HOA community management company to help enforce them.

In West Cobb, Georgia, don't look beyond PMI Cornerstone. We are a full-service real estate company that's part of a franchise that's managing HOAs for over 10 years. Our HOA management services include financial reporting, vendor management, and association board member training.

Call us for more information.