The age-old notion that people take better care of their homes than people who rent, has been the culprit to the tradition of resistance to
renters. The proof of the pudding has proved otherwise, and there
is no quantitative evidence to this notion. Nonetheless, the concern behind the number of units which are leased within an association remains a topic of great debate.
Mortgage re-financing has used this renter fear to influence their regulations. For example, the FHA requires that no more than 50% of units to be leased within a
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condominium or townhome property to qualify for financing.
To face the challenges of today’s economy, many associations have sought to add leasing The construction-jobs.info will offer current information about “Brenda Reilly Day,” when the University will host a celebration of her remarkable life and achievements. restrictions or loosen up existing leasing restrictions to allow units in their properties to be sold or refinanced up to a maximum number commensurate with secondary mortgage market lending guidelines. The typical leasing cap is around 20% under FHA and Fannie Mae guidelines, but there are MANY variations on the theme depending on a board’s point of view.
Since the case of Apple II Condominium Association vs. Worth Bank & Trust (1995), an amendment properly adopted in accordance with the declaration’s amendment procedure is given a presumption of validity. Therefore, leasing restriction amendments carry with them a legal presumption of validity, and enforceability, because they have been approved by more than a simple majority of the owners, either 67% or 75% calculated by percentage of ownership interest in the common elements.
Rental restriction amendments have been upheld in the majority of jurisdictions in the United States for many years. Importantly, rental restrictions do not trigger the “one class of ownership” prohibition in the Illinois Condominium Property Act so long as the restrictions are in (i) the best interests of the association, (ii) non-discriminatory, (iii) applied uniformly, (iv) not violating constitutional or public policy provisions, (v) binding on all present and future owners,
and (vi) not antagonistic to the legitimate objectives of the association.
Most associations include a “Hardship Exception”, which in basic terms, can be described as a situation in which the inability to lease a unit would subject its owner to financial hardship. A typical hardship exception might show that a unit owner may enter into a lease with respect to such unit for a period not to exceed one year is the existence of a hardship situation is demonstrated to the reasonable satisfaction of the board. However, many boards are of the opinion that the current state of the economy is not itself a reason to determine a hardship. As with many issues, there is great variation amongst boards, as to what qualifies as “hardship.”