Many investors and vacation homeowners purchase homes with the intention of leasing them either full-time or seasonally. But what if you were told that you were prohibited from using the property as a rental? It happens more often than you'd think.
Many areas throughout the United States, especially in more populated areas have Homeowners Associations. These HOA's have rules called CC...R's (Covenants, Conditions ... Restrictions). You have an obligation as a homeowner to abide by these rules and regulations. These rules and restrictions mandate how you as the homeowner can use the property.
Surprising enough there are guidelines as to what percentage of grass you are allowed in the landscape, the colors and trim on your house and even your window treatments. Review and thoroughly read the CC...R's before purchasing a home. You are usually given a certain time frame to review these documents and will have an opportunity to cancel your contract.
Several years ago, home builders began including provisions within the CC...R's prohibiting rentals of any kind within their communities. These provisions also included language stating that the buyer would occupy the property until the time the owner sold the home, meaning the home could not be vacant for extended periods of time. Most home buyers were aware of these provisions and agreed to them when they purchased their homes.
People's perception of rental properties usually relates to higher crime rates, declining property values and un-kept homes. Although this is the assessment by many, it is not true in most cases. In the current housing crisis the foreclosures and bank-owned properties are portraying a worse image.
With the declining Real Estate market and more homeowners considering renting their homes, we are starting to see Homeowners Associations attempting to amend their CC...R's to include rental home restrictions. Many people believe that CC...R's cannot be amended. Amendments happen regarding all sorts of rules and regulations. Can this be true for rental properties too?
Most states have laws clearly stating that if you reside in a Homeowners Association that has CC...R's, there is a contract between the property owner and the Homeowners Association. When you execute your purchase, the imposed restrictions are binding. Hence, you must follow the rules.
The issue with amending the CC...R's after the purchase may be difficult but it can be done. When purchasing a home in a Homeowners Association, read the documents carefully. Consider the long term effects of the restrictions and how they may apply to your investment strategy.
Many areas throughout the United States, especially in more populated areas have Homeowners Associations. These HOA's have rules called CC...R's (Covenants, Conditions ... Restrictions). You have an obligation as a homeowner to abide by these rules and regulations. These rules and restrictions mandate how you as the homeowner can use the property.
Surprising enough there are guidelines as to what percentage of grass you are allowed in the landscape, the colors and trim on your house and even your window treatments. Review and thoroughly read the CC...R's before purchasing a home. You are usually given a certain time frame to review these documents and will have an opportunity to cancel your contract.
Several years ago, home builders began including provisions within the CC...R's prohibiting rentals of any kind within their communities. These provisions also included language stating that the buyer would occupy the property until the time the owner sold the home, meaning the home could not be vacant for extended periods of time. Most home buyers were aware of these provisions and agreed to them when they purchased their homes.
People's perception of rental properties usually relates to higher crime rates, declining property values and un-kept homes. Although this is the assessment by many, it is not true in most cases. In the current housing crisis the foreclosures and bank-owned properties are portraying a worse image.
With the declining Real Estate market and more homeowners considering renting their homes, we are starting to see Homeowners Associations attempting to amend their CC...R's to include rental home restrictions. Many people believe that CC...R's cannot be amended. Amendments happen regarding all sorts of rules and regulations. Can this be true for rental properties too?
Most states have laws clearly stating that if you reside in a Homeowners Association that has CC...R's, there is a contract between the property owner and the Homeowners Association. When you execute your purchase, the imposed restrictions are binding. Hence, you must follow the rules.
The issue with amending the CC...R's after the purchase may be difficult but it can be done. When purchasing a home in a Homeowners Association, read the documents carefully. Consider the long term effects of the restrictions and how they may apply to your investment strategy.
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