April 2, 2019
Official response to question from Jan. 2019 annual meeting regarding regulation of leasing residential properties within SaddleBrooke, Estates of SaddleBrooke, Enclaves at SaddleBrooke, by the SaddleBrooke HOA.
The HOA currently has the authority to enforce the nuisance provisions in Section 7 of the Declaration of Restrictions by warning and then fining the Owners of properties in violation. This is a tool that can be used immediately by the HOA to financially punish and incent the Owners to address the problem behavior or activities (i.e. lack of maintenance or upkeep). The only remaining item to complete, establish and publish the fine schedule.
The Declaration of Restrictions can be amended to restrict leasing, although current owners may be grandfathered. Notice of the restriction prior to purchase (plus reasonableness and compliance with state, federal and local laws) is considered a key element in enforceability of a restriction that materially impacts the use or marketability of the property.
While screening of individual tenants may be problematic and potentially raise Fair Housing Act issues (screening can lead to allegations of discrimination), the HOA may limit the number of units that can be tenant-occupied at any given time, creating a cap and waiting list situation. The HOA may also establish a rule that homes must be owner-occupied for a period of time (say one year) before they can be leased, which will discourage purchases for investment purposes only. The HOA may impose restrictions on lease terms (i.e. no lease terms less than 120 days) to prevent vacation rental or short term leasing. The HOA can also require that lease agreements require the tenant to comply with all HOA rules and regulations, so that breach of HOA rules is a breach of the lease and they may be evicted (still does not give HOA right to evict, but can begin imposing fines on Owner and gives Owner the right to evict).
The HOA can use the fine structure to deal with current problematic behavior, and could consider amending the Declaration of Restrictions to put some limits on the right to lease and the terms of lease agreements. I really think the owner-occupation requirement (i.e. owner of home must reside there for one year before property is eligible to be leased) is a great way to deter pure investment purchases. The Board, and residents of the association, recognizes the value in having the ability to lease a home, and the above suggestions would allow the HOA to address the association concerns in a manner that would add to the market value of the homes and not unduly limit the right to lease.
It is my opinion that the above approach would be the best scenario to limit legal exposure but still keep pure investment opportunists (leasing companies) out.
If this is the direction the association wants to proceed, I am asking for a petition from the association requesting the change. If we receive 72 signatures, I will begin the process to change the Deeds and Restrictions adding this language. It is a lengthy process and will involve our attorney to help write it. Then notarized approvals will need to be received just as before.
Shawn Johnson, SaddleBrooke HOA President