Over the last few decades American homeowners have gradually lost sovereignty over their property. With every new law, every new covenant, every new policy our ability to live in our homes as we see fit has been eroded. With every new policy there is an acceptance that this is the way of the future. It is “normal” now to have someone else dictate and approve the colors you choose for your house, the plants and flowers you plant, the decorative elements you use, or in fact even if you are ” allowed” to use them, the structures you buy for your children’s play equipment including the colors you use. The list is endless. Sometimes I think it is getting to the point where children in kindergarten have more autonomy over their daily lives than do their parents.
John Cowherd j oins us On The Commons. John is a Virginia attorney who represents homeowners against their condominiums and homeowner associations. He hosts and maintains Words of Conveyance a blog that focuses on property law. One of the trends he is seeing more of is the growing restrictions on renting one’s home, or even a room, either short term or long term. He has a recent blog about this not so new issue of contention in America’s controlled residential associations titled Rental Restrictions in Virginia Condominiums. While there may be some genuine concerns about rentals, as usual the problems don’t appear to be quite as awful as some people might have you believe. We’ll talk to John and learn more about it. We will also talk about how the courts rule in cases where the use of free use of property is inhibited. Fortunately there is some good news there.
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Another aspect of H.O.A. interference between property owners and their tenants is “rental interception”, where the H.O.A. corporation demands payment directly from a property owner’s tenants for past due assessments, or any arbitrary fines or fees.
A few years ago my H.O.A. corporation amended its Collection Policy – without notice to or a vote by the owners – to include the following:
Rental Interception. To the extent permitted by the Declaration, the Association may, without court order, notify the tenant of any unit where the Owner is delinquent in payment of assessments, pursuant to the Declaration and Colorado law, that rents shall be paid to the association effective immediately and continue until such time as the Owner’s account is current. Such notice shall be in writing to the tenant and the Owner. All funds received by the Association from the tenant shall be credited to the Owner’s account as set forth herein.
1) Note that the H.O.A. corporation gave itself the authority to demand payment from a property owner’s tenant “without court order”.
2) The tenant has no contractual relation with the H.O.A. corporation.
3) This creates a serious dilemma for the tenant, when two different parties – the property owner and the H.O.A. corporation – are demanding payment for the same rent.
4) While the Declaration did not explicitly permit Rental Interception, it did not prohibit it, either.
4a) John has repeatedly stated – both here and in other forums – that covenants tend to be interpreted in favor of the homeowner. While this may be true in Virginia, this is not necessarily clear cut in Colorado, where courts (and legislators) tend to be deferential to H.O.A. corporations.
4b) The H.O.A. corporation later petitioned the Court to amend its Declaration to include, among other things, Rental Interception.
4c) I was able to use this provision in the proposed Amended Declaration to convince non-resident investment owners — along with resident owners — to join a coalition in a successful Objection to the H.O.A. corporation’s petition.
4d) Some of the non-resident investment owners who joined my Objection had originally voted in favor of the Amended Declaration, unaware of the Rental Interception provision until I pointed it out to them. Even though these owners were more “sophisticated” than the average resident owner (at least one sat on the board of another H.O.A. corporation).
4e) Otherwise, Courts in Colorado have almost no discretion when it comes to an H.O.A. corporation petitioning to amend their governing documents; see https://www.cohoalaw.com/what-the-courts-say/declaration-amendment-petitions-shall-means-shall/ about C.R.S. § 38-33.3-217(7) and Centennial Ranch and Aspen Mountain Ranch Association v. Fuller et al., 14CA1326
5) Rental Interception without a court order should be explicitly and unambiguously prohibited by law, regardless of what is authorized in an H.O.A. corporation’s governing documents.
5a) Any legislation which says “An H.O.A. corporation shall be prohibited from doing X, unless X is authorized in the governing documents” is worthless, because the H.O.A. corporation will eventually amend its governing documents to authorize X.
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