Rental property owners operating in communities run by homeowners associations (HOAs) may encounter unfamiliar terms such as covenants and CCRs. But what exactly is a CCR, and how does it affect landlords and tenants? In this article, we will explore the importance of understanding HOA governing documents and their impact on rental properties.
A Homeowners Association and Its Purpose
A homeowners association is an organization responsible for managing a community, subdivision, or condominium building. Its primary goal is to maintain curb appeal and property values. To achieve this, HOAs enforce strict rules that keep the community in order. These rules are agreed upon by homeowners when they purchase a home within the community.
While not all HOAs prohibit rentals, many impose rental restrictions that can significantly impact how owners manage their rental properties. These restrictions exist to enhance the overall well-being of the community.
Understanding CCRs: Covenants, Conditions, and Restrictions
One term that landlords may come across in an HOA community is "CCR," which stands for Covenants, Conditions, and Restrictions. CCR is one of the key HOA documents that govern how the community operates. Homeowners usually receive a copy of these documents when they buy their homes and may be required to sign them as proof of agreement.
The CCR covers various aspects, including homeowners' rights, maintenance responsibilities, property appearance restrictions, dues and assessments, insurance requirements, and guidelines for rule enforcement and conflict resolution. While the specific content of each association's CCR may vary, these are the general areas covered.
Fig. 1: Understanding the CCR
Other Important HOA Governing Documents
Apart from the CCR, there are other essential HOA governing documents that landlords should be familiar with.
HOA Articles of Incorporation
In many states, HOAs are recognized as nonprofit corporations and are required to register as such. These associations usually have their own articles of incorporation, which contain basic details such as the association's name, address, and purpose. While the articles of incorporation may not contain extensive information, some associations include voting rights and amendment procedures within this document.
HOA Bylaws
The HOA bylaws dictate the structure and procedures within the community. They cover aspects such as board member terms, annual meetings, board member roles and responsibilities, election procedures, budget creation, and dues determination. While there may be some overlap between the bylaws and the CCR, the bylaws primarily govern the HOA board.
HOA Rules and Regulations
While the CCR establishes general rules and guidelines, the HOA may further clarify them by implementing operating rules and regulations. These rules are more comprehensive and specific, and the HOA board has the authority to enact or amend them. Owners usually have a 30-day window to review and provide feedback on proposed rule changes.
How HOAs Affect Rental Properties
If you own a rental property within an HOA community, you may encounter rental restrictions aimed at maintaining the association's appeal and exclusivity. Common rental restrictions include limits on tenant occupancy, minimum lease durations, thorough tenant screening requirements, and limitations on tenant participation in association matters and access to facilities.
It is important to note that all HOA rules automatically extend to tenants. Therefore, if an HOA has a no-pets policy, tenants are not allowed to have pets in their leased homes. If a tenant violates a rule, the HOA typically holds the landlord or property owner responsible. Therefore, careful tenant selection is crucial to avoid conflicts with the association.
Conclusion
Understanding the significance of HOA governing documents, particularly the CCR, is essential for rental property owners in HOA communities. These documents define the rights and responsibilities of the association, its members, and its board. When buying a home or renting out a property, reviewing an HOA's governing documents is crucial.
Dealing with tenants can be challenging, and the involvement of homeowners associations adds an additional layer of complexity. If you require assistance, consider seeking out a property management company using Rental Choice's online directory.
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