HOA rules determine rental restrictions

Q: I think I read somewhere (in one of your columns, possibly) that the Legislature abrogated all percentage rental restrictions.

1.) Is this true and if so does it apply going forward and existing restrictions are grandfathered in?

2.) Was it retroactive to include all restrictions no matter when enacted?

A: Nevada Revised Statutes 116.335 restricts an association from prohibiting any rental restrictions, with certain exceptions. At the time of purchase, if the covenants, conditions and restrictions did not prohibit the leasing of homes, the association may not prohibit those homeowners from renting or leasing their units.

If the CC&Rs had a maximum number or percentage of units that could be rented or lease, that provision of the builder may not be amended to decrease that maximum number or percentage of units in the community that can rented or lease, in essence, make the covenant more restrictive. If the maximum number of units are currently leased or rented a homeowner may seek a waiver of the prohibition from the board based upon a showing of economic hardship and the board may grant such a waiver.

Q: How does one define “financial hardship” What documentation is required to prove financial hardship?

It would seem that this provision would be fertile ground for board corruption.

A: Prior to waiving any rental restrictions due to financial hardship, the association needs to develop a well-thought out plan. The association should contact its legal counsel and certified public accountant to obtain their recommendations. As much as possible, the association would need a fair and equitable set of guidelines in order to avoid the appearance of favoritism or “board corruption.” Associations could require specific financial records.

We know that there are cases where an existing homeowner is trying to save his house from being foreclosed by the lender by leasing his home to help cover all or part of the monthly mortgage while they find some substitute housing (often moving in with his family.)

Barbara Holland is a certified property manager, broker and supervisory certified association manager. Questions may be sent to holland744o@gmail.com.