Author Topic: HOA Condo dispute  (Read 748 times)

Invester17

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HOA Condo dispute
« on: July 11, 2018, 12:30:31 PM »
Hello,

I'm about to purchase a single family home that is on a lot declared as a condo. There is another house on the same lot and they were able to build them both if they were considered condos. I'd like to rent my property as a weekly rental (Airbnb). However, the HOA docs only allow for monthly rentals.

The challenge I have is....we only have 2 owners so we have equal votes. How would we go about resolving the dispute? In my mind, this HOA doc is superficial as its really only to allow us to live on the smaller lot (which isn't that small). This lady is against the weekly rentals as she doesn't want people partying, I think that's fair but....ultimately I don't think it should be her say on what the neighbor does with their property.

Thoughts / suggestions? If I can't make it a weekly rental the property month to month would take a loss due to the high mortgage and lower rent (mortgage $3100 where rent would be somewhere around $2500 ~ not including PM fees, maintenance etc.)

Frankies Girl

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Re: HOA Condo dispute
« Reply #1 on: July 11, 2018, 12:53:46 PM »
Simple. Don't purchase this property. Don't like the idea of the neighbor(s) having a say in what you do with your property? Don't buy in a HOA controlled area. But just based off the mortgage + PM/maintenance, it's a bad buy for a rental of any kind.

What you want to use it for is completely prohibited in the HOA rules. Doesn't matter if you want to change them, there is no sane reason to purchase a property that is going to require you to go to war as it were and with the outcome of your not getting your way causing the property itself to be non-profitable if you can't use it for a weekly rental. If your plan must include weekly rentals to turn a profit, then the property isn't a good bet for your usage.

Do you like the idea of being sued? Of having to cull through paperwork, argue with the neighbor, deal with them being angry with every renter, and having them nitpick you to death? Like dealing with lawyers to see if this rule or that one might be challenged? Enjoy strife and paying out lots of money in filing fees, consults, etc.? Then by all means, proceed.

If that sounds like something you'd like to avoid, then walk away from the deal. Find a non-restricted property that fits what you want to use it for, at a profit margin that makes it actually profitable to do so whether you go weekly or monthly on the rentals (INCLUDING the PM and maintenance stuff).

Mr. Green

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Re: HOA Condo dispute
« Reply #2 on: July 11, 2018, 06:39:44 PM »
50/50 on anything real estate related is a total non-starter. It means there is no legal way to resolve a difference of opinion because you're deadlocked. If the HOA doc says you can't rent weekly and the other 50% owner is against it that is game over, plain and simple.

Invester17

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Re: HOA Condo dispute
« Reply #3 on: July 12, 2018, 07:12:57 AM »
I appreciate the insight, I'm trying to stay focused on this as an investment. Let me add this to the mix, my plan is to likely (but I'm not 100% sure) move back into this house next September as my primary residence. For that reason, I look at it less as an investment and more as a place to live in the future.

My parents are retiring and moving into it for this year until I move back. If I don't, the plan was to rent it.

sokoloff

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Re: HOA Condo dispute
« Reply #4 on: July 12, 2018, 07:16:18 AM »
If you want change the HOA, buy both units.

Otherwise, plan based on the status quo.

erutio

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Re: HOA Condo dispute
« Reply #5 on: July 12, 2018, 08:24:52 AM »
Sorry, I'm not able to add more to the discussion, but I had a question reading this.

What's the point of a 2 household HOA? 

Invester17

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Re: HOA Condo dispute
« Reply #6 on: July 12, 2018, 08:26:37 AM »
It's basically a fake HOA (no fees) to allow for a builder to build on a property lot that is only allows for a single family home. It's a loophole, but this other person is actually using it against me.

joonifloofeefloo

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Re: HOA Condo dispute
« Reply #7 on: July 12, 2018, 08:36:39 AM »
This isn't restricted to a fake, workaround HOA, though. i.e., Even where a neighbour doesn't have a 50% vote, you can face the same outcome. People doing AirBnB in detached, SFD houses they own face this. They start AirBnBing, problems arise for neighbours, neighbours lobby, the municipality changes what's allowed.

Renting out has some risks. Renting out daily or weekly vs yearly increases some risks (and decreases others).

If you want to rent out property, it's important to be mindful of the impact to neighbours and of the risks to you and your neighbours.

So, I wouldn't focus so much on one neighbour preempting AirBnB in this dwelling. I would focus on finding a situation that isn't *dependent on* AirBnBing or one that allows you to be a phenomenal neighbour while doing so (e.g. AirBnBing part of the dwelling while you're resident in it, so you can address issues in the very moment they arise, rather than leaving a neighbour to cope with it).

sokoloff

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Re: HOA Condo dispute
« Reply #8 on: July 12, 2018, 08:49:17 AM »
It's basically a fake HOA (no fees) to allow for a builder to build on a property lot that is only allows for a single family home. It's a loophole, but this other person is actually using it against me.
It's not fake and they're not using it against you unfairly, IMO.

The HOA is real and the rules are pre-existing and you can decide to buy into the deal or not. If you want to change the rules, follow the process. The other owner has a reasonable position that the contemplated activity is barred and could equally well (or even more strongly argue) that it's you who is trying to take advantage of them.

Samuel

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Re: HOA Condo dispute
« Reply #9 on: July 12, 2018, 09:34:38 AM »
This lady is against the weekly rentals as she doesn't want people partying, I think that's fair but....

This is a very valid concern. Good friend of mine lived next to an AirBnb's house and it was a lot of Friday/Saturday night noise, some of which I experienced firsthand. Often quite raucous and very late into the evening. It was a big problem.

It's basically a fake HOA (no fees) to allow for a builder to build on a property lot that is only allows for a single family home. It's a loophole, but this other person is actually using it against me.
It's not fake and they're not using it against you unfairly, IMO.

The HOA is real and the rules are pre-existing and you can decide to buy into the deal or not. If you want to change the rules, follow the process. The other owner has a reasonable position that the contemplated activity is barred and could equally well (or even more strongly argue) that it's you who is trying to take advantage of them.

+1

Invester17

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Re: HOA Condo dispute
« Reply #10 on: July 12, 2018, 10:19:07 AM »
Thanks everyone. As much as I loved the house, I pulled out of the contract and only likely will lose $200 for the appraisal. The builder is putting up 2 new homes in the next year that are the exact same floor plan, but a smaller backyard. The house value will likely go up as they are in different streets, but at least they could be made into rentals.

Now I'm just wondering if I'd be better off sticking the 60k down payment in the S&P 500 and enjoy my rental! haha

joonifloofeefloo

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Re: HOA Condo dispute
« Reply #11 on: July 12, 2018, 10:29:37 AM »
Now I'm just wondering if I'd be better off sticking the 60k down payment in the S&P 500 and enjoy my rental! haha

It's what a lot of us here do :)