Top Amendments for an HOA or Condo in North Carolina & South Carolina – Part Three

Authored by David Wilson & Harmony Taylor

We
are often asked by board members for HOA and condominium associations to review
their community’s documents and “update” them or “make them more modern.”  While there is no one-size fits all solution
for any community association, we have noticed that some amendments are a good
idea for most communities.  Over the next
few articles, David Wilson
and Harmony Taylor
will be exploring some of the amendments that we frequently recommend to the
associations that we represent. 

Whether
you are a single family, townhome, or condominium community, you may want to
think about some of the amendments that we describe and see if you and your
community would benefit from one of these changes.

In
Part One we
examined insurance amendments.  In Part Two we
looked at amending to clarify the application of payments for delinquent
homeowners.  In Part Three we look at
amendments that restrict leasing of property.

Part Three:  Rental Restriction Amendments for Your HOA or
Condominium

In either North Carolina or South
Carolina, one of the most common amendments we are asked about is one that
would restrict, in some form or fashion, the ability of homeowners to lease
their property. 

Some of the common concerns
surrounding leasing are that high percentages of leased properties detract from
home values, problem tenants / landlords who don’t restrain problem tenants, that
renters have a general lack of concern for the specific property they are
renting and for the community at large, and that maintaining a revolving door
of occupants detracts from the cohesiveness of the community—that it is no
longer a community bound together by families but instead it is a hotel where
people have no long-term interest in the success of the community. 

Add to that the concerns created
by an even more drastic type of renting (the short-term rental explosion in
recent years) and you have many communities wanting to amend their covenants to
restrict leasing in some way.  

In North Carolina we have been
following developments for a new HOA bill that would limit the ability of a
homeowners association to restrict rentals. 
As
reported by our colleague, Jim Slaughter
, House Bill 594 (HB 594) has passed
the House and crossed over to the Senate. 
It is currently with the Senate Committee on Rules and Operations.  In its current form the Bill will place
limits on all new homeowners associations’ ability to restrict rentals.  It does not limit the ability of a condo to
restrict leasing.  The Bill is still
subject to change until passed, but it is likely that some form of the Bill
will make it into law.  So, Boards of
Directors for HOAs in North Carolina should be aware that their ability to
restrict leasing in their communities may be limited some time in the next
several months and should certainly consult with a knowledgeable HOA attorney
prior to attempting to amend their documents. 

In South Carolina there is not
currently any legislative push to limit an HOA or condo’s ability to restrict
leasing. 

Once your association has decided
that it wants to amend, there are many factors to consider.  Some important factors to think about that
aren’t so obvious when considering a rental amendment could include:

  • How
    many lots or units are currently leased?  It can often be hard to know when a unit
    is actually rented so there may be more rentals in the community then you
    are aware of already.
  • Consider
    the record-keeping requirements of any proposed rental.  Some rental restrictions entail keep
    track of things like which lots are rented, whether a copy of a lease is
    on file, when leases expire, etc.  These
    rules may sound good, but could mean greater cost for the association in
    management fees.
  • Does
    the association want a hardship waiver to allow the board some discretion
    to allow rentals in cases of family or job emergency, even if the cap is
    already met?

We have helped many associations
amend their documents to add or revise rental restrictions.  If your community would like to find out more
about amending your documents to restrict leasing contact our community
association attorneys in one of our Charlotte, Greensboro, Triangle, or Coastal
offices. 

Author: David Wilson
Articles have been Reprinted with permission from Black, Slaughter, Black.

* These articles and related content on this website are provided without warranty of any kind and in no way constitute or provide legal advice. You are advised to contact an attorney specializing in Association Management for legal advice related to your specific issue and community. Some articles are provided by thrid parties and online services. Display of these articles does in no way endorse the products or services of Community Association Management by the author(s).