This article focuses on general leasing considerations for those
condominium associations where the trustees have the power
to establish, regulate, and enforce rules regarding the rental of
units.
Condominium associations face difficult decisions regarding
the rental of condominium units. Some Master Deeds,
Declarations of Trust, Bylaws, and Rules and Regulations
have specific guidelines already in place at the creation of
the condominium trust, while others are silent as to rentals.
Regardless, if you sit on the board of trustees, you inevitably are
going to struggle with whether to allow or not allow the lease
of units, what the leasing policy and procedures should be, and
what policies should be enforced.
LEASING POLICY CONSIDERATIONS
The existence of a leasing policy is essential to the security
and safety of the other unit owners and the condominium.
In today’s world, you have short-term rentals such as Airbnb,
HomeAway, and other services that provide transient shortterm rentals. If your leasing policy fails to restrict and/or regulate such short-term rentals, your association could be
facing issues with multiple tenants moving in and out of the
complex on a transient basis. This leads to discord between unit
owners who have a primary residency on site and those who
lease their unit to residential tenants.
Leasing considerations—especially in long established
condominium trusts—should be reviewed by the trustees.
The trustees should adapt their leasing policy to match
today’s residential rental reality. Each condominium trust is
governed by its own set of rules established in its organization
documents, such as the Master Deed, Declaration of Trust,
Bylaws, and Rules and Regulations.
A leasing policy should be clear and concise. It should set out
the procedure for application by the unit owner who seeks to
lease a unit, the review of the application by the trustees, and
the requirements and responsibilities of all parties.
The following is a basic—but not a comprehensive—summary
of what a reasonable leasing policy should include.
- Trustee Approval of Lease Must Be Required
- Any unit owner who intends to lease a unit should be
required first to send a written request to the condominium’s
management company. Each written request to lease a unit
should include a copy of the proposed lease agreement and all
related documents. - Trustees should have a reasonable time to review the
application, i.e. seven to 10 business days. - All leases should be subject to the approval of the trustees.
If not approved, the lease should be null and void. If
disapproved, execution of the lease by the unit owner would
be a violation of the condominium association bylaws, and
could result in the unit owner being subject to a fine, if
allowed by the governing documents of the condominium. - Trustees should have a fully executed copy of the lease on file
for the leased unit. - It must be clear that leasing a unit is the responsibility of
the unit owner. It should be clear that each unit owner is
solely responsible for checking the credentials of his or her
prospective tenants and is legally responsible for the acts,
omissions, and negligence of his or her tenants and for events
or incidents that may occur.
- Requirements of Written Lease
- All leases should be required to be in written form.
- The description of the leased premises should make clear
that the lease is for the entire unit. Moreover, to avoid
overburdening the common areas (e.g. pools), unit owners no
longer in residence should not be able to use common areas
for their own benefit during any approved lease term. The unit
owners’ right to access the common areas will be transferred
to the tenant for the duration of the lease. - All leases should be for a term of not less than 12 months;
transient or short-term rentals of any kind, such as hotel,
motel, rooming house, vacation rental and/or Airbnb,
VRBO, HomeAway, or similar short-term rentals should be
prohibited. Unit owners should be prohibited from advertising
their units for short-term or vacation use, and further
prohibited from listing their units with a company in the
business of acquiring tenants for such short-term use. This is
important because it is the only way the trustees can prevent
transient occupants. - It should be clear that every lease is subject in every respect to
the Master Deed, the Declaration of Trust, the Bylaws and the
Rules and Regulations. Any amendments to these governance documents will also amend the terms of the lease even if that lease was executed before the amendment. To enforce this, each lease that is approved by the trustees should be required to contain a statement to this effect. - Unit owners should be required to notify the trustees when
a lease is terminated and/or the property is vacant for any
reason.
- General Requirements Concerning Tenants, Fees
and Fines, and Responsibilities of Unit Owner
- The trustees or their management company should have
model rental forms in place. These should include a Unit
Owner Agreement/Application that the unit owner files
when requesting approval of a lease, and in which the unit
owner agrees to be bound by the leasing policy. A reasonable
fee for processing could be considered as well. Additionally,
there should be a Tenant Agreement in which the tenant also
acknowledges that they shall be subject to the leasing policy.
Finally, there should be a Unit Owner and Tenant Information
sheet with contact information for all parties to enable proper
and efficient communication. - A leasing policy should be clear that it is the responsibility of
the unit owner to inform tenants and other third parties of
all rules and regulations. Moreover, the Tenant Agreement
discussed above should make it clear that the tenants must
abide by all the terms and conditions of the Master Deed,
Declaration of Trust, Bylaws, and Rules and Regulations of the
condominium and are responsible for the payment of fines
and actual damages arising from their violations of same.
- Powers of the Trustees to Deal with Tenants
- A leasing policy should authorize the trustees to take action
to enforce the Master Deed, Declaration of Trust, Bylaws, and
Rules and Regulations in the event of a default by the unit
owner or tenant. In the Master Deed, Declaration of Trust,
Bylaws, and Rules and Regulations, the leasing policy should
extend the authority of the trustees to call for the following
remedies:
– The trustees should have the right to give written notice
of the default to both the tenant and the unit owner.
– The trustees should have the right to levy fines against
the owner of the unit in accordance with the provisions
of the Declaration of Trust, and to terminate the tenancy
by giving notice to quit in writing to the tenant in any
manner permitted by law, in the name of the landlord
(unit owner) or, in the name of the trustees, or both. The
trustees should be entitled to follow a notice or notices to
quit with a summary process action or actions.
– All of the expenses of the trustees in giving notice and
notices to quit, and maintaining and pursuing summary
process actions and any appeals therefrom, should be
entirely at the expense of the unit owner, and such costs
and expenses, including reasonable attorney’s fees, should
be charged to and collected from the unit owner and unit
as if the same were common expenses owed by the unit or
unit owner. - The above narrative summarizes some of the main provisions
of a sound leasing policy. While other important rules should
be considered, the key point is that the existence of a leasing
policy is essential. It should require an application process, the
exchange of information regarding the rules and regulations,
restrict the type of leasing options available to unit owners, and
should allow the trustees to enforce the leasing policy. Such a
policy will help to avoid any potential pitfalls or ambiguities
in the condominium documents that otherwise could create
discord between unit owners or impose additional unexpected
liability on the association.
