Given the current position of the real estate market many HOA's are making acceptions to their rules on renting.
In my opinion the community is better off allowing rental of units than having multiple foreclosures. The foreclosures bring the value down more than the rentals do.
If it were me I would try and advertise it for sale, lease purchase, owner finance and for rent.
That way you are not leaving out any occupant that my be in the market, If there are foreclosures in the community it will be hard to sale, but maybe a lease purchase or owner finance on a contract for deed.
Getting some downspayment money and hopefully monthly payments to cover your PITI and association fee.
They can lien the property and possible other things is you allow a renter, if you cannot sale.
I would try owner finanace that would not violate the association, 2nd best would be lease with a sperate purchase contact so you do have someone that does have a contact to buy.
I say rent it, just don't advertise it in the neighborhood. I wouldn't worry about HOA doing anything. THEY CAN, but "off the record" I don't think they want you causing a stir over this item.
Some loans won't get approved if there are too many renters in the complex, and most of the loans refer to the HOA as part of that package. So there is a legitimate reason why an HOA would not want you to rent too many units out.
At the end of the day, THIS YEAR, it's better to have a renter next door than a foreclosure. Even if you're not close to foreclosure it's a good statement.
OF course, you could call you HOA and tell them, "Look I have a renter and I can rent it out or it can go to the courthouse to be advertised as a foreclosure and sold for up to 50% less than the surrounding units, thus damaging everyone's investment and ultimately causing the very thing the HOA is trying to protect."
We are seeing a lot more of this lately, neighborhoods are getting stricter about the rental percentage and HOA are enforcing those rules. If you were staying there you would be happy with this rule since renters can bring down our values. We have a few in this area that have actually changed the HOA exceptions to NO rentals even lease purchases.
They can most definately fine you and yes can eventually put a lien on the townhome. I know you are frustrated about the sale of your home and we have talked about this in the past. I would either try to hang in there for a little while longer or sit down and seriously take a look at the list price of your town home. Again, you need to make your townhome more attractive than any other deal in there so they buy yours first. What are all the other agents offering, is there maybe a agent bonus you could throw in there. Some homework needs to be done to see what is being offered on the other townhomes for sale.
As always, a pleasure talking with you.