G.p, Home Buyer in Chicago, IL

How do we protect our property values by not allowing other unit owners in our condo building to rent?I

Asked by G.p, Chicago, IL Thu Mar 27, 2008

live in a 6 unit condo-complex and as the owners, we are the association. There are people that want to rent their unit and there are some that are opposed. How do we convince the others that it's not a good idea to rent out their unit as it will make it a less desirable place to purchase in the next few years?

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9
Hi G.p,

I assume that, prior to asking this question, you reviewed your Bylaws to determine that you currently do not have a cap on the number of renters that your Association allows for. If so, then you will need to have a vote.

First, the Board will have to form a quorum (majority ruling) in favor of such an amendment. Once it has passed throught the Board and depending on what your Decs and Bylaws state, you may be able to do one of two things:

Pass the amendment and wait 30-60-90 days (depending on your Bylaws) for the Association as a whole to come up with 66 2/3% of the owners to petition against it or pass the amendment and secure 66 2/3% vote in favor of it.

Without seeing your actual Bylaws it's hard to state what yours allows for. However, the former is most common.

Once you have completed all of this, you will then begin the filing for an amendment. My advice to you is to hire a Real Estate attorney to help you with this process as it is often confusing and time consuming. You will have to get a quorum of the Board in order to hire an attorney, as well.

My recommendation is to have a solid meeting of the minds to determine at this point if you have any other changes that need to be made to the Bylaws, as you might as well get it all over with in one shot.

Bear in mind, however, that, if you amend the Bylaws to reflect no renters or a certain amount of renters, that those who are already renting are more than likely "grandfathered" in until the end of their current lease.

Hope this helps.

Carol
1 vote Thank Flag Link Tue Aug 5, 2008
let them know about legislation pending in Springfield, HB5189, that would amend the Condominium Property Act to prohibit Condominium Associations and other "common interest communities" from barring unit owners from leasing up to one fifth of the units. If you don't act soon to restrict rentals as you are contemplating, you might not be able to later when they change their minds...
1 vote Thank Flag Link Thu Mar 27, 2008
Be careful what you do in restricting renters... you may need to rent your unit someday. I do think it is a good idea for the board to establish guidelines and review/ approve leases. You don't want a family of 6 in a 2 bedroom and you must make it plain that any violation of the rules and regulations (or fines) will reflect on the owner.
Web Reference: http://www.condochicago.com
1 vote Thank Flag Link Thu Mar 27, 2008
Let me ask you a question. What do you think will have more of an negative effect on your property value? Well qualified renters? Or restricting renting in your building and removing the entire investor pool of buyers in the future? Or perhaps restricting a struggling homeowner from renting, to avoid a foreclosure or short sale. I can assure you, if there is a struggling home owner in your complex you won't know until its too late.

A foreclosure in your building will do more damage to your property value then any renter.
Keep in mind that adding a right to 1st refusal in your bylaws, will have a negative impact on any FHA purchasers. And right now FHA loans are some of the easiest to get.
0 votes Thank Flag Link Tue Aug 26, 2008
Definately would not recommend a right to 1st refusal clause for the assocation as it will interfere with FHA PURCHASERS. Please see item #5 on the attached blog.
http://activerain.com/blogsview/591941/FHA-Spot-Approval-Req…
0 votes Thank Flag Link Tue Aug 5, 2008
Limiting the number of rentals is probably a good idea, and also having checks of all prospective tenants but not allowing rentals overall could come back and hurt you later. By not allowing any rentals you are limiting the pool of buyers and it could cost a sale, which eventually could hurt your price.

As an example, I am currently helping a family purchase a unit for one of their adult kids. The parents will be financing the home as an investment property, putting down a large down payment, as the young adult can't purchase something on their own right now, they will be responsible to take care of monthly expenses, etc, until they can purchase the property on their own name. Your condo association would not work because we have to be able to show the bank that this would be an investment property. Your unit would not be sold to this family that would potentially make a great addition to your association and on a tough market like this, it may lead to longer market time and possibly a lower price, which is what you were trying to prevent with in the first place. Don't throw the baby away with the bath water and make sure that your association has a way to qualify and screen owner's tenants and hold owners accountable for any damage, excessive noise, etc...
Web Reference: http://www.MainChicago.com
0 votes Thank Flag Link Thu Jul 24, 2008
tenants tear stuff up
because they don't own it
most people don't respect things they don't own
tell them if they rent it out, it will look like a public bathroom soon


anyways

good luck
0 votes Thank Flag Link Thu Mar 27, 2008
Although your board can ammend the your condo rules to restrict renting it is subject to be challenged by other owners and more likely by a court to be overturned. Your better of having having the whole association vote to ammend the condo decleration and then filing it with the city. Your condo declaration and bylaws will tell you how many owners you need to pass a change to the declaration. I can't comment on the pending bill but Illinois courts have repeatedly upheld declarations that have either partially or completely limited renters.
0 votes Thank Flag Link Thu Mar 27, 2008
G.P, your by-laws do not have any restrictions with respect to the % of rentals allowed at any one time? If not then you need your board to add them. Plan and simple with too many rentals in a your building, lenders will not approve mortgages.
0 votes Thank Flag Link Thu Mar 27, 2008
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