In many HOAs, an issue arises when a homeowner purchases real estate as an investment property intending to lease the home or condo unit. In those situations, the homeowner becomes a “landlord” rather than a resident owner and the situation causes concerns for many homeowner and condominium owner associations. Many association documents contain restrictions on leasing property. In response to an inquiry, the Attorney General for Virginia has issued an official advisory opinion concerning the imposition of rental restrictions in common interest communities concluding that if the restriction is adopted correctly and for a legitimate purpose, the rental restriction is valid.
Virginia law permits the Attorney General to issue such opinions. Virginia Code § 2.2-505 requires the Attorney General to give his advice and render official advisory opinions in writing only when requested in writing so to do by one of the following: the Governor; a member of the General Assembly; a judge of a court of record or a judge of a court not of record; the State Corporation Commission; an attorney for the Commonwealth; a county, city or town attorney in those localities in which such office has been created; a clerk of a court of record; a city or county sheriff; a city or county treasurer or similar officer; a commissioner of the revenue or similar officer; a chairman or secretary of an electoral board; or the head of a state department, division, bureau, institution or board.
In this particular instance one of the members of the General Assembly inquired as to whether a homeowners’ association, by duly recorded covenant, may limit the number of housing units within the association that may be offered for rent by the owner to tenants. The Attorney General stated that “if properly written, adopted and enforced, and authorized as to purpose and not in conflict with an association’s declarations, bylaws or rules and regulations, a homeowners’ association may covenant to limit the number of housing units within the association that may be offered for rent by the owner to tenants.” The Attorney General considered the rental restriction as a matter of contract and further looked at the Virginia Property Owners’ Association Act, finding that “the Act allows broad latitude for contracting parties and homeowners’ associations to devise rules and restrictions governing the use of property.”
The Attorney General stated further that “Restricting the rental of homes serves a number of legitimate interests, including preserving a sense of community and protecting property values. Virginia courts likely would uphold reasonable restrictions on the rental of homes by a homeowners’ association, provided that such restrictions serve a legitimate purpose, comply with the association’s own declarations, bylaws and rules and regulations, and comply with applicable laws in the way they are enforced. Whether a restriction is reasonable would be highly context specific, and may depend upon whether it was contained in the original restrictions or was the subject of an amendment to existing restrictions, and how draconian the rental restrictions are.”
Although the Attorney General’s opinion is not binding upon Virginia’s courts, in the absence of any other guidance, the opinion provides support for homeowner associations to apply reasonable rental restrictions. Homeowner association boards should work closely with their experienced HOA attorney to review any rental restrictions and to ensure that your HOA board enacts reasonable restrictions addressing legitimate community concerns.
Tarley Robinson, PLC, Attorneys and Counsellors at Law
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