—Concerned Condo Owner
“For example, when development was booming investors seeking investment properties were very interested in units that were rentable because they could (i) count on a revenue stream from the rental or (ii) market the unit to a larger group of potential buyers. Those same investors were not always concerned with rental restrictions given the plethora of buyers available in the market. This has obviously changed in recent years. Many individuals are opting to rent in order to save money to either purchase a home or maintain their budget and live within their means. Additionally, there are many individuals who have been impacted by foreclosure and cannot purchase another home due to credit issues. Renting is becoming much more commonplace and acceptable across all income levels. As a result, a community with fewer restrictions might be more “marketable” and thereby gain greater favor among brokers, tenants and buyers alike. Consequently, there really is no hard and fast fact as to the effect of rentals on the value of units other than many people believe that owners take better care of their properties than renters. As for how to restrict unit rentals, a condominium association can consider certain restrictions:
“Prohibition. The community can outright prohibit rentals altogether via its governing documents which, if not already contained, could be amended by a vote of the membership pursuant to its terms, in order to restrict rentals in the community completely. Note that Section 718.110(13), F.S. provides that an amendment prohibiting unit owners from renting their units or altering the duration of a rental term, specifying or limiting the number of times unit owners are entitled to rent their units during a specified time, applies only to unit owners who consent to the amendment and unit owners who acquired title to their units after the effective date of that amendment. Essentially, if a unit owner does not consent to the amendment then that unit owner is not bound by that amendment and may continue to rent pursuant to the existing Declaration of Condominium provision (pre-amendment).
“Lease Waiting Period. A lease waiting period could be incorporated into the Declaration (by amendment to the Declaration as described above). A lease waiting period would discourage investors who have no intention of living in the unit. How a lease waiting period works is that the Declaration can specifically provide for a new unit owner to own the condominium unit for a specified time (for example, a year) before it may rent to an individual and/or entity depending upon its governing documents. This type of amendment would have to be voted upon by the membership and adopted pursuant to the governing documents of the community. A lease waiting period would discourage investors from buying condominium units simply for the purpose of renting because the waiting period would work as a bar to rentals during that time. This means that the purchasing investor, unless he or she was intending to live in the unit, would basically be buying a unit that would remain vacant for the period of the leasing wait period.
“Increased Terms. Another way to restrict lease rentals is by requiring a high minimum lease term. Amending the Declaration in order to provide for a high minimum term lease period would discourage people from renting in the community simply because they would have to enter into a minimum term perhaps longer than they were intending to rent. As above, Section 718.110(13), F.S. would apply.”