As the housing market in many parts of the country has floundered, many developers have taken creative approaches to stanch the outward flow of cash. In many markets, this means opting to convert portions of developments originally intended as condo units into rental properties.
When a condo with no units sold converts to rental, it's not such a big deal, but when there are fully-vested owners who have purchased their units living side-by-side with rental tenants— or when unit owners rent out their apartments as income properties—the situation can become more complicated. “Commonly, but not in all circumstances, tenants do not have the same sense of investment in the community as owners do so as a result they are more liable to flagrantly violate the rules,”says Steven Cohen, vice president of A&N Management in Boca Raton.
The increasing number of renters in many South Florida may create unfamiliar and unpleasant situations amongst owners and management. Thankfully, there are legal mechanisms in place to protect current condo owners, developers and landlords to make sure the transition is done as smoothly as possible.
In Florida, there is no data looking at how many of the condos have been turned into rental buildings or rental units, but Gary Poliakoff, founding principal of Becker & Poliakoff in Fort Lauderdale, and co-author of New Neighborhoods: The Consumer’s Guide to Condominium, Co-op and HOA Living, says there are currently hundreds of thousands of units in Florida that are in the process of being foreclosed—and need cash as soon as possible.
“As a result, many communities which had previously passed amendments restricting rentals, are now amending their documents to allow both transient and long-term rentals,” Poliakoff says. “The primary users of these new rights—the associations which while waiting for the banks to take possession, in some cases not before several years pass—are renting units themselves.”