Can Condo Boards Weigh In On Tenant Approvals?
FOR REALTORS/LANDLORDS: October Substack 2022 Exclusive
By Juliana Torres-Mason, Go4Rent Guest Writer (Linda Mullins, Contributing Writer)
Whether searching for a single-family home or condominium unit to rent, the competition is fierce. As the economy emerges from the effects of the COVID-19 pandemic, the price of housing is escalating across the board for both home sales and rentals.
Florida and Texas are among many states in the nation experiencing dramatic increases in home values. In turn, would-be buyers are being priced out of the market and turning to renting their properties instead — with increased demand for rentals. When two applicants both seem like viable candidates, asking for higher rent is usually the tie-breaker.
But what happens when a condominium board gets involved in the vetting process? Tenant approvals or denials may look a bit different.
“It all starts with the Declarations of Covenants, Conditions and Restrictions (CC&Rs),” said Casey Meyers, a partner at the Dallas-based attorney firm, HOA Legal, who promulgates rules and regulations dealing with rental properties. “Only if it is set forth in the CC&R can a condo board approve or reject a prospective tenant for that property.”
Texas Property Code Chapter 82.102 of the Uniform Condominium Act denotes the Powers of Unit Owners’ Association enables the condo association to “adopt and amend rules regulating the use, occupancy, leasing or sale, maintenance, repair, modification, and appearance of units and common elements, to the extent the regulated actions affect common elements or other units.”
Similarly, Florida laws also give condo association boards (and homeowners associations, or HOA, boards) the right to vet tenants. HD Law Partners categorizes their right as “considerable discretion.”
And when the board does have the power to vet, landlords should be aware of what needs to happen to reach a happy medium.
Can Condo Boards Reject Applicants?
When interviewing prospective tenants is part of the CC&R, consistency in the process is key, and will help ensure that board interviews remain neutral and within the law.
Standard protocols should carefully align with the Fair Housing Act.
The act was created by the Supreme Court in 1968 and prohibits discrimination by direct housing providers such as landlords, Realtors and other entities from discriminatory practices of making housing unavailable to the following protected classes: race, color, sex, national origin, familial status or disability.
“Discriminating against renters shouldn’t even enter into the stratosphere,” said Meyers.
It can be tricky to navigate the line between screening for desirable candidates and discriminating against someone for a reason that falls under the Fair Housing Act. However, Meyers explained that the process can be straightforward.
“Using a standard rental form that is pre-approved by the association covers fair and equitable questions related to criminal background,” Meyers said. “Owners of associations are most concerned with prospective tenants’ criminal backgrounds and how they treat others. But there should never be a time where they ‘wing it’ in an interview with a prospective tenant. It is as simple as a form filled out that was previously approved by counsel.”
Additional vetting includes making sure credit reports are clean and favorable, and security deposits are available.
While the process for screening for problems may be lengthy, the reasons for rejecting potential tenants should fall under certain categories. First, the board may reject candidates if they’ve been convicted of a felony for crimes that were violent or property-related, and have not undergone the process to restore their civil rights.
Second, the board can reject candidates if they misrepresent themselves on their application or if something in their background shows violations of community rules in the past.
The board may turn down tenant applications based on their credit score, but only if the association has outlined a minimum credit score that it will accept within their governing documents beforehand.
What To Expect During the Condo Board Screening
Landlords and Realtors may have decided on a specific tenant, using their own method of screening and checking the tenant’s credentials. The board often requires potential tenants to submit a new, lengthier application beyond the process the landlords used to select them.
Some of the extra paperwork could be part of the move-in process or clarifying Rules and Regulations for all communal areas. While the landlord is aware of the bylaws and Rules and Regulations, the board will want to confirm that the lease mirrors those rules, too. Paperwork clarifications may include move-in fees and pet rules. If the association is in a gated community, there may be additional parking rules such as the procedure for tenant parking, guest parking and window stickers.
Landlords and Realtors should give their future tenants plenty of warning about the board’s screening process and encourage them to submit the application as soon as possible. Depending on the board’s process, landlords may not be directly involved, aside from paying a move-in deposit for the new tenant and submitting a copy of the signed lease.
Once the application is in, the board may utilize a third party to run a background check, follow up on references and verify employment. Even if that process is completed quickly, landlords and tenants alike may have to wait for the board to meet and vote on the tenant’s application, which could be weeks, depending on when the application was submitted and the minimum timeframe for a follow-up meeting. The board may also choose to interview the candidate in person regarding answers to application questions, which would lengthen the process.
Realtors and landlords should anticipate the extra time it may take to get their new tenants approved. Searching for new tenants as early as possible will help reduce the down time and unpaid utility expenses in between tenants.
If the application process is a lengthy one, landlords would do well to remind themselves that the board works on behalf of the whole community. The condo board and the association’s overall objective is to provide a high quality of life, which is a benefit for the incoming tenant as well — hopefully for a long time to come.
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