|HOAs are serious business.|
One of the most important weapons in a landlord’s armory—and one of the most neglected—is the rental agreement. It sounds simple enough. All you need is a basic piece of paper that identifies your tenant, identifies the address, and sets forth the monthly amount of rent, the due date, and the amount of the security deposit, right? Well, that’s a start.
Tenant HOA Rule Violations
What if your tenant violates the CC&Rs, and you, as the homeowner, get fined for it? You’ll just collect it from your tenant, right? Well, consider this scenario: your tenant pays rent on time every month, in the full rental amount, but doesn’t pay you for the fine. Can you evict your tenant for non-payment of rent? Depends on what your rental agreement says. If your rental agreement doesn’t say what to do about the fines, then you could get stuck with a tenant for the remainder of the lease who keeps racking up HOA violations. You could probably deduct it from the security deposit at the end, provided the security deposit is big enough to cover all damage, any unpaid rent amounts, and the unpaid fines. But a tenant who racks up HOA violations will likely leave some interior damage you’ll have to take care of, too.
A better way to go is to have a provision in your rental agreement that says that rent payments are first applied to pay any HOA fines, and then applied to the regular rent. Now, if your tenant gets fined for $250 from the HOA, you can apply the first $250 of rent to cover the fine. If your tenant doesn’t pay you enough to cover the fine and all of the rent, then the unpaid portion is categorized as unpaid rent, so you can evict the tenant if necessary. (Check your own state’s laws to be safe).
If you have a good tenant, and an HOA that tends toward the unreasonable, then sticking up for your tenant in the face of unreasonable HOA violation letters is the only honorable (and profitable!) thing to do. You may think the easy way out is to just let the tenant pay the fine, since you’re not really required to contest any violations, but if you lose a good tenant in the process, you’ll be costing yourself way more than the amount of one measly fine.
A Real Life Example
For example, I had a pair of really great tenants in my rental condo, and the HOA there was ridiculous. The HOA President was rude and combative and drunk with power, and unfortunately, none of the more reasonable homeowners would run for the board because they couldn’t stand her. My poor tenants got a violation letter within the first month of moving in, and it listed violations for a satellite dish (which had been previously approved in writing), a window air conditioner (also previously approved in writing), having a fan inside the unit near the window where it could be seen from the street, and for having “unwanted” plants stored underneath the stairs. The tenants promptly moved their one, small, potted ficus upstairs onto their deck, but the remainder of the violations were completely bogus, and the HOA knew it. I went to bat for the tenants, the HOA backed off, and I was able to hang on to those really great tenants for another year and a half. (NO damage at all when they moved out!) Plus, the tenants were really grateful for my effort on their behalf, so it immediately established a good working relationship between them and me.