city rules say no renters...what to do?

The city I live in just passed a moratorium for renters. This means that even if I buy a home ‘subject to’ I can not legally put a rent-to-owner into the home because they would be a ‘renter’ in the city’s eyes. I am wondering if other people have found a way around this situation and if it is worth the risk just to put renters in anyway and hope I don’t get caught by the city. Also, what can a city do if they catch me? Assess a small fine?
Technically, since I am buying subject to…I am the renter because I am paying the mortgage on the seller’s loan. If anyone knows how to remedy this problem I’d sure appreciate the help.


Hi Sonriffic,

Just do a tax lease. Buy the home, place it in a land trust and assign your tenant a beneficiary interest in the trust which makes him an owner. Lease the property to him for say three years. He is entitled to writeoff property taxes and mortgage interest during the lease term. At the end, he assigns his interest in the trust back to you. The property at all times was owner occupied.

Da Wiz

Thanks for the input. Do you have any idea if it is a risky idea to put a renter in anyway? What can these cities really do to me if I get caught except ask me to get rid of the renters. I would try to sell it at that point. Any thoughts.

Sonriffic (original poster)

Why break the law when you don’t have to? The city may only be able to force you to evict your renter but I’m sure his/her lawsuit against you will discourage that notion.

Da Wiz

When the person living in the home assigns his beneficial interest in the trust back to me at the end of his lease, does he buy the home from me at that point? What happens after I have all of the beneficial interest in the property? If I hold on to the property and keep renting it out, we will be back where we started with a ‘renter’ living in the house. Thanks again for all of your insight. How long have you been doing this business?


With the tax lease beneficial interest is assigned back to you at the end of the 3 years. The tenant is not obligated to buy the property. They can if they want by making you an offer. If not, you can just raise the rent and do another tax lease for 3 years with the same tenant or a new tenant.

The Beggar

What city do you live in? How can city stop the rental of property? That would devastate local economy of any city!

Sedona, AZ passed a Land Development ordinance in which it is against local law to rent a SFR for less than one month. The bill was sponsored by all the local corporate hotels and won. Many people own vacation homes there. Hurts them in the pocket. Typical corporate takeover of America.

Da Wiz

First immenant domain now this. Who’s on our side?

Wiz…I have a question for you? I am thinking of buying a couple of preconstruction homes in FL in 2 communities but they require the owner to hold the property for one yr and it can not be sold unless there is proven financial hardship showing. Can I use this method once I close on the home to put a tenant in and then sell after 12months to them??
Do you know if the HOA or in this case the builder can block me from doing this if legal???



It depends upon the wording. If they require that the home be “owner occupied”, you can simply place the home in a land trust and name your tenant a co-beneficiary. Therefore, he also becomes an owner and the home will at all times be owner occupied.

If you have a loan that is for owner-occupied, you may have a different kind of problem, but if your purchase mtg is NOO, you’re fine.

Da Wiz

Yikes! What is happening to private property in this country??

If you bought sub2, you are not a renter, you are an owner. It doesn’t matter who is paying the loan- it only matters whose name is on the deed.

Just my .02