I am asking this because a good friend of mine bought a condo for himself in 2007. There was a rent restriction. It wasnt an issue at the time since it was owner occupied. In 2008, economy downturn, he got laid off and went jobless for 8 months. He found a job in a different city in 2009 and moved there.
He rented out his condo(cant sell, the property is underwater and he doesn’t want to walk away), the rent he collected almost covered all his cost, so he was fine for a while. Early this year, a neighbor notified the HOA and HOA sent him a notice, threatening $30 per day fine. My friend now has the choice between not paying the fines or walk away from the property( he loves the condo and doesn’t want to walk away)
I heard horrible stories about how HOA can foreclose your property and ruin your credit score if you doesn’t pay the HOA dues and fines. In this case, I don’t think the HOA can or wants to foreclose the property, since it is underwater right now. I am more concerned about the credit score here.
btw, he lives in California.
Any insides or suggestions?
Thanks
KI
Depends on your state laws. Here in Texas the HOA can foreclose.
I would advise your friend to contact the HOA and ask them for an exception. Your friend can’t be the only one in an underwater situation. Until he actually calls and speaks to someone he is just a name and number on a violators list. Definitely don’t ignore the notices as the fees and fines will add up quickly. The fact that his move was related to a job may help him out.
Hope this helps.
As christopher w said they can foreclose, but even if they don’t’ they will prevent a clear title from being passed. You end up finding a buyer for your underwater house and BAM the door is slammed closed because you can’t transfer the title because of that pesky HOA.
Sell the tenant a 1/10Th of 1 percent interest in the property and get an option to purchase his share for X years. As an co-owner he is entitled to possession of the unit and your Nazi HOA can go stuff it. Plus send the busy body neighbor a bouquet of stink weed.
HOA dues would never go down once they go up. There are many foreclosures and short sales today are due to homeowners have not paid their dues. Make sure to communicate with HOA in resolving your dues.
Wow, that’s a creative solution. I think I would rather deal with the HOA than to have the tenant THINK they have an interest in the property. A good idea in theory, but in practice I can see the tenant at eviction hearing asking the valid question, “Your Honor, why do I have to pay rent on a property I co-own?”
tgauchsin
There are several ways around your worry. I won’t list them here because I see a pile of cash just sitting out there in my current area at the moment because of this restriction and the fruit is getting ripe. Maybe I will post them later after I harvest the current crop here. I don’t normally waste time with condos period but there are times to jump in.
Plus if your “tenant” doesn’t pay you don’t evict, you exercise a very well written option and purchase agreement. It’s a simple method of having a club to use, but with a well qualified tenant those problems just don’t seem to show up, but if you want a bigger club there are even better ways depending on the laws of your state.