HOA rental restrictions are a common cause of disputes

Texas residents who purchase property in a subdivision, condominium complex, or a planned community are usually required to abide by rules laid down and enforced by homeowner’s associations. These rules are designed to protect property values by ensuring that communities maintain certain standards, and they can require residents from painting their doors a different color, parking large vehicles in their driveways or displaying signs or banners on their properties.

HOA rental disputes

Many people who buy properties in communities with HOAs do so to provide a source of rental income. This often leads to contentious disputes with HOAs that see renters as less desirable than owners. While renting is not usually banned entirely by HOA’s, the practice is often tightly controlled and restricted. Common rental conditions include limiting the number of times a property can be rented or requiring the board approval of tenants. Managing rentals can be crucially important for HOAs as prospective buyers may not be able to qualify for mortgages backed by the Federal National Mortgage Association if a large percentage of the homes or units in a community are rented to tenants rather than occupied by their owners.

The Supreme Court of Texas weighs in

A case involving these issues was decided in 2018 by the Supreme Court of Texas. The involved an owner who rented his property to vacationers even though the HOA’s Declaration of Covenants, Conditions, and Restrictions stated that rentals were only permitted for residential purposes. The HOA claimed that the owner was in violation of the rules because he was essentially running a hotel rather than renting out a home, which is a position that both the trial court and the court of appeals agreed with. However, the state’s highest court overturned the decision after concluding that the language of the CC&Rs was ambiguous and did not specifically prohibit short-term rentals.

Resolving HOA disputes amicably

This case shows how unpredictable the outcome of cases involving real estate law can be. This is why attorneys with experience in this area may urge the parties involved in HOA disputes to do all that they can to reach an amicable resolution. When conventional negotiations are unsuccessful, attorneys could suggest exploring an alternative approach like mediation.