Condo Owners Face Rental Dilemma

Condo owners who can’t sell their units often consider leasing the space to tenants until the market improves. Yet, increasingly, such owners are discovering that their condo association has rules preventing them from doing so.

Rental policies vary by condo association, but generally associations limit the percentage of units that can be occupied by tenants. Some communities require owners to submit the lease they plan to use to the condo board for approval.

The rental restrictions are meant to guard against the condo being viewed as a risky investment by lenders who believe that buildings with a high concentration of rentals are harder to market to homebuyers. Fannie Mae will not guarantee a loan for a condo in which renters make up more than 49 percent of the occupants.

The rules generally stem from a feeling that renters don’t take good care of a unit and can reduce the value of the unit.

Source: The Washington Post, Renae Merle (05/03/2008)