Thanks to the large number of foreclosures that occurred following the 2008 global financial crisis, homeowners associations (HOAs) and condominium associations began developing an inventive strategy to overcome the loss of revenue caused by unpaid fees and vacant housing units.
Many HOAs began using liens to claim ownership over housing units and then rent them out to other tenants. While the foreclosure-to-rent strategy has a number of benefits that HOAs can reap, it’s important to realize that it’s not without its drawbacks.
If you’re considering implementing a foreclosure to rent policy at your HOA, or if you’re considering renting a foreclosed property managed by an HOA, there are a few important things to consider. Qualified HOA legal counsel in Arizona can assist HOAs in understanding the nuances associated with renting out a foreclosed unit.
What HOAs should know
For HOAs, consulting with an HOA lawyer in Arizona is an essential step to take prior to moving to foreclose on a property and rent it out. It’s often very expensive for HOAs to move to foreclose on a property, which means that it may not be worthwhile in the long run, unless you’re able to negotiate an alternative fee structure with your attorney.
Additionally, HOAs should consider their ability to fill the unit once the foreclosure proceedings are complete. It may be challenging to fill some units, meaning that it will take longer for the HOA to recoup the costs it spent on the foreclosure process. Additionally, the unit may suffer damage or deterioration if left unattended for a long period of time.
The HOA should also consider the length of time that it wants to rent the unit for, and its ability to resell the unit.
What renters should know
Prospective renters should understand that they are responsible to the HOA when they decide to rent a foreclosed unit. They should be aware that the HOA may not intend to hold the asset for the long term, and that it will likely reserve the right to sell it at any time. Many foreclosed properties are ideal short-term rental solutions, but they’re typically not well suited for long-term rentals.
Some HOAs may issue short-term leases for foreclosed units. Renters should always carefully follow and observe the terms of their lease, and maintain a clear and active line of communication with the HOA.
Renters do have a number of rights under both municipal and state laws. Renters should consult with an attorney to learn more about their rights under the law, and to learn about ways that they can improve their relationship with the HOA of the community in which they rent their home.
Since 2010, Goodman Law Group has been a trusted HOA lawyer in Arizona. We’re proud to provide each of our clients with quality legal representation and sound legal advice. You can count on us to look out for the best interests of your HOA. Contact one of our friendly representatives today to learn more—we look forward to assisting you!