We had a co-op apt down the street that sat on the market for over a year, at what seemed like a give away price.  Unfortunately, it was in a very old, three story building and you have to walk up to the third floor!  Yikes!  That was a tough one to sell even at the seemingly bargain basement price. 

They also have a restrictive convenant about not allowing owners to lease out their property and this was a deal  killer.   Would have sold in a month, were it not for that clause.  Unfortunately, the poor owners were med students, bought the place thinking it made good business sense to invest in a home for the four years of med school; they couldn't even sell the place to a small business that wanted to have an art studio there -- not to have a retail store, but just to have a place to work.   Seems much too restrictive to me. 

Craziness and all in the name of "protecting" values?   If these units would allow investors to purchase, the units would get some much needed repairs, and they would actually go up in value!  Of course, these provisions are there because tenants can be very rough on a property.   It's a real delicate matter yet it does seem a bit extreme to restrict from leasing completely.  

Maybe Homeowner's Associations could have some rule like no more than 25% of units could be leased at any one time? 

 

3 Comments on Restrictive Covenants against Tenants in Townhomes, condos, co-ops, etc.

JUL
08
2007
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It's important for condo and coop association boards to figure out that lots of restrictions, be they on pets, rentals (common in coops) or the color of your balcony furniture, drive prices down, no up.  Especially those with no pet clauses, even though I will concede it's easier to enforce "no pets" than "only well behaved pets.
6:29pm • #1
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Is it an HOA covenant or a deed restriction??

We sold a home last year to a lady that wanted to board an elderly patiend.  She needed a license and everything was approved except that there was a deed restriction that owners couldn't use the property, a single family home, for a "day care center for elderly or chiildren".

However, since the deed restriction was not disclosed until a week before settlement, the buyer didn't want to buy.  I reaserch the gazoo out of these deed restrictions and found that they have to be renewed every 25 years in MD or they expire, even if they are in the deed.

Our buyer settled and has been providing licensed day care to an elderly couple since. 

Of course, if it's an HOA restriction, that's different.
6:32pm • #2
JUL
09
2007
2 Featured Posts

Lenn -- One of the few times I actually found myself saying, "Thank God for Attorneys".  :^)

Be they HOA covenant or Deed Restriction, I do know that in Iowa you are allowed, as I recall, seven (7) days to read, review and understand the HOA bylaws and restrictive covenants.  This is not a thing to take lightly. 

 
8:45am • #3


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Andrew Lietzow, MBA-Exec Dir

Iowa Real Estate Investors Association

Des Moines, IA

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