Condo Media - May 2012 - 28

MANAGEMENT

Aronson doesn’t remember how it was resolved, but it was unpleasant and expensive for everyone.

The Problem with Tenants
While it appears that few associations are trying to restrict rentals today, many are grappling with the problems, or perceived problems, an increase in investor owners and tenants can create. The underlying concerns in this debate haven’t changed. Those who oppose rentals contend that tenants, transient by nature and lacking a financial stake in the property, will be less concerned about maintaining property values and less conscientious about obeying the rules. Absentee owners, critics say, will be less involved in the community, less likely to respond quickly to problems and less concerned about maintenance, rules enforcement, and other qualityof-life issues important to the owners who live there. Many association attorneys, although by no means all of them, agree that tenants, as a group, are more likely to create problems for managers and more likely to violate the rules than owners. “If I counted the complaints,” Ellen Shapiro, a partner in Goodman, Shapiro and Lombardi, says, “the complaints against tenants would outnumber complaints against owners.” That is partly because tenants don’t have an ownership stake in the property, she says, but it is also because some landlords aren’t as scrupulous about selecting tenants and monitoring their behavior as they should be. “As long as they are collecting the rent,” Shapiro says, these landlords don’t care if other owners are complaining about their tenants.

Connolly, who manages Flagship Wharf in Charleston, Mass. for Thayer & Associates. The same holds true for investor-owners, says Pat Brawley, CMCA, AMS, PCAM, a principal in Community Solutions and a veteran association manager. Some are very sophisticated and “understand what condominium ownership is all about,” she says, while others aren’t very knowledgeable at all. Some understand what it means to be a landlord, she adds, and others “don’t have a clue.” One of the biggest fears about investor owners — that they won’t support essential maintenance and capital improvements — usually isn’t justified at all, according to Brawley and Connolly. Particularly in the current market, they have found, investors may be among the strongest advocates for increasing association fees or approving special assessments, because they recognize that essential maintenance and renovations will increase the value of their investment. “Investors who bought low recognize that property improvements will allow them to increase their rents and their profit margins, and better position their units for resale,” Brawley says. For that reason, “they’re likely to applaud a renovation plan.” Investors are also often more likely to recognize that associations must be run like a business, according to Connolly, who says, “They bring a business perspective that owners often lack,” and that community associations need.

education, among all the groups. “When tenants move into an apartment building, the landlord or property manager sits down with them, goes over the lease and the rules and regulations, and makes it clear that if they don’t comply, they can be evicted,” Brawley says. “That step is usually missing in a condominium rental.” It’s a step she thinks association boards and managers should take. Some associations she has managed require investor owners and their tenants to meet with a board member or the manager at the beginning of a new tenancy. At that meeting, owners verify that they have been provided a copy of the rules and acknowledge their understanding that they (the owners) are responsible for ensuring that their tenants comply. Tenants certify that they have received the rules from the owner and understand that they are required to comply. Both the landlord and the tenant acknowledge their understanding that the tenant should contact the landlord — not the board or the manager — if there are any problems with the unit.

Setting the Ground Rules
Few boards and management companies can invest the time and attention this process requires. But all community associations can, and should, establish clear ground rules for rentals, and make sure investor-owners understand them. The rules should “strike a reasonable balance” Shaffer says, accommodating owners who want or need to rent, while ensuring that tenants don’t adversely impact owner occupants. Industry executives agree generally on what these baseline requirements should be. Association attorneys emphasize that they should be incorporated in the association’s bylaws, in a clearly worded leasing amendment. The key provisions should: • Require landlord-owners to give their tenants a copy of the association’s rules and regulations and to

Communication and Education
Problems related to rentals, Brawley has found, result most often from a lack of communication — between landlords and tenants, between association boards and landlords, and between boards and tenants — and a lack of understanding, rather than from a willful intent to violate or ignore association rules. The solutions, Brawley says, are better communication with, and better

More Perceived than Real
The belief that tenants are problematic is widespread, but not universal. Many managers say the problems are more perceived than real. “There are good tenants and bad tenants, just as there are good owners and bad owners,” notes James

CONDO MEDIA • MAY 2012

Condo Media - May 2012

Table of Contents for the Digital Edition of Condo Media - May 2012