Could you Be Prevented from Renting Your Home?

In Arizona many people buy residential property as an investment and then rent out the the home full time or at least some portion of the year.  Additionally with the current declining market and the inability to sell a home, renting it until the market improves has become increasingly popular and necessary.  But, WAIT A MINUTE....could your Homeowner's Association Covenants Conditions & Restrictions (commonly known as CC&R's) prohibit you from leasing your home??? Maybe so. CC&R's regulate the homeowner's use of their property restricting everything from the color of the home, awnings, holiday decorations, pets, outdoor basketball hoops and landscaping.


During the recent housing boom builders included restrictions prohibiting homeowner's from renting their properties to limit the number of rental units in a community.  These builders/developers and their lenders believed that the number of rentals in a community affected the value of the property because of crime that often occurs in rental property.  Now many Homeowner's Associations are seeking to amend their CC&R's to include a restriction preventing rentals. While these associations might find this to be a difficult process as there have been no case law that addresses this issue...but you never know what can happen. 



The law in Arizona clearly states that if you choose to live in a HOA (Homeowner's Association) that has CC&R's you have a binding contract with the HOA and are accepting the restrictions associated with your property.  There is a contingency in the Arizona Associations of Realtor's resale purchase contract that allows the Buyer a period of time to review, accept or reject the CC&R's after their offer has been accepted.  ALWAYS carefully review the CCR's (provided by the Title company) to determine whether or not you must occupy the home and not rent it out.  REMEMBER CC&R's can be amended.  A HOA that doesn't have a rental restriction today may have it arise as an issue at a later date.


Linda Shank is a Broker/Owner & Certified Residential Specialist in the Southeast Phoenix Valley who has been selling real estate since 1978.  She is experiencing her third down market cycle.