COLUMN: Ownership limit proposal may face snags

Q. I think our condominium complex should have a two-ownership limit per family or firm to encourage more ownership, fewer renters and improved value of the entire building.

Is this legal? Could we amend the covenants, give multi-owners a year to scale down, and after that the association would buy at appraised values with cash and resell the units? Have you heard of ownership limits? Sounds socialistic, but I think it makes much sense.

A. Assuming that the board and membership would support a two-ownership limit, this proposed covenant would fall under the section of material changes and would require the approval of the mortgage companies.

Would such a limit necessarily reduce the number of renters? Not really. It is not common practice to own more than one rental within an association, and multi-owners are in the minority. There are exceptions as a number of associations were developed for the express purpose of allowing investors to own multiple units.

As a practical matter, most associations would have difficulty buying and selling property, especially when the marketplace fluctuates.

An association could face a loss when selling a unit. While the unit is being sold, it is probable that the association would incur the expenses of mortgage, utilities, property taxes, insurance and association fees. In fact, an association may even be forced to rent the unit on a monthly basis, which obviously would be counterproductive as to the intent of the covenant change.

In addition, it would be legally difficult to make this policy retroactive. It would be easier to implement such a policy in a new community being developed. The problem later would be in the enforcement of the covenant, which could be costly.

Q. I am on the board of an association. We understand that we can charge owners who rent their condos a yearly fee. How much can we charge? Our current dues are $170 per month.

A. NRS 116.3115 states that any common expense of the association must be assessed against the units in accordance with the allocations set forth in your declaration. Your association has one fee regardless of the size of a unit. Other associations have dues based on square footage and would have a range of dues depending upon the unit.

The law does not state that associations can charge yearly fees to owners who rent their units. But, the law states that any common expense benefiting fewer than all of the units must be assessed exclusively against those units benefited. Charging fees to owners who rent was not the original intent of this law.

Many associations charge a user fee or administrative fee (not dues) to those owners who rent. The fee covers the registration of the tenant and the cost to enter information about the tenant, such as name, telephone number, vehicle and pets, into its computer system. The tenant could obtain copies of the governing documents, the rules and regulations and receive newsletters.

The registration form would also inform the association as to who is managing the unit. If there are any problems with the tenants or bills that must be sent to the manager and not the owner, the association would have this information.

These administrative or registration fees range from about $25 to $150 per unit per year. It is important for the board to be able to justify the fee in relationship to the special work to monitor the tenant occupants and the services provided to them.

Questions for Barbara Holland may be sent to Association Q. & A., P.O. Box 7440, Las Vegas, NV 89125. Her fax number is 385-3759.

Barbara Holland, Certified Property Manager, is president and co-owner of H&L Realty and Management Co. She is a member of the Institute of Real Estate Management and is the author of two books on the subject. Holland is a past president of the Greater Las Vegas Association of Realtors.

Real Estate home