Association’s Review of Rental Applications: A Useful Practice with Many Possible Pitfalls

In order to provide for the safety and welfare of members, lease restrictions, in both homeowner’s associations and condominium associations, are an area by which associations regularly attempt to control who resides within an association.  While this certainly can accomplish the desired effect of controlling which individuals are permitted as tenants in an association’s community, associations need to be careful both in what items are contained in these restrictions and how the restrictions as a whole are enforced.

Initially, in order to develop a method in which prospective leases, and by extension, prospective tenants, are evaluated, an association’s declaration must grant the association the authority to perform such a review in the first place.  In many instances, a declaration will include language that states that the board is permitted to promulgate rules regarding the review and approval of leases within the community.  If an association’s declaration contains this language, the next step would be for the association to develop clear criteria that states the standards that will used to review the applications of all prospective tenants within an association.

Generally, restrictions that would operate to prevent the leasing of a property within an association will be seen to be enforceable unless it is shown that the restriction is wholly arbitrary, a violation of public policy, or a violation of an individual’s constitutional rights. For example, if a restriction only stated that prospective tenants must submit to a criminal background check, but then gave the board of directors unfettered ability to determine whether to approve or deny an application based on the results of that criminal background check, could be seen as arbitrary.  Instead, the provision would stand a greater chance of being enforceable if it stated that any prospective tenant would be denied if that tenant had been convicted of a felony within a specified period of time.  Additionally, associations must be careful to apply all of their restrictions evenly to all prospective tenants to ensure that these provisions are not being selective enforced against certain individuals.  If an association selectively enforced its rules it runs the risk of otherwise enforceable rules being declared unenforceable solely due to this uneven application.

Another area that associations need to be aware of are the restrictions imposed by the Fair Housing Act.  In a very general sense, an association cannot use its rental restrictions to discriminate against a protected class.  Examples of protected classes include race, color, religion, sex, familial status and national origin.

Finally, associations must be careful to only enforce a rental review process prospectively, rather than retroactively.  A rule is being enforced retroactively when it operates on transactions that have already occurred.  For example, a lease that was entered into prior to the creation of a rule that would have otherwise prohibited the lease would likely be determined to be immune from such a rule.

Every declaration is different and each community requires a specialized review and determination of whether, and how, a rental review process should be implemented.  As such, no information in this article should be acted upon without first receiving professional legal advice.

This article was prepared by Patrick J. Burton, Esq. of the Law Offices of John L. Di Masi, P.A.  The Law Offices of John L. Di Masi has practiced in the area of community association law in the Central Florida area since 2000.

Patrick J. Burton, Esq.