Restrictive Covenants
I'm looking at a project where we would try to turn-around a townhouse development where large numbers of the units are currently owned by investors who rent them out to Section 8 www.tenants.This has resulted in a cycle of neglect and deterioration.
Our plan is to buy a significant number of units in this complex and renovate them and re-sell to owner-occupants.
So I've been thinking about how to keep this cycle from repeating itself. One of the possibliites is a restriction on renting units. I suspect that a restrictive covenant on renting to section 8 tenants would be considered a violation of the fair housing laws. But what about a restricive covenant that the unit must be owner ocupied for a period of 10 years?
Suggestions? Comments?
There are lawyers and lawfirms who specialize in HOAs, condos, etc., and I think it'd be worth some few bucks to find and chat with him/her/it.
To find some of these specialists, stop in and talk to half a dozen of the best looking or best known condos close to you and find out who their lawyers are.
Or just ask your lawyer to make a rec or two of specialists in this field. He can make a few calls and check the local Bar A**ociation directory and get you some good peoples' names.
Its a good suggestion, John but there is a catch. Each of these townhouses is currently in fee simple title. So there is no HOA. Its not entirely clear to me how to change that. I suppose I could put together a HOA and deed each unit into the HOA and then back out again but the reality is that he HOA has no common areas to maintain and therefore no real reason to exist (though I am working on funding a community center through a TIF as part of this project its not at all clear to me that I can use taxpayer dollars to build a common element and then require people to join the HOA in order to use it). In addition it seems very unlikely that I will ever own all of the units in the complex so what happens to the ones that are not part of the HOA?
I'm no expert but I have seen something similar happen. A developer went into a neighborhood that was a poor area and bought dozens of the houses up. He rehabbed them and sold them as own-occupied only. He somehow added restrictions to the deed when he sold the places.
I'm not sure how it was exactly done but it seemed pretty simple.