Q. I own a condominium in the Northern Virginia area. There are some renters in the building, but they are not a majority. At a recent board of directors meeting, it was suggested that the board should not only review all lease forms but also possibly go so far as to review applications for leases. The management office currently has a copy of all leases. There is nothing in our documents giving the association the right to screen applicants or leases. In speaking with some real estate friends, I was advised that such a move could have repercussions on future resales, financing, etc. Could you give a professional opinion on this issue?
A. You have raised two very significant issues affecting condominium life: renters and the power of the board of directors.
Let's first look at the board's power. In any discussion of whether a board of directors of a condominium has the power to do something, we have to start with the various legal documents affecting the condominium. The highest priority is the particular law in the jurisdiction where your condominium is located. All three area jurisdictions (Maryland, Virginia and the District of Columbia) have strong condominium statutes. You have to review those laws to determine whether there are any legal prohibitions against the action the board is considering.
Next in priority is the Declaration of the Condominium, the document recorded among the land records for all to see. The bylaws of the association come next and, finally, the rules and regulations that are promulgated periodically by the board of directors.
There have been a number of court decisions nationwide on the question of the board of directors' authority. All these cases come to one conclusion: namely, that the board must be reasonable, and in the absence of a specific prohibition in the various legal documents, has the general authority to run and maintain the condominium association.
However, as a precautionary measure, I have often counseled condominium boards of directors that if there is any question about their authority -- or if they believe questions will be raised about their authority -- they should present their case to the membership for a vote of confidence. Often, this vote can come in the form that I call the "book of the month club" option: If we do not hear from you within a reasonable period of time, we, the board, will assume your consent and will take the action we are proposing.
This way, the board at least has informed the membership -- in advance -- of its intention to take certain steps affecting the condominium association.
Now, let's turn to the question of leasing and renters.
As discussed earlier, you have to examine your declaration and bylaws to find out what rights the board has with respect to tenants. Most condominium documents permit an owner to rent his or her condo, although most condominium associations impose restrictions, such as a minimum of six months or a year, on the term of the lease. Some condominium associations have given the board of directors authority to require that a particular form of lease be used. This is absolutely essential, in my opinion, because the board may want to take legal action against the tenant if the unit owner refuses to take those actions, and the lease between the unit owner and the tenant should give the board this right. For condominium associations that do not have such a requirement, I strongly recommend that the documents be amended to give the board this authority.
You have raised one additional question, however, about whether the board has the right not only to approve the form of the lease but also to screen the prospective tenants. Although this might seem desirable from the board's point of view, in my opinion, unless the documents specifically give the board this right, it cannot take it upon itself to screen future tenants. I tend to agree with your real estate friends who suggested that such a restriction might affect the future value of the units in your building. If we get into a serious recession again and interest rates are high, most, if not all, of the unit owners who would prefer to sell might be forced into renting their apartments. Clearly, they should be able to do so without restrictions from the board of directors.
This is not to suggest that the board cannot monitor the activities of tenants, just as it monitors the activities of unit owners. If a tenant (or the owner) is engaged in illegal activities, for example, or is operating a business in violation of the condominium documents, the board of directors must have the authority to assure compliance with the condominium documents.
I suggest that your board of directors consult its lawyer and get a written opinion on the board's authority to take the proposed action.