A rental cap limits how many homes in the community can be rented at the same time. Nolo's guide to renting in an HOA community describes caps as rules that "limit the percentage of rental units existing at any one time," sometimes with "a long waiting list for owners wishing to rent out their units."
Whether your association can adopt a cap at all, and whether it has to live in the declaration or can be a board rule, is the subject of our guide to HOA rental restrictions. Once the board has that answer, the rest is mechanics.
A count or a percentage
A cap is written either as a fixed number of homes or as a percentage of all the homes in the community. A fixed number is easy to read and doesn't move. A percentage keeps the cap in proportion if the community adds homes, but someone has to do the arithmetic every time a slot is in question, and the cap should say whether a fraction rounds up or down.
Either way, the cap has to define what counts as a rental. Decide, and write down, how these cases are treated:
- A home rented to a relative, with or without rent changing hands.
- An owner who lives in the home and rents out a room.
- A home held in a trust or a company the owner controls.
- A home that's vacant and listed for rent but not yet leased.
If your state has a leasing statute, check it before settling these cases, because some statutes define what counts.
Running the waitlist
When the cap is full, an owner who wants to rent needs a fair way to get in line. A waitlist rule should answer these questions:
- How an owner joins: a written, dated request to the board.
- The order: the date the board received each request is the simplest to defend, and the rule should name it.
- How long an owner has to sign a lease once a slot opens before it passes to the next owner on the list.
- What opens a slot: a lease ending without renewal, a rented home being sold to someone who moves in, or a landlord moving back in.
- How the board tells an owner a slot is theirs, and where that notice is recorded.
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Tell each owner on the list where they stand, and update them when the order changes.
Hardship exceptions
Owners sometimes have to rent for reasons they didn't choose: a job transfer, a military deployment, a death in the family that leaves a house that can't sell quickly. A cap can carry a hardship clause that lets the board allow a rental outside the cap for a set period.
Write the clause narrowly. Name the kinds of circumstance it covers, require a written request with whatever documentation the board will rely on, set a time limit on the exception, and decide every request the same way. Record each decision and its reason in the minutes.
Owners who were already renting
When a cap passes and the community already has more rentals than it allows, what happens to the landlords who were renting before?
Florida answers it by statute for HOAs. Section 720.306(1)(h) provides that a governing document or amendment "enacted after July 1, 2021, and that prohibits or regulates rental agreements applies only to a parcel owner who acquires title to the parcel after the effective date of the governing document or amendment, or to a parcel owner who consents" to it. The statute carves out exceptions of its own, including one for leases shorter than six months, so read the whole paragraph before applying it.
Outside a statute like Florida's, whether current landlords keep renting depends on how the amendment is written and on your state's law. Some amendments let existing rentals continue until the home is sold, which works the way a grandfather clause does for other rules. Whatever the amendment says about current landlords, say it plainly in the text owners vote on, and ask the association's attorney to review that language before the vote.
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Keeping the count straight
A cap only works if the board knows, at any moment, which homes are rented. That means a registration requirement that tells the board when a lease starts and ends, and one list, kept by one person, that shows each rented home, its lease dates and the waitlist order. Review the list whenever a lease ends or a home sells.
Owners who rent still owe the association what any owner owes under the declaration, and Do Renters Pay HOA Fees? covers that from the landlord's side.
HOA-OS gives each unit its own page with its residents, its ledger and its history of property transfers, so the board can see who lives in a home and when it last changed hands. The unit pages are part of the Community plan, and every plan can be tried free for 30 days. See the plans at hoa-os.com/pricing.
Related Reading
- HOA Short-Term Rental Rules: What Your Board Needs to Know
- How to Amend Your HOA's CC&Rs: A Step-by-Step Guide
- Selective Enforcement: How Boards Lose HOA Disputes
Waitlist rules written after the cap fills get written with the owners already standing in line.