HOAleader.com - Tip of the Week - March 14, 2025
Published: Fri, 03/14/25
Updated: Wed, 03/19/25
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HOAleader.com - Tip of the Week - March 14, 2025
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In this week's tip, we answer a question from an HOAleader.com reader who wants to know whether their condo can charge investor owners a higher assessment.
In general, our experts say this idea, while appealing, probably wouldn't fly in the states in which they practice. But they also offer up four tactics you may find just as effective in either discouraging rentals or covering the added financial burdens rentals impose on your community.
Molly Peacock, counsel at Rees Broome in Tysons Corner, Va., who has represented condos and HOAs for 17 years, says this would face tough challenges in Virginia. “It's possible there may be a creative way to draft an amendment to the governing documents that would allow an association to charge investor owners an extra charge,” she says. “But that's not a sure thing. And even assuming you could do it politically in a community, I'm not sure it would overcome a discrimination claim—that the association is treating one class of owners differently than another.”
It's also unlikely to be permissible in Illinois, according to Michael Kim, of counsel at Schoenberg Finkel Beederman Bell Glazer in Chicago, who represents about 500 associations. He says condos and HOAs can't charge a higher assessment than what would be determined based on each owner's ownership interest.
Thomas W. Chaffee, a partner at O'Toole Rogers LLP in Lafayette, Calif., who, after he became the president of his own HOA, began to focus more on community associations in his legal practice, says this tactic wouldn't be permissible in California unless the association's CC&Rs specifically permitted it.
This is a common question asked by clients of Lydia Chartre, CCAL, a partner at Kaman & Cusimano in Milwaukee who represents 750-800 associations throughout Wisconsin.
“I often have clients saying that's what they'd like to do,” she says. “Or they want to put some extra charge or penalty in for those who want to invest and rent and not live in the community. Pretty much across the board, I say that's a bad idea.”
Find out why—and read four workarounds that might be easier to implement and achieve the same goals—in our new article, Reader Asks: Can We Charge Owners Who Rent Out Their Unit a Higher Fee? https://www.hoaleader.com/members/5062.cfm
Best regards,
Matt Humphrey
President
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