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Recently, I came across an interesting article and thought I’d share it with you—it's about whether an HOA community or condo association can restrict owners from owning more than one unit in a building or community. Spoiler alert: legally, it’s not as straightforward as you might think!
As I suspected, it’s not always clear-cut. Associations can set rules, but those rules must meet certain legal standards and be reasonable to hold up in court. It’s one of those gray areas where getting the right legal advice is key.
Attorney Eric Glazer, explains this matter really well in his article, "Can a Condo Prevent Ownership of More Than One Unit?". He points out that, yes, associations can impose these kinds of ownership limits, but it’s not as simple as saying, "You can't own more than one unit."
The law requires any restriction to be reasonable and clearly outlined in the association's governing documents. It’s all about finding the right balance between protecting the community and staying within legal limits.
One strong example of how these restrictions must be reasonable comes from the court case,
Tropicana Condominium Ass'n, Inc. v. Tropical Condominium, LLC. This case showed that ownership limits need to make sense for the specific community’s circumstances to be legally valid.
In that case, the condo association limited owners to two units each after one owner had six units go into foreclosure, which hurt the whole community. The court said this restriction was okay because it prevented financial problems without hurting the market for the other owners trying to sell their units
That said, it’s important to think about how people might try to get around the rule. For instance, what if the owner buys another unit in their spouse’s name or under a different business? Enforcing these rules can get tricky, so before making changes, associations should definitely talk to an attorney to avoid headaches down the road.
What Does This Mean for Investors and Buyers?
If you’re an investor or buyer looking to purchase multiple units in a condo or HOA community, it’s crucial to understand the potential restrictions on ownership. Some associations may limit how many units you can own to prevent a single owner from holding too much influence or to protect the community from financial risks. For instance, in the Tropicana Condominium case, a single owner’s financial difficulties resulted in multiple foreclosures, hurting the entire community.
Investors should carefully review the association’s governing documents before purchasing multiple units and consult with an attorney to ensure they won’t face unexpected restrictions later on. If you’re buying property for investment, it's important to know what you can and cannot do within the community.
How Could This Impact Sellers?
For sellers, ownership restrictions can be a double-edged sword. On the bright side, limiting buyers to one or two units might make your community more attractive to people who want a quieter, homeowner-focused neighborhood. It can also protect property values by preventing big investors from snapping up multiple units, which might stabilize the market.
But on the flip side, these rules can shrink your buyer pool. Investors who want to buy several units may be turned off, and that could mean fewer offers or a longer time to sell. It might also affect how much demand there is for your property. So, as a seller, it's good to know how these restrictions could play into your strategy—whether they’ll help you find a buyer quickly or slow things down a bit.
If you're looking to buy or sell in a condo or HOA community, I can definitely help you find the perfect place and guide you through the process. I am also a licensed Community Association Manager (LCAM), I understand the ins and outs of association living and can provide the expertise you need to navigate the rules and requirements that come with it. Feel free to reach out—I'm here to make the entire experience as smooth as possible!