DELINQUENT LANDLORD

DELINQUENT LANDLORD

QUESTION: Our board is frustrated with delinquent homeowners who collect rent on their units but refuse to pay their dues. Is there anything we can do?

ANSWER: There is a very effective provision I added to CC&Rs 20 years ago to address this issue. It's called a supplemental lease agreement or lease addendum.

Lease Terms. Whenever an owner leases his unit, both the owner and the tenant are required to sign a lease addendum supplied by the association that requires, among other things, (i) the lease be for the entire unit; (ii) no assignments or subleases are allowed; (iii) the lease is for not less than one year; (iv) tenant agrees to comply with the association’s governing documents and be subject to the its disciplinary procedures; (vi) owner assigns rents from his unit to the association in the event he becomes delinquent; and (vii) tenant agrees to pay the owner's assessments should he become delinquent. 

Effective Tool. The agreement provides a tool that associations need to hold both the homeowner and the tenant accountable since they are parties with the association to the agreement. When I go into court with CC&Rs and a signed agreement, neither the owner nor the tenant have a defense. Normally, a demand letter from my office with the relevant documents enclosed and a threat of litigation is sufficient to get prompt payment of the delinquent assessments. Only once have I had to go into court to enforce the lease addendum.

Rules Enforcement. The addendum is also effective in bringing a wayward tenant into compliance with the rules. Per the signed agreement, the owner and the renter are subject to disciplinary action. Both can be fined and, if necessary, sued. Moreover, the agreement gives the association the power to evict the tenant for violation of the terms of the lease addendum.
RECOMMENDATION: If your association has problems with delinquent landlords and/or problems with rules enforcement involving tenants, a lease addendum may solve both problems.