Tim Arel: Generating income from amenities
USING AMENITIES TO GENERATE INCOME
While the goal of most homeowner association developers is to provide equal access to amenities, that isn't always possible. Some HOA amenities, like storage and parking, may be available in limited quantities so there is not enough for every owner. This limitation can be a source of conflict if not handled proactively. The board should enact a resolution for sharing these limited amenities.
As a rule, the board should not allow exclusive use of a common element without payment of rent to the HOA. In the case of additional parking, for example, rent should be established according to local area parking facility rates. If the competition is charging $100/month, there is no reason for the HOA to rent for less because it has the advantage of proximity. Renting below market rate may fill the spaces but loses valuable income that could reduce monthly assessments for everyone. This is particularly critical when demand is high. The association can justify charging market rate because of the convenient location.
It is more practical and profitable for the HOA to require a one year rental, rather than month to month. This is particularly true for seasonal owners where they would only pay part of the year if they could, leaving an unpaid vacancy while they travel. Renting a year at a time ensures a steady income stream for the HOA. Additionally, if the monthly rent is small, it's wise to collect for the full year to reduce monthly bookkeeping tasks.
When supply exceeds demand, some owners may be allowed to rent more than one space. However, when demand exceeds supply, the board has the right to terminate the multiple space renters on their anniversary date to allow other owners to rent. Reapportioning limited number common elements when demand exceeds supply is only fair. No owner should have greater rights than another. Finally, under most circumstances, HOA amenities should not be rented to non-owners. If an owner defaults on the rent payment or causes damage, money can be recouped by liening the owner's homeowner association property if necessary. The HOA has no such rights with non-owners.
Slicing the amenity pie can be problematic when demand is high. Rather than waiting for the kids to fight over the last piece, draft a resolution outlining the procedure, circulate it to the owners for review, revise as needed, formally adopt it at a board meeting and distribute it to all owners.
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