An HOA insurance agent must understand rental agreements and have an idea about how to navigate them, while fully understanding the concept. You probably frequently receive legal and insurance-related questions from your homeowner’s association and condo association clients.
What an HOA or a Condo Insurance Agent Must Do
Among many other HOA responsibilities is the responsibility for landlords to understand the ins and outs of rental agreements. It can impact landlords and tenants alike. Here’s why HOAs need to understand rental agreements and what they need to know about this type of housing contract.
Only Certain Types of Rental Restrictions May Be Legally Permissible
The first and perhaps most important aspect of rental agreements your clients should understand is that not all rental restrictions may be permissible. Only a few restrictions are generally widely considered to be legal. Your clients should always check with an attorney about the legality of a specific restriction type before placing it into a rental contract.
Some common types of rental restrictions your clients may come across include:
- Community-wide rental caps for developments owned by a single landlord
- Lease restrictions, such as community compliance requirements and minimum lease periods
- Bans on sublets or unauthorized roommates and pets
- Blocks on hotel-style, short-term rental agreements
- Bans on using a designated residential property for commercial purposes
Boards May Wish To Institute Tenant Screening Before Signing Rental Contracts
To keep their properties and other tenants safe, many HOA and condo boards opt to screen tenants before agreeing to rent properties out to them. Instituting tenant screening has several key advantages:
- Ensure prospective tenants have the financial means to pay their rent reliably
- Avoid the need for a potential eviction in the future
- Learn more about the applicant’s background and financial and job history
- Lower crime rates at the property and keep other tenants safe
- Comply with HOA rental rules and guidelines, when applicable
Boards Should Be Prepared With Detailed Contracts and Enforcement Mechanisms
Lastly, preparation and attention to detail are essential when writing rental agreements. HOA and condo board clients should ensure they’ve written in all necessary specifics. Then they should prepare to enforce the contracts. Your clients should:
- Write a thorough, detailed rental contract with specific language
- Have an experienced attorney review all contracts before signing sessions
- Include necessary clauses about essential aspects of the agreement, such as security deposit, late fees, rent increase warnings, notices of entry, smoking requirements, and payment requirements
- Institute a system of warnings for tenants who have one or more contractual infractions
- Prepare to evict tenants who are not paying or who are breaking other aspects of the rental agreement, as necessary
As an HOA insurance agent, you likely field questions from your clients frequently regarding the ins and outs of rental agreements. These legal contracts can be complex. Also, your clients should know how they work to ensure fair contracts with their tenants. The next time you meet with your HOA and condo clients, bring this list of critical facts to help guide your conversation.
About Kevin Davis Insurance Services
For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (855)-790-7393 to speak with one of our representatives.