2W // Real Estate & Home Builders Guide // December 2016
Angry neighbors pushing for ‘renter rules’
By Ilyce Glink
and Samuel J. Tamkin
Tribune Content Agency
Q
: Our three-unit condo
building allows renters as
long as the lease is for a term
of at least one year. We bought
a unit and then met the other
two unit owners on the day
we closed. We told them we’d
be renting our unit and one of
the unit owners has been quite
distraught, as he has no interest
in having renters in the building.
As a result, he is harassing
the renter for tiny things and
creating a very tense situation
all the way around. Now the two
other owners are considering
putting a separate set of rules in
place for renters.
We are committed to having
the renter follow the bylaws
of the association and do not
know why there would be a
separate set of rules for them.
Have you heard of this? I
feel this is a slow and steady
march to prevent renters in
the building, which is not an
option for us.
: Let’s start with the fact
that personalities are always
a factor when you live in a
community, and with a three-
unit building, you’re in a very
small community. So, whatever
personality issues arise, they
tend to get magnified, whether
the issue is noise sensitivity,
smoke intolerance, indifference
to the building appearance,
pickiness about the level of
cleanliness, or a host of other
issues.
In your particular situation,
the neighbor is concerned
about rentals in the three-flat
building. You didn’t indicate
if the neighbor had issues with
the renter because they were
renting or if there were problems
with that person. We’ll have to
assume that the neighbor doesn’t
A
want to live in a building with
rentals.
Generally, the governing
document for a condominium
association is the ultimate
determinant as to what you can
and can’t do in a condominium
project. If the document allows
rentals, the board may not
have the authority to eliminate
rentals in the building without
an amendment to the document.
If the document requires all unit
owners to sign off on an amend-
ment, they would need your vote
to make the change.
Now, you still would have
to read the condominium
declaration or other governing
document to determine what
restrictions the board can place
on rental units. The board may
have the ability to screen renters,
pass rules and regulations that
apply to all residents living in
the building, but they probably
don’t have the right to pass rules
and regulations that specifically
apply to renters and not owners.
So they can’t pass a rule that
says that owners have the right
to use the common areas of the
property but renters can’t.
As an owner of one of the
three units in the building,
we assume that you have the
ability to sit on the board for the
association. We’d suggest you
go to the meetings to see what
the other owners are trying to
do. There are times that talking
things through can de-escalate
situations and addressing
concerns by neighbors helps
limit some of the problems that
may have arisen. You can’t
eliminate all issues but perhaps
you can figure out what has your
neighbor up in arms and try to
work things out.
Again, when it comes to
personalities in buildings there
may be little you can do and
being on the right side of the
law may not matter. If you have
to take legal action against the
board or your neighbor, that
route can be quite expensive and
may not be cost effective. And,
if going the litigation route ends
up being your only option, your
neighbor might end up winning
because it might be more
beneficial for you in the long
term to sell your unit -- if it can
sell for a profit -- than continue
owning it and dealing with the
neighbor.
(Ilyce Glink is the creator
of an 18-part webinar+ebook
series called “The Intentional
Investor: How to be wildly
successful in real estate,” as
well as the author of many books
on real estate. She also hosts
the “Real Estate Minute,” on
her YouTube channel. Samuel J.
Tamkin is a Chicago-based real
estate attorney. Contact Ilyce
and Sam through her website,
ThinkGlink.com.)
H om e B uyer s ' Glossary
Adjustable-rate Mortgage (ARM) - A
mortgage for which the interest rate and the
payments change during the life of the loan.
Agreement of Sale - The contract in which
the seller agrees to sell and buyer agrees to
buy, with conditions and terms spelled out
and signed by both parities.
Amortization - A plan for gradually repaying,
in periodic payments, money borrowed.
Balloon Mortgage - A mortgage that has a
large amount of the principle due at the time
of maturity.
Bridge Loan - A loan that finances a
mortgage at the end of one loan and the
start of a new one.
Closing Costs - Expenses and fees that are
added to the price of the property, paid by
the buyer and the seller at the closing. The
Agreement of Sale states who pays which
costs.
Commercial Bank - A financial institution
authorized to provide a variety of financial
services, including consumer and business
loans
(generally
short-term),
checking
services, credit cards and savings accounts.
Condominium - The buyer owns title to a
residential unit, shares common areas with
other unit owners and pays maintenance fees
to the condominium association for property
upkeep.
Conventional
Loan - A loan not
guaranteed by the VA or insured by the FHA.
Co-op - In exchange for the right to occupy
a co-op unity, the buyer owns shares in the
co-op corporation (made up of co-op
residents), rather than owning real property.
Federal National Mortgage Association
Payment Cap - Limits the amount that a
monthly payment on an ARM loan can
increase at the time of adjustment.
(FNMA or Fannie Mae) - A privately owned
and managed corporation that purchases
mortgage loans originated by other lenders.
Fannie Mae issues stocks and securities to
obtain funds for its purchases.
Points - One percent of the amount of the
mortgage loan.
arrived at by dividing the borrower's fixed
monthly obligations by the borrower's monthly
income.
Fixed-Rate Mortgage - A loan that has one
Prepayment - Payment of a mortgage loan,
Due-on-sale Clause - A mortgage
stipulation demanding payment of the entire
loan balance upon sale or other transfer of
the real estate securing the loan.
Intermediate-term Loan - A home loan of
Debt-to-income Ratio - A percentage
Equity - The ownership interest remaining in
property after payment of all liens or other
charges on the property.
Escrow - Funds left in trust with a third party,
to be paid to a designated recipient at a
designated time.
F ederal
Home
Loan
Mortgage
Corporation (FHLMC or Freddie Mac) - A
quasi-governmental
secondary
market
agency that purchases whole mortgage
loans. Freddie Mac sells interest in pools of
mortgage loans to obtain funds for mortgage
loan purchases.
Federal Housing Administration (FHA ) - A
government agency within the Department of
Housing and Urban Development that
administers many programs involving housing
loans made from private funds, including
mortgage insurance for lenders and rent or
interest assistance for low-income tenants and
mortgagors.
set interest rate. Installment Debts - A buyer's
long-term debts; they usually extend for
periods longer than nine months.
or portion of the loan, before the due date.
Prime Rate - The interest rate that banks
less than 30 years.
charge to their preferred customers. Changes
in prime rate are used as indexes in some
adjustable rate mortgages, especially home
equity lines of credit.
Life-of-loan Cap - A consumer protection
on some adjustable loans. It limits the total
upward adjustment that may occur during the
life of the loan. Also known as an overall cap.
Principal - The basic loan amount, separate
from interest, insurance, and taxes.
Loan-to-value Ratio - The relationship
between the amount of a home loan and the
total value of the property. Lenders may limit
their maximum loan to 80-95 percent of value.
Lock-in Rat e - A rate commitment made by
lenders when making a mortgage loan to
commit to or "lock in" that rate pending loan
approval. Lock-in commitment periods vary.
Market Value - The highest price the buyer is
willing to pay for a property and the lowest
price the seller will accept.
Mortgage - A lien or claim on property given
by a buyer to a lender as security for money
borrowed.
Mortgage Broker - An individual or
company that obtains mortgages for others
by finding lending institutions, insurance
companies, or private lenders to lend money.
Private Mortgage Insurance (PMI) - The
insurance coverage offered by a private
company that protects a lender against loss
on a default mortgage loan. Its use is usually
limited to loans with high loan-to-value ratios.
The borrower pays the premiums.
Title - Proof of ownership.
Title Search - A check of
title records to assure that
the buyer is purchasing
property with no liens,
encumbrances, or other
claims
which
might
adversely affect the title's
value or marketability.
Veterans Administration
(VA) - A government
agency that helps veterans
of the armed forces obtain
housing.