Unable To Sell, Some Condo Owners May Be Squeezed Into Foreclosure By Rental Restrictions In Association Rules

In Atlanta, Georgia, the Atlanta Journal Constitution reports on the story of a local resident who owns a condo apartment that she can't unloaded, and who is hamstrung in her attempts to rent out the place because of rent restrictions contained in the condo association's rules:

• [A]tlanta has a glut of condos and few are selling, so owners want to rent them but cannot because of limits designed to protect condo values. “A lot of these buildings have three- to four-year waiting lists” of prospective landlords, said Steve Cooper, a Midtown condo resident and co-founder of Cooper Brown Real Estate, which manages residential property.

• After trying to sell her condo, [Shawni] Mozaffari leased it and was fined $25 a day by the condo association for exceeding the 25 percent rental cap. Then the tenant left after the building’s staff prevented his business associates from entering the unit. Without a renter, Mozaffari said, she might lose the condo to foreclosure. She already has lost a lake home to foreclosure.

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• Mozaffari sought an exemption to the limit but was not approved. Such requests pose a dilemma for condo associations. Allowing waivers will help homeowners weather the recession and might curb foreclosures. But lenders and mortgage buyers, such as Fannie Mae and Freddie Mac, worry too many rentals will hurt a community’s stability.

For more, see Would-be condo renters feel boxed in (Rules to limit tenants push some owners closer to foreclosure).