Your community association’s Governing Documents provide the association with the right to review and approve sales and rentals; and to charge a transfer fee to cover the costs of processing the transaction. You have an application form and you pay a company to run a background check. So, can you actually turn any of the prospective applicants down? Would the association have to buy the house or the unit if you do turn an applicant down?
There are some circumstances under which a background check can be used to disapprove prospective buyers or renters. That is, under the Statutes and the Florida Case Law, there are certain situations under which the association can disapprove of a prospective applicant, without having to exercise a right of first refusal (i.e., without having to provide an alternate applicant), as follows:
- If the owner of a unit is delinquent in any monies owed to the community association, the rental or sale of the unit can be disapproved. (Of course, if the owner pays all sums outstanding, then the association would have to reconsider the application.) And, by the way, if an owner is renting out the home/unit and becomes delinquent, the association has the right to demand that the tenant pay the rent to the association until the account is brought current. If the renter doesn’t do so, the association can evict the tenant.
- If the prospective tenant or buyer provides information on the application form which is a material misrepresentation, and impacts on the occupancy, (i.e., if the board cannot verify prior or current employment or most recent address) then the board has the right to disapprove the tenant or the buyer.
- If the proposed tenant or buyer is or has been in violation of the association documents, before taking occupancy of the unit, then the board has the ability to disapprove the rental. For example, if there is no one who is 55 or older, and the community is senior housing; or if the intended occupants have two trucks, and no trucks are allowed in the community; and so on. This right to disapprove applies to all tenants and purchasers, including those who might already own or occupy another home/unit in the community. The evaluation would occur at the time the application is filed.
Basically, an association may disapprove a lease or prospective tenant, if the basis for the disapproval is reasonable and non-discriminatory. Note: Be wary of using credit history as a ground for disapproval. The owner of the unit remains responsible for all payments to the association, so the credit history of a prospective tenant is not really relevant. And, if a buyer has qualified for a mortgage, the credit worthiness of that buyer has been confirmed by the lender, so it is difficult to assert a credit problem as a ground to reject a purchase application based on credit history.
Rejection on the basis of criminal history and prior residential history must be reasonable, provided the criminal history is relevant. If you are looking at a criminal background check, you have to look at the severity of the crime, when and how long ago it was committed, and whether it materially impacts on living in a multi-family residential community association. If, for example, the crime were income tax evasion, that would not materially affect association living; or if the criminal event happened fifteen years ago, and there has been no problem since, then it would probably not be a problem for the community. Generally, the concept is once a person is convicted, serves his/her time and is released, the debt to society has been paid, and the person can get on with life.
Each situation would, however, have to be looked at on a case by case basis, as the information is received, and the manager, as well as the board, should consult with legal counsel if there is a situation regarding past criminal activity, for assistance in making the determination of whether it is grounds for disapproval. Note: The association would have the authority to disapprove the rental of an apartment to a person who is a registered sex offender.
It is illegal to discriminate based upon race, religion, sex, national origin, color, creed, familial status or handicap. Other than that, the board would be bound by the limitations set forth above in grounds for disapproval. Again, if any of these limitations is the basis for the disapproval, the association is NOT obligated to purchase or find an alternate purchaser or renter for the home/unit.
If an owner does not get approval for the prospective sale, or otherwise fails to comply with the documentary and policy requirements for processing a sale of a unit, the association can bring legal action to set aside the sale.
If the owner does not get approval for the rental, or the renter is disapproved by the board, but the owner moves the person in anyway, the association can bring legal action against the owner to force the removal of the unapproved occupant.
Be careful out there, and talk to your association attorney.