The question has been asked of whether an Association can vote for a renter’s cap?

In short, the answer is it may be possible, but if allowed, it will only be effective against people who buy their unit after the cap has been adopted and recorded in the County Clerk’s office.   

If a declaration contains a provision establishing a maximum number or percentage of units in the common-interest community which may be rented or leased, that provision of the declaration may not be amended to decrease that maximum number or percentage of units in the common-interest community which may be rented or leased.

So, what if your Declaration does not have an existing cap?  The answer to that question is in found in NRS 116.335.1 which states that:

Unless, at the time a unit’s owner purchased his or her property, the declaration prohibited the unit’s owner from renting or leasing his or her property, the association may not prohibit the  owner from renting or leasing his or her property.

Similarly, NRS 116.2117.6 provides that:

An amendment to the declaration which prohibits or materially restricts the permitted uses of a property or the number or other qualifications of persons who may occupy the address may not be enforced against a unit’s owner who was the owner of the unit on the date of the recordation of the amendment as long as the unit’s owner remains the owner.

The statutory language may leave a potential loophole.  That is, an Association may be able to adopt a cap on the number of renters within the community.  However, to the extent it may be allowed, that cap would only apply on a going-forward basis.  In other words, the cap would only apply to individuals who purchased their units after the restriction was adopted and recorded.  Therefore, if an Association is seeking to adopt a renter’s cap or other use restrictions, all existing owners will effectively be “grandfathered” in.

An additional consideration when looking at rental caps is keeping track.  It can be a monumental burden on the Association and its management to track which units are being rented.  Though enforcement of rules and restrictions requiring the lease agreement be provided to the Association can help, tracking down those who seek to skirt the system can be an added difficulty.

It should further be noted that a review of your community’s Declaration needs to be performed to determine if there are any other restrictions which might alter the potential for a cap on the number of units available for rent within your community.  Working with my office, we can develop caps on the number of rental units knowing that the Association will have to take a long-term approach. For more information, please see Articles tab on our website at [email protected] or all Troy at (702) 529-2559.