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How a Leasing Amendment Pays for Itself

How a Leasing Amendment Pays for Itself

Passing a leasing amendment is desirable because it helps to maintain the quality and character of the community.  A leasing amendment benefits a community in two main ways:  1) by providing an association with a means of evicting nuisance tenants and 2) by enabling the association to collect rent directly from tenants when unit owners become delinquent.  A leasing amendment will also pay for itself in the time and money saved in these two scenarios.

Scenario 1: The Problem Tenant

Every association encounters problem tenants.  However, without a leasing amendment, many associations are limited in their ability to evict such tenants.  A leasing amendment provides an association with the authority to evict a nuisance tenant if the owner fails to do so in a timely manner.  Thus, a leasing amendment enables an association to quickly and effectively remove problem tenants from the community.  This not only saves time, it also maintains a pleasant community atmosphere which helps to attract and retain good unit owners and tenants.

Scenario 2: The Delinquent Unit Owner

Unit owners who fail to pay assessments have a huge effect on an association’s bottom line.  A leasing amendment permits an association to collect rent directly from a unit owner’s tenant when the unit owner becomes delinquent.  This is particularly beneficial to an association because the association can do so without taking on the duties of a landlord.  Instead, the owner remains responsible for all duties as landlord.  Once the association has collected enough rent from a tenant to satisfy the owner’s obligations, the owner simply resumes collecting the rent.

Without a leasing amendment, an association will usually be forced to file a complaint against the landlord, obtain a judgment and attempt to execute a rent levy. Compared to the automatic assignment of rents that can be implemented through a lease amendment, this is a long and expensive process.   A leasing amendment solves the collections problem when a tenant is paying rent in a delinquent unit.  Not only can the association avoid going to court, the association has automatic access to a source for collections.  The collections obtained based upon adopting a leasing amendment can easily pay for the amendment itself—usually with the first rent check collected.

Why Not Just Pass a Resolution instead of an Amendment?

An amendment to an association’s governing documents takes more time and effort than the board passing a resolution.  Why not pass a resolution to deal with the issues outlined above?  The simple answer is that while a resolution may be easier to pass in the short term, it can create enforcement challenges down the road.  In order to be able to enforce the same type of provisions outlined above with a resolution, every tenant would have to sign a lease rider permitting the association to collect rent directly.  This creates excess administrative work and takes up valuable time—if it can even be accomplished.