Voting to Amend CC&Rs - Assignment of Rents
Many homeowner associations find that owners of rented units are far more likely to be delinquent in paying their monthly HOA assessments than owners of owner-occupied units.
Fortunately for homeowner associations, subject to certain conditions, it is possible for associations to collect delinquent assessments directly from tenants who are paying rent to these owners. With an enforceable assignment of rents provision included in the association's CC&Rs, the association or its assessment collection company, can require the renter to pay rent directly to the HOA, instead of the unit owner, until such time as any past due assessments are paid current.
An attorney should be consulted whenever an HOA wants to amend its governing documents. Following is language taken from the CC&Rs of a condominium association that is being provided only for educational purposes.
Assignment of Rents. As security for the payment of all assessments and liens and sums owed by an Owner to the Association, each Owner hereby gives and confers upon the Association the right, power, and authority, during the continuance of such ownership, to collect the rents, issues and profits of said Owner's Unit, reserving unto the Owner the right, prior to any default by which Owner in performance of that Owner's obligation under this Declaration, or the Bylaws or the Articles to collect and retain such rents, issues and profits as they become due and payable. Upon any such default, the Association may, at any time, upon ten (10) days written notice to such Owner, then either in person, by agent or by a receiver to be appointed by a court of competent jurisdiction, and without regard to the adequacy of any security for such indebtedness, enter upon and take possession of such Owner's Unit or any part thereof, in its own name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and apply the same, less costs and expenses of operation and collection, including reasonable attorney's fees, in payment of any indebtedness of the Association or in performance of any agreement thereunder, and in such order as the Association may determine. The entering upon and taking possession of said Unit, the collection of such rents issues and profits and the application thereof as aforesaid, shall not cure nor waive any default hereunder or invalidate any act done pursuant to the Declaration.
The assignment of rents and powers described in the foregoing paragraph shall not affect, and shall in all respects be subordinate to, the rights and powers of the holder of any first or second mortgage on any Condominium, or any part thereof, to the same or similar acts. See Exhibit A to CC&Rs for required Addendum to lease.
Homeowner associations that utilize an assignment of rents provision will find that it is almost never utilized because the threat of its use is sufficiently effective to encourage owners of rented units to pay their assessments timely.