Condo Community: A Mix of Owners and Renters Creates a Harmonious Living Space

Dear Mary:

Our board members agree that we now have too high a percentage of leased-out units. We’d like to have more owners living here to give our condo more of a community feeling. We’re not sure how we got here, and we don’t know how to change it. Any thoughts on how we might move toward a different mix?

— Mixing It Up in Midtown

Dear Mixing:

First, a caveat: Check with your building’s attorney before you take action. You can exercise your business judgement, of course. But ensure that you stay out of legal trouble by working within your bylaws.

There are many ways in which the mix of owners and renters affects your building. I’m not disparaging renters. But with their financial interest in the building, owners tend to be more diligent about caring for their units and the building as a whole. They have (or should have) input to policies and rules. As a result, they’re more apt to adhere to them. Those occupying (vs. leasing out) their units also have more of an incentive to promote a calm and harmonious atmosphere. And a higher ratio of owners-to-renters increases stability in the building. That creates more opportunities for residents to establish relationships with each other and building staff.

Improving your building’s character — and finances and operations — is a good reason to change your mix. Assuming you’re not planning to ban leasing altogether, here are some things to consider:

Check for agreement. You say that increasing owner occupancy is important to your board. If you haven’t already, you need to have a candid discussion with members to see if you truly have consensus. It sounds like a no-brainer: We all want community! But some members might have interests — financial or otherwise — they consider more compelling. You should find that out now.  

Recognize that consequences drive behavior. A major determinant of how someone will behave is what they think will happen as a result — and whether they view that result as positive or negative. So if you want less leasing and more owner-occupancy, you have to change behavioral consequences (see examples below). Before acting, the board must recognize this as a basis for a new approach.      

Assess your current situation. Is your leasing process easy or difficult for owners? What are the requirements for successful rental candidates? What’s the minimum length of a lease? Do renters get the same benefits as owners? Can they have pets, use a storage unit, get a bicycle rack? An easy process, minimal requirements, short leases, and renter benefits all serve to encourage leasing. If you’re doing this now, it’s at odds with your stated goal.

Decide on what you’re willing and able to change. Obviously you can’t change existing leases. But if you make leasing more difficult for new owners, you will at some point have fewer buyers who purchase with that intent. Your attorney can guide you on whether you have any options with existing owners and expiring leases. Discuss with your board: Are you willing to make this kind of change? How far will you go?

Identify interim improvements. What can you do to create more of a community feeling with the mix of owners and renters you currently have? Are you creating opportunities for owners to interact with each other? Is it possible to include renters in any of those activities? You don’t need permission or legal advice for these tweaks.

If you have a shared goal, align your building policies and rules with it, and do so with legal guidance, you should make good progress.