More Howard County residents are renting out their homes amid the slump in the housing market, local officials say, sometimes leaving a burden of unpaid fees for condo and homeowners associations.
The issue has prompted the County Council to consider a bill that would require owners to show that they don't owe any outstanding fees or penalties before they are allowed to rent their properties. The bill would also allow associations to request that the county suspend or revoke existing rental licenses.
Homeowners groups say the legislation would give them another tool to make sure they get what they are due.
Associations "have contacted our offices expressing the frustration they experience with homeowners who have chosen to rent their properties but fail to satisfy association obligations," Councilman Calvin Ball in a statement.
The annual number of new applicants seeking rental licenses in Howard has jumped from 695 to 884 since 2007, according to county statistics.
"Over the last several years, we have seen an increase in the number of rental properties. I think that as the economy weakened, and it became more difficult to sell a house, owners were getting licenses to rent out their properties," Robert J. Frances, director of the county's department of inspections, licenses and permits, said in an email.
He said most of the rentals are in the district that includes Columbia, Ellicott City, Elkridge and Laurel.
Ball, a Democrat who represents east Columbia, is sponsoring the bill, along with Democrats Mary Kay Sigaty of Columbia, Jen Terrasa of Savage and Guilford, and Courtney Watson of Ellicott City.
Homeowners and condo associations hope the change will reduce the rate of unpaid fees and charges, which affects those developments' ability to secure Federal Housing Administration mortgages.
If more than 15 percent of units in a complex are 30 days or more delinquent on their association dues, the condo association can lose its FHA standing. That designation is important for potential buyers interested in FHA loans, which require a minimum down payment of 3.5 percent. FHA loans are often preferred over conventional bank loans that require much higher down payments. Losing FHA eligibility could price out potential buyers.
In Ball's district, which includes parts of Elkridge and Ellicott City, 72 percent of associations no longer qualify for the federal help.
In Terrasa's district, which includes parts of Jessup and Laurel, 61 percent had expired. Watson's had 55 percent expired and Sigaty's had 51 percent. Greg Fox, a Fulton Republican whose district has only seven condo associations, saw 43 percent with expired FHA financing.
The bill will be introduced at the next council session on Thursday, March 29 and a public hearing is scheduled for Monday, April 16.
Tribune Newspapers contributed to this article.Copyright © 2015, The Baltimore Sun