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Dear PoP – Question about business license for Condo Owners

by Prince Of Petworth November 16, 2010 at 2:30 pm 42 Comments

Photo by PoPville flickr user ekelly80

“Dear PoP,

We live in a condo building that is over 50% rental units (very investor heavy…why did I buy? The old management company did not report the correct number of rental units to me or the mortgage company and it’s also gotten worse since we moved in). Yes, I understand that people need to rent apartments and I have no problem with that as long as a condo building operates for the owners.

That said, there are only 6 business licenses issues for our building according to DCRA. I know that 50 or so units are not professionally managed, so that means a good number are renting out their units without the proper licensing.

Even though our condo bylaws state that the Board – which includes two investors – must follow and enforce DC law, they have told us that they do not care about this issue. Do you have any recommendation to ensure that our building is following DC law?”

Any advice for this situation?

  • Chad

    Call the cops?

  • Shoz

    How does this affect you? Why is it your problem to solve?

    • saf

      It affects the property as a whole and hence, the value of her property. Why does everyone here whine about crime and then whine when somebody wants to do something about it?

      No, this is not violent street crime, but it is crime nonetheless.

      • joker



        Listen, the OP is pissy because they didn’t do their own due diligence, and they have buyers remorse. The crock about “Oh, well the management company didn’t report the correct number to me” is total crap. The bank doesn’t get that infrom from you, they get it directly from the management company who also has to sign affidavidts to its veracity. If they “lied” then I suggest you and your bank take them to court for an easy six figure payday.

        Lastly, as someone said below, if the way the association is run bothers you so much, then “gasp” join! Thats the way a condo association works. Its run by the authority of its membership. Oh, thats right…you are probably just another one of those apathetic condo owners who has all the time in the world to complain, but not an hour a month to go to board meetings.

        • saf

          Me, I live in a house.

  • JohnDC

    How many other non-investors are on the board? Replace them with like minded people.

  • Native American JD

    File a lawsuit against your “neighbors”.

  • Mrs. Klaspkoch

    Threaten them with legal action. That will force them to correct these licensing matters, even if you have no grounds for a lawsuit. The last thing these owners want is to get wrapped up in a lawsuit over the condo unit they now undoubtedly wish they had never bought in the first place.

  • tj

    I don’t understand… Is the concern here really “to ensure that our building is following DC law” or is it actually that the questioner wishes their building had a higher owner occupancy rate and just wants to make things difficult for people.

  • Tres

    Having a transparent number of investor owned units hurts your property value — like you said, people are slightly less inclined to buy in properties with large numbers of renters. So in one sense, it’s good to keep the actual number off DCRA’s books. You didn’t mention what you hoped to accomplish by getting everyone legit.

    Each individual investor-owner, however, is best served by registering their unit because of the greater legal protections it affords.

    • Jessica

      Having an inaccurate account comes at many costs including when your building needs a loan for capital improvements. A bank looking at tax records would notice the problem, and the Association puts itself at risk for a law suit for knowingly not disclosing accurate information in the condo docs. It’s not as simple as “stop complaining” when the ramification of poor management and poor leadership impact everyone from those who want to buy in a building to the Board wanting to get a loan to replace a roof.

  • Anonymous

    The author is a whiner. They have no standing to file a lawsuit. Whether someone has a license or not does not effect the author at all. Period. Grow up and find something to really complain about.

    • Native American JD

      By affecting the property value of her condo they have economically damaged her for their failure to follow the law. She could be protected under either a whistleblower statute or a claim for damages to her property value. She could even challenge the tax assessment based on the other owners failure to comply.

      She has plenty of standing.

      • joker

        You’ve obviously never owned a condo or understand how one works.

        And as I said above, if the management company “lied” to the bank would be provable in about 12 seconds then this is the easiest and quickest 6 figure payday I’ve seen since Marion Barry was in office.

        But alas..thats not the problem.

        • Jessica

          Sure enough, but what if it is the problem? There’s a fine line between ignorance and lying. If you simply don’t know because you keep bad records, is that a lie? Or if you lie because you know it would mean people would have to get licenses/pay back property taxes and you want to protect the people that pay your salary…?

          • Anonymous

            legally, I’m pretty sure the person who didn’t know because they kept bad records would still be liable.

      • Anonymous

        You’re really not that smart. Whether or not they have a license or not is not what is affecting property values– it is the fact that the units are rented out. even if ALL rented units had licenses, the property value would still be negatively impacted. There is no standing to bring a lawsuit because someone did not apply for a business license. There WOULD be a claim if they are renting out their unit in violation of a renters cap– but that is not alleged by the OP. This is just someone who is whining. Grow up, get over it.

        • llcoolq

          anonymous, what is your deal? you don’t have to be a jerk to state your opinion (which, is quite narrow). this is a legitimate situation that is not all that uncommon. you must not understand how these things work but feel entitled to pipe up and call people whiners. i hope a 400lb woman sits on you soon.

  • How about you join the board and do something about it if it bothers you that much.

    I suspect this is a problem that will never go away. People will always rent their properties when they need too.

    This is one reason I bought a house.

  • Side Question/Semi-Off Topic

    Sorry to steal this poster’s thunder, but it is on topic, just on the other side. I bought in a new condo building whose association has just taken over. When I bought, there were no restrictions on renting units. We are now drafting a renters policy which will place a 20% cap on rentership. There is no grandfather clause included in our policy (which would usually allow any current owners to rent out their unit for 5 years from the date the policy is passed regardless of whether the 20% cap was met). If, hypothetically, I moved in 3 years and rented out my place even though the cap was met, would they successfully be able to enforce this policy against me, or would I have a legitimate legal argument that the policy is unconscionable since there was no restriction when I bought and no grandfather period? I know there are “hardship exceptions” but I doubt that moving for a job would necessarily count as one.

    Sorry for getting slightly off topic.

    • Anonymous

      Depends on whether this is a “policy” or a bylaw. Condo rules are notoriously difficult to enforce. Rules can be passed by the board and therefore subject to change as frequently as the board’s makeup. Bylaws on the other hand must be voted and approved by the dictated number of owners (typically a super majority). In the event the bylaw passes, they are very enforceable. Condo owners acknowledge when buying a condo that they will abide by the will of the collective owners. Courts will surely enforce the renter cap- which impacts all owners collectively. As a side note, it was idiotic for your building not to have a renter cap in the first place. If the renter to owner ratio goes about FHA limits, MANY potential buyers are forced out and opportunities to refinance dwindle. It is in everyone’s interest to restrict the number of rental units.

    • Anonymous

      What is a “hardship” clause? Does that mean if it would be a “hardship” for you to not rent out the property that you can do so even if they already have met whatever cap they make? I would think that being transferred for a job would be a “hardship”.

  • PetworthRes

    Has anyone ever tried to estimate what percent of rental properties across the city that are managed by an owner who has a single rental unit even have a business license? I imagine that percentage would be very very small (vs. large buildings run by management companies). Like others have commented here I wonder why the original poster cares…

    If you really want to limit the percentage of rental units in your building you’d be much better off asking your board to pass a rule on it, rather than trying to report/harass your neighbors.

    • Anonymous

      The original owner cares because it affects the value of the units in the building.

      • Anonymous

        Whether someone applies for a license or not has ZERO effect on property value.

        • Jessica

          Whether or not landlords are following city law does, however impact people in such close living conditions such as a condo. Additionally, landlords that skirt the law and don’t pay the District the fees and taxes they are legally required to do so impact ALL of us.

    • Jessica

      Because you’ve given up some of your rights to a Board who ignores some bylaws that impact them (i.e. having to get a license) and if it’s in the bylaws that they enforce DC law, including laws from no grills on balconies to rental units being registered as such for tax purposes. What about people who are under the tax abatement that rent out their properties – is that something to be a whistleblower for? All of these things happen in condos and the management is paid to ensure there is as little law breaking as possible assuming they are a good management company. Which is an assumption and assuming there are any good condo management companies makes me an Ass U Me!

  • Alien

    You will regret the day you brought DCRA into your building. While you are trying make enemies out of your new neighbors, how many other things that aren’t 100% kosher do you think they’ll find? Things that will inevitably result in big expenses from your condo? Yeah, the same on that you are a part owner of.

    The only possible consequence of this is that you will BE DESPISED by everyone in your building. They will all have to spend a lot of money and go through a lot of hoops for a piece of paper.

    You live there. Act like it, don’t act like the lawn-length police. Your neighbors are real people with real problems, too.

    • Tres

      Worst case scenario, they’d have to spend the $200 it takes to register with DCRA and maybe call a GC to come in for a half day — if that. Peanuts when they’re grossing $20k – 30k or more a year — it’s called a business expense. If they don’t have that kind of chump change, something is extremely wrong — and they’re probably slum lords.

      Ideally, everyone in the building should conform to DCRA standards. If your neighbor has loose wiring somewhere, that’s a fire hazard for you. The requirements are really basic.

      • Alien

        “Worst case scenario?”

        You must be joking. The requirements for a legal rental are much different than the requirements for living in your own place. They could be facing expensive (and largely unnecessary) upgrades. The requirements are far from “basic.”

  • anon

    If you want to report the illegal rentals to the DCRA, then do it. You can argue that the section of the bylaws that purports to restrict your ability to report illegal activity is void because it violates public policy.

  • whitney

    The author asks a legitimate question, so I see no reason for the negative commentary. I had a similar issue in my small condo building in Logan. None of the owners thought too much about the owner-occupancy ratio until one owner-occupant lost his job and needed to sell — and only got offers that involved FHA-backed mortgages that would not be approved because we had topped 50 percent. The condo association debated an amendment to the bylaws to try to prevent further rentals, but it was too late. Not only was there no way to enforce a more restrictive by-law, but such a by-law would also take away options for those of us who still lived in the building and might want/need to rent in the future. Plus, we realized that a more restrictive by-law might discourage future buyers, who would have to buy in to a situation in which the building was already above the FHA standards AND would not be able to rent out in the future until several other units had reverted to owner-occupancy. In today’s market, we didn’t want to take any actions that might discourage a potential buyer, so we decided to let the situation stand.

  • Anonymous

    I’m not convinced you need a business license to rent out a single condo unit that you own. (This is different from needing a C of O for a basement apartment in a house where you live.) Has anyone confirmed this?

    • PetworthRes

      Mike Rupert, are you out there reading????

  • GeorgiaAve

    Given that you already have a high rental ratio in the building what is harassing your renting neighboring condo owners going to achieve? It’s not like they are going to panic and move back into the building. Maybe you think forcing them to sell would be better. If they are forced to sell in a bad market when loans are hard to get in your building, then that will drive prices down. Better approach to ask the board to ban further rentals until the rental ratio goes down. It’s a little more proactive and less passive aggressive than secretly reporting your neighbors to DCRA and something your board members should agree to support.

  • Horhae Montreegez

    What exactly is so terrible about having a lot of renters in your building? With the obscene going rates for apartments in DC these days, you’d think it would be an asset, with the ridiculous amount of money to be made from renters.

    • Eric in Ledroit

      have you ever lived in a building full of renters?

      • Jack

        Damn Straight! This isn’t always 100% the case but basically: Renters – less vested, less interested, less considerate of neighbors… Owners – more vested, more interested in property, more considerate of neighbors!

        If you don’t believe this, then do like the last poster said and live in a building that’s majority rented!

        • Jessica

          Totally – landlords don’t care whether the elevators work or there are security issues. We’ve had renters let in homeless people to sleep in our stairwell (and yes, I agree people need a place to sleep, but preferably not in my stairwell). Units with high turnover mean lots of dings in the hallway and wear/tear on the common areas. Renters tend to not care if they have loud parties or barking dogs because the owners get fined, not them. I know people have to rent, but there aren’t enough landlords who properly vet renters for the right personality/responsibility level for a condo building, it seems.

  • If you don’t like the building because of all the renters then sell and take a loss (closing fees and expenses). Before you buy again, read and UNDERSTAND the condo documents regarding limits on renting.

  • There is some great commentary and we’d like to clear up a few things. A Condo rental license is one of the easiest rental licenses to obtain and can be done quickly. The code standards are not as restrictive as a basement apartment and no additional Certificate of Occupancy is required. Rentals in condos are extremely difficult for is to enforce because it’s tough to get access, the “activity” at the buildings looks no different if 80 percent are renters or 10 percent are renters, and because the owners often don’t want to bring attention to property. We get very few complaints about illegal condo rentals unless there is massive overcrowding. The code for living in the condo is really no different than if you rented it in most multi-family condo buildings as one poster suggested. Owners simply would report code violations on themselves.

    That said, we can certainly enforce the licensing requirements and in most cases, for anything to hold up, we need the cooperation of condo association. Please let us know if you have any questions. You can email me anytime at [email protected].

    – Mike, DCRA

  • Sorry for the typos. Wrote that from my phone. – Mike, DCRA


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