Condo rental restrictions are valid

Listen to this article

Unless a condominium's declarations explicitly create a right to lease a unit, the bylaws may be amended to prohibit rentals.

In 1979, Steven MacHutta built the Apple Valley Gardens condominium complex.
The condominium declaration provided, in relevant part, "8. PURPOSE — RESTRICTION ON USE. The buildings and each of the units are intended for the purpose of single family residential use only and are restricted to that use. Any lease or oral or written rental agreement shall not relieve an owner from his obligation to pay common expenses or any other obligations imposed upon unit owners by this Declaration."

In 2002, the condominium association amended the bylaws to prohibit the rental of units.
When Gloria MacHutta, one of the unit owners, leased her unit to a third party, the association brought suit seeking a declaratory judgment that the bylaws amendment was enforceable.

The circuit court, Court of Appeals, and the Supreme Court all held that the amendment was valid.

Although the court acknowledged that Paragraph 8 contemplates that owners may rent out their units, Justice Michael J. Gableman wrote for the court that it does not create a right to do so.

Justice David T. Prosser dissented, concluding, "Section 8 of the declaration confirms the inherent right to lease or rent for single family residential use when it refers to '[a]ny lease or oral or written rental agreement'"

But the majority disagreed. Gableman wrote for the majority, "this provision neither grants a right to rent one's unit nor prohibits it. … The dissent makes the mistake of believing that a declaration's neutral contemplation of unit rentals somehow constitutes a positive right to lease one's unit."

The majority also concluded that prohibitions on renting condominium units do not violate sec. 703.10(6), by rendering title to the units unmarketable.

Menomonee Falls attorney Matthew R. Jelenchick, of Niebler, Pyzyk, Klaver & Carrig, LLP, who represented the condominium association, praised the decision.

"The beauty of the opinion is that it creates a flexible option for condominium owners, so the declarant isn't still controlling the condominiums from the grave 30 years later," Jelenchick said.

Jelenchick said that, when a majority of owners feel it is better for property values to prohibit rentals, they should be able to do so.

Jonathan B. Levine, who wrote an amicus curiae brief on behalf of the Community Associations Institute, also called it a good outcome. "Had the court decided it the other way, it would have created a lot of work for lawyers but I don't know if it would have helped anyone else," Levine said.

Attorney Randall L. Nash, who represented the MacHuttas, declined to comment.