The Question That Comes Up More Than You'd Think
A tenant moves out of unit 311. The owner emails the board asking if they can find a new renter. Someone on the board says yes, another says check the CC&Rs, and suddenly nobody's sure what the actual rule is.
This is one of those situations where getting it wrong costs you. If your governing documents have a leasing cap — a hard limit on how many units in the association can be rented at any one time — then a vacancy doesn't automatically give the owner the green light to re-lease. It depends on where the community stands against that cap right now.
What a Leasing Cap Actually Does
A leasing cap is a provision in your CC&Rs (sometimes in your bylaws, but usually the CC&Rs) that restricts the percentage or total number of units that can be leased at once. A typical cap might say something like "no more than 20% of units may be leased to non-owner-occupants at any given time."
In California, these restrictions are governed under the Davis-Stirling Common Interest Development Act. Civil Code Section 4740 protects owners who purchased before a rental restriction was adopted — they generally can't be retroactively barred from renting. But if your leasing cap was in place when an owner bought, they bought subject to it, full stop.
In Illinois, the Condominium Property Act (765 ILCS 605/) gives associations similar authority to restrict leasing through their declaration. Illinois boards should also be aware that some municipalities layer additional landlord-tenant requirements on top of whatever your declaration says.
When a Unit Turns Over, the Math May Not Work in the Owner's Favor
Here's the part that trips boards up: when a tenant moves out, the unit temporarily drops out of your leased count. That might feel like the cap just opened up a slot. But there's a difference between a unit becoming available and a unit being approved to re-lease.
If your association was already sitting at the cap — say 18 of your 90 units were leased and your cap is 20% — and now one tenant has left, you're at 17. The owner of 311 wants back in. Do they get automatic approval? That depends entirely on what your CC&Rs say about the process.
Some declarations are first-come, first-served with a waiting list. Others require a new application and board approval each time the unit is re-leased. A few are silent on re-leasing procedure, which creates a real problem because silence invites disputes.
What the Board Should Do Right Now
First, pull your actual CC&Rs and find the leasing restriction language. Don't rely on what someone remembers from the last board. The exact wording matters — "no more than 20%" is different from "no more than 18 units," especially if your unit count has changed through conversions or additions.
Second, count where you actually stand today. Not where you were six months ago. Get a current number of how many units are actively leased. If you're using a platform like Boardly to track unit status and owner correspondence, this is information you should be able to pull up immediately. If you're working off a spreadsheet or memory, now is a good time to formalize that tracking.
Third, check whether your CC&Rs specify a re-leasing process. If they do, follow it exactly. If they don't, your board should document whatever decision you make and apply it consistently going forward — inconsistent enforcement is one of the fastest ways to end up in a dispute under Davis-Stirling's good faith requirements.
What You Tell the Owner
Be direct but not dismissive. Something like: "Our CC&Rs include a leasing cap. We're currently at [X] leased units against a cap of [Y]. Before we can confirm whether you're able to re-lease, we need to verify the current count and your application is [approved/on the waiting list/requires a new submission]." That's not a no — it's a process.
If you're below the cap and there's no procedural barrier, tell them that too. The goal is a clear, documented response that doesn't leave the owner guessing or the board exposed.
One Thing Worth Flagging to Your Association Attorney
If your leasing cap language is vague about what happens when a previously-leased unit turns over, it's worth a quick conversation with your HOA attorney before the next time this comes up. Amending CC&Rs is a heavy lift, but a board resolution clarifying the re-leasing procedure — adopted properly and consistently applied — can fill some gaps in the meantime.
Leasing caps are a legitimate tool for maintaining owner-occupancy ratios and protecting FHA financing eligibility. They just require the board to actually know what the cap is and where the community stands against it before answering the owner of unit 311.