PITFALLS FOR INVESTORS RENTING SINGLE FAMILY HOMES

INTRODUCTION: From time to time real estate investors may rent single family residences to unmarried individuals, whether in terms of an unmarried couple with children, a group of college students, or perhaps by leasing out portions of the residence to separate individuals. While such action is commonplace, particularly in view of the changing nature of “families” and the need on the part of investors to keep properties leased and generating cash flow for debt service. However, many investors probably do not know that by doing so they may be unwittingly setting themselves up for misdemeanor prosecution depending upon (1) the jurisdiction in which their rental property is located, and (2) that jurisdiction’s restrictions concerning what constitutes a “family” for zoning purposes.
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LOCAL ZONING ORDINANCES: Each local city in the Hampton Roads area has adopted a Comprehensive Zoning Ordinance which typically appears as annex or some similar designation to the City’s Code of Ordinances. Each Zoning Ordinance contains provisions establishing different zoning classifications and the requirements/restriction applicable thereto and set out definitional terms, including what is a “family” for the purposes of single family residential zoning districts. In addition, these ordinances or the related City Code establish various criminal and civil penalties for violations. No two of these Zoning Ordinances are the same and, therefore, investors with rental properties need to be aware of the specific restrictions that apply to their properties. The various definitions of what is a “family” for zoning purposes in the area cities range from three (3) unrelated individuals in Newport News to five (5) unrelated individuals in Chesapeake. (NOTE: Detailed information on a city by city basis is available upon request)
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ENFORCEMENT OF ZONING RESTRICTIONS: Enforcement of zoning restrictions is not consistent either from city to city or even within the same city. Typically, unless a violation is picked up during an inspection triggered by some other issue, property owners only receive a summons based on a complaint from a neighbor. Often the complaints are anonymous. Once a complaint is received, inspectors will come to the property and verify whether a violation exists. If a violation is discovered, a warning letter or in some cases a criminal summons will be issued to the property owner of record. Usually, if the violation is corrected within a timeframe specified by the Codes Enforcement office, the matter can be dismissed. If not resolved, however, a criminal conviction can and will be entered against the property owner.
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If a summons is issued for violating the single family restrictions of the Zoning Ordinance, generally it will NOT be possible to secure a license to operate a rooming house or a boarding house because such a use is NOT consistent with the single family residence zoning district. Should an application be submitted, action by the Planning Commission and City Council will be involved and the aggrieved neighbor(s) will speak in opposition and it will be unlikely that a permit would be issued.

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Real Life Example: An unmarried couple in Norfolk owned a home and leased out a room to a tenant. Subsequently, another unmarried couple was allowed to move into the home after one of the parties to that couple lost their job and that couple was unable to remain in their rented apartment. A neighbor made an anonymous complaint, inspectors appeared and a criminal summons was issued because the five occupants exceeded the four (4) unrelated person limit of the Norfolk Zoning Ordinance. Because the zoning of the property in question was single family residential, it was impossible to get a permit for a rooming house and the only way in which the owners could avoid a conviction was to make the homeless couple move out.
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MORAL FOR INVESTORS:
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1. Before leasing a property to a group of unrelated individuals, make sure that you know the limitations imposed by the governing zoning ordinance.
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2. Make sure that the lease form utilizes requires that the tenants comply with all applicable governmental regulations and ordinances and that failure to do so is grounds for immediate termination of the lease if not immediately rectified.