North Dakota Condominium Rental Rules: No Cap on Leasing Bans, No Occupant-Status Bylaws

Start with the honest negative, because it governs most disputes. North Dakota never adopted a common interest ownership act. Chapter 47-04.1 is the state's only association statute and it says nothing about leasing: no cap on the percentage of units that may be rented, no protection for an owner who was already renting when the restriction was adopted, no minimum or maximum lease term, no exemption for a hardship or a military deployment, and no required supermajority to pass a rental amendment. If your declaration authorizes the association to prohibit leasing, or to cap it, North Dakota law does not stand in the way. The only general check is section 47-04.1-04, which makes recorded restrictions enforceable equitable servitudes where reasonable and binding on all owners in the project, leaving reasonableness for a district court to decide case by case.

The substantive protection North Dakota does give tenanted units is a bar on occupant-status bylaws. Section 47-04.1-07(1) requires the unit owners or the administrative body they establish to adopt bylaws covering maintenance of common elements and limited common elements, assessment of expenses, payment of losses, division of profits, disposition of hazard insurance proceeds and similar matters. Subsection 2 then removes two things from that list. A bylaw may not base the assessment of common charges on whether the occupant of a unit is an owner, a tenant or other person, and a bylaw may not make payment of losses, division of profits, disposition of hazard proceeds, or any other topic within the scope of the bylaws, turn on that same distinction. In plain terms, the rental surcharge that many associations elsewhere impose on leased units, the reduced insurance-proceeds share for an investor owner, and the differential common-charge tier for non-resident owners are all outside what a North Dakota condominium may put in its bylaws. Note the reach of the provision: it constrains bylaws, and it constrains them on bylaw topics, so a leasing ban that applies to every unit equally is untouched by it.

How a rental restriction gets adopted matters as much as what it says. Section 47-04.1-07(1) provides that no modification of or amendment to the bylaws is valid unless it is set forth in an amendment to the declaration and unless that amendment is duly recorded in the office of the county recorder. A board vote recorded only in minutes, a rule circulated by newsletter, or a resolution never taken to the recorder does not create an enforceable rental restriction in North Dakota. The vote required is whatever the declaration itself specifies, since the Century Code supplies no default threshold. Subsection 3 adds that all bylaws, rules and regulations adopted must be reduced to writing and made available to every owner of any interest in the project, so an owner facing a rental restriction is entitled to be handed the text of it.

One North Dakota provision quietly makes rental amendments easier to pass. Declarations frequently require mortgagee consent before an amendment takes effect, and lenders routinely ignore those requests. Section 47-04.1-15 provides that notwithstanding any requirement in the declaration or bylaws for a lender's approval of an amendment, a lender contacted at its last known address that neither refuses nor approves the proposed amendment within thirty days beginning on the date of mailing is deemed to have approved it. The section does not apply to a proposed amendment that affects a lender's right to enforce the terms of its mortgage. Associations use that thirty-day deemed consent to clear the mortgagee-approval hurdle when tightening leasing rules, and an owner opposing an amendment should not count on lender silence to defeat it.

For a homeowners association that is not a condominium, even the section 47-04.1-07(2) protection disappears. Those associations are creatures of their recorded covenants and of chapter 10-33, the Nonprofit Corporations chapter, which authorizes dues, assessments or fees only where the articles or bylaws confer the power, and expressly permits a corporation to impose them differently on different classes of members and to exempt some classes entirely. That is the opposite of the condominium rule, so a subdivision association in North Dakota may lawfully create a rental class and charge it more if its governing documents say so.

There is no state agency that reviews a North Dakota rental restriction, and no administrative appeal. Enforcement and challenge both run through the district court for the county where the project sits. 1-08 lets the administrative body, or in a proper case an aggrieved unit owner, sue for sums due as damages, injunctive relief, or other relief a court of proper jurisdiction may provide, and that is the route an association takes against an owner who keeps leasing in breach of a recorded restriction. 1-04.

Where the association is incorporated, section 10-33-81 additionally lets fifty members with voting rights or ten percent, whichever is fewer, or the attorney general, seek equitable relief and expenses including reasonable attorney's fees for a violation of the Nonprofit Corporations chapter. 1-11, under which the amount becomes a lien on the unit only when a notice of assessment naming the record owner is recorded with the county recorder.