I live in a condo, and the board is trying to establish a rental cap in the building's rules and regulations, instead of making the change in the condo's bylaws. Does the board have the power to do this, or does such a change have to be made in the bylaws. What does state law say about this?

—Concerned in Clifton

“A 'rental cap' is a restriction in a common interest community that sets a limit on the number of units that may be rented,” says Ronald L. Perl, a partner at the law firm of Hill Wallack LLP, in Princeton.

“While there are a number of possible reasons why a community association might want to set a maximum for rentals, there has been an increased interest in rental caps since the issuance by the FHA of its Condo Project Approval Guidelines in 2009. Those guidelines provide that at least 50 percent of the units in a project must be owner occupied in order for the community to receive project approval. The ability to rent has traditionally been a basic component of the rights associated with property ownership. In fact, the Appellate Division of New Jersey’s Superior Court has observed that a community association’s leasing restriction is significant 'in that it does affect a fundamental property right and not some less significant aspect of the manner in which properties are used.'

“A restriction on the right to rent a unit would normally be found in a condominium declaration (master deed) because it is that document that defines the property interests of the owners. In fact, many declarations specifically allow for rentals. In the event the original declaration does not contain a rental restriction or cap, and the bylaws do not specifically authorize the condominium board to adopt a rule imposing a rental cap, the declaration would have to be amended to impose the cap. A condominium board does not have the authority to enact a rental cap without a grant of authority to that effect in the association’s governing documents. Regulations adopted by a board cannot contradict the declaration or bylaws or exceed the authority granted by those documents. Absent such a grant, the adoption of a rental cap by the board would not be within its authority.”