On July 2nd 2007, I paid a $1300 security deposit to a rental property manager to hold a townhome rental unit until Aug 1st. On July 19th I paid the first month's rent of $1300 and a $500 pet deposit. On that same day, my girlfriend and I signed a 1 year lease effective August 1, 2007. I picked up the keys on August 1 and spent August 3rd, 4th and 5th moving into the townhome. On August 8th, I received a phone call from the property manager informing me that I had to move out because the owner made a mistake and wasn't supposed to rent the townhome. The owner had supposedly signed a no-rental clause with the homeowners association that said the property couldn't be rented for a period of one year. The owner and property manager had a full month before I moved in to figure this all out, but waited until I was already moved in to drop this bombshell on me. The owner will be fined $500 for each month I remain in the townhome.
Does the owner's prior contract with the HOA negate my lease or do I still have full legal rights to assert my use of the townhome and request them to honor the terms of the lease?
There is a clause in the lease that says they can raise the rent with 30 days notice if expenses associated with the townhome increase by more than 10%. Can they legally just add the $500 amount to my rent after giving me 30 day notice, or would the fine be considered something outside of ordinary expenses so they can't pass that cost on to me?
Is it reasonable to expect the owner to pay for someone to move me to a new place? Is it reasonable to expect the owner to pay the difference between what I am paying now and what I will need to pay for an equivalent place (if I can even find an equivalent place in the same general location) for a period equivalent to the original terms of my current lease? If the only equivalent rental is outside the area that I am now living, is it reasonable to expect the landlord to pay my additional commuting expenses?
Any help would be greatly appreciated. I really like the place we have rented and we love the location. I had even considered buying one of the townhomes in this development earlier in the year and we don't want to move.

