Page 6 - Chicago Fall Cooperator 2020

6 THE CHICAGOLAND COOPERATOR —FALL 2020 CHICAGOCOOPERATOR.COM be handled in a fair, nondiscriminatory way, maintain the records of that fi ne to avoid it but when reviewing the totality of the circum- stances surrounding the alleged violation, having documentation of it.” “the board does have leeway—known as the Business Judgment Rule—in determining component in the condominium environ- when and how to enforce.” In many cases, there is also a question enforcement, because people control their of what rules and regulations passed by the behavior relative to their pocketbook. Some board may cover. In Massachusetts, explains challenge fi nes when they believe they haven’t Richard E. Brooks, a partner at Braintree- based law fi rm Marcus Errico Emmer & being penalized, but if they have done it, Brooks, boards can make rules that govern though, they tend to pay.” Brooks uses the ex- common areas, but not the interior of condo- minium units. “If there is a violation of a reasonable rule rather than challenge the fi ne,” he says. “If you relating to the common areas, the board can put the fi ne on the unit owner’s account and enforce it,” he says. “Th ey can’t make one it’s a lien and you leave it there, it can be eff ec- about what someone does inside their unit, tive because it gets to them, and it grows. though. Say they might want to limit rentals in any number of ways. Th ey might not want behavior,” Brooks continues. “If you move the more than a certain number of the total units—say, 10 percent—to be rented. Or they don’t want one person to own more than a certain number of units. Th at would be a problem. Th ey can’t do that because that’s telling unit owners what they can \[or cannot\] do inside their unit. Boards can make rules about what you can put on your deck, or where you can park your car, but not infraction to your association’s attorney aft er “Eighty percent carpeting generally means who can live in your unit or what or who you multiple fi nes, the attorney will instigate a eighty percent carpeting. Th e Business Judg- can put in your unit. Boards are in charge of foreclosure or court injunction and order pay- common areas of the association.” Persuasion vs. Coercion Boards and managers walk a fi ne line when dealing with neighbors in residential com- munities such as co-ops, condos, and HOAs. never ignore rule-breaking for too long. “Let’s While the unwritten covenant is to make that say someone builds something they’re not or have favoritism in rule enforcement,” he extra eff ort to live within both the letter and allowed to—like a bench. If no one says any- the spirit of the rules and get along with your thing for too long and others do the same, and when the enforcement of a rule diff ers slightly neighbors, confl ict inevitably erupts. Clearly, then a new board comes in and tries to en- the fi rst attempts at getting community mem- bers to at least coexist harmoniously is to more diffi cult. You’ve allowed the infraction persuade them—nicely—to ‘go along to get for too long,” and it becomes a fact on the pearance of discrimination. “Th ere are legal along.’ “Generally, I fi nd the most eff ective way of getting folks to play by the rules is to dis- cuss it with them and encourage open com- munication,” says Hakim. “Obviously, if that some options,” he says. “Depending on the looks bad for a board. A court will research does not work, then the threat of enforcement state and/or city in which you live, there may the matter—and it can create a terrible envi- is next, followed by fi nes, if applicable. Resi- dents must remember that they do not live in whom you can take complaints relating to as- a bubble and what they do can adversely aff ect sociation governance. You may further have a a lawsuit—a very serious one.” the quality of life of those who live nearby.” Hakim’s mention of fi nes brings up one members for breach of fi duciary duty for its/ commonly used ‘stick’ that may be employed their failure to enforce the association docu- aft er the ‘carrot’ has failed to achieve compli- ance with community rules. “Typically, for lengthy and expensive to fi ght.” a fi ne structure to be upheld by a court, the governing documents—the proprietary lease “At least in Illinois, one thing you cannot do ceptable for the staff member to remind the or bylaws—must permit the enactment of it. If is refuse to pay your assessments until the resident of that. If the resident refuses to leave, it is not permitted, then an amendment to the association addresses the issues you have then it should be reported to the board. I pre- lease or bylaws is necessary, but may be dif- fi cult to obtain, given the voting threshold of that the obligation to make payment of as- many buildings. Once it is permissible, then sessments is independent of virtually all oth- a house rule setting the fi ne structure should er issues you, as an owner, may have with the be enacted, and a copy delivered to all resi- dents. If a shareholder or unit owner does not pay the fi ne, it will be added to their account, and must be paid at some point; it doesn’t just go away. I explain to boards that they should later being challenged without the building According to Brooks, fi nes are a necessary ment. “Fines are the most eff ective means of committed the infraction for which they’re ample of illegal parking. “If there’s evidence of the behavior, like a photo, the person will pay “Th is method also tends to curb the bad ment, plus legal fees. At that point, the owner ity depending on reasonable facts, allowing will defi nitely pay attention.” Brooks also cautions that no matter how time to time, including the issuance of a warn- large or small the association, boards should ing rather than a fi ne, for example. force the no-benches rule, it becomes much amicable solution, and similar items.” ground. Rosenbaum concurs, adding that if an as- sociation or its management is unwilling to go to court, an owner could have photos and address a rule-breaker, “You may still have evidence that they were treated unfairly. It be a governmental administrative agency to ronment and oft en results in a board being claim against the association and/or the board ments/rules. But again, such a claim can be but should generally stay out of enforcement. However, Rosenbaum is quick to note, of an amenity, for example, it would be ac- raised. Th e Illinois courts have made it clear fer that staff members who are involved in the association.” Limiting Access to Amenities Another potential disciplinary action boards can take against owners and share- holders who fl out the rules and regs is to limit their access to community amenities, like a pool or a gym. Both Brooks and Hakim ad- vise against this. “Absent express permission in the govern- ing documents to do so,” says Hakim, “we do not recommend it. We recommend that each board revise its governing documents to per- mit, if not already included, the imposition of fi nes for a breach, and other remedies such as removal from the board, if a board member.” Brooks sees barring owners from common areas or amenities as very detrimental to the association. “It’s diffi cult to do in Massachu- setts to begin with,” he says. “How do you en- force it? It can become very ugly. If an owner is revoked access, he might say he has an un- divided interest in the common areas in the deed. How do you take that away? I don’t like it, but sometimes owners don’t challenge it, so it can in some cases be eff ective.” Proceed with Caution While thinking outside the box is usu- ally a good thing, the pros who contrib- uted their expertise to this article generally feel that boards should avoid getting ‘cre- ative’ when it comes to rules enforcement. “Th e board cannot discriminate in its ap- plication of the house rules,” says Hakim. ment Rule does permit a board some fl exibil- them to enforce or delay enforcement from “Th at said, it’s important never to show continues. “Residents are generally accepting based on facts, the board wishing to seek an Brooks also cautions against even the ap- consequences for unequal enforcement,” he warns. “If you don’t enforce rules equally, and removed. If it’s discriminatory, it could bring Who Should Do the Enforcing? “Th e board enforces the rules,” says Ha- kim. “Th e building staff are the eyes and ears, However, if a resident is not permitted the use daily lives of residents not get into confronta- tion with anyone.” Brooks further cautions that “traditionally, a unit owner or a board member would report a violation to the full board and/or manage- ment, and management will then provide an enforcement letter. It’s less personal than a board member getting involved. With re- spect to the current COVID crisis, this is very important. In all cases, building employees should not get involved in enforcement—and board members should use discretion before commenting themselves. Th at really depends on the situation as well. If it’s minor, okay, but it should be done in a very polite way.” Community rules are there for the benefi t of all residents. Th ey may not be universally liked, but they must be obeyed in the spirit of community harmony. Boards must consider all options when seeking enforcement, but always make sure that enforcement is within the law, the community’s documents, and in the best interest of the community. n A J Sidransky is a staff writer/reporter for Th e Chicagoland Cooperator, and a published novelist. LIVING BY... continued from page 1 “Fines are the most eff ective means of enforcement.” — Richard E. Brooks “Some state laws require that association committee meetings also be open to physi- cal attendance or electronic monitoring,” says Laura Otto, a community manage- ment and public health columnist. “Some measures dictate that property owners at- tending board meetings be given the op- portunity to address the board, as well as to listen to deliberations. And some statutes permit boards to vote by email in certain circumstances and to ratify such a vote in a subsequent public meeting.” While it’s true that courts typically de- fer to board decisions made in good faith as falling under the Business Judgment Rule, given the uncertainties facing boards (and everybody else) going forward, it’s still a good idea to amend your documents to explicitly permit online and electronic meetings, voting, and other administrative functions—and that includes both monthly board meetings and annual association or corporation meetings. “When I draft an amendment,” Shapiro continues, “I specifi - cally include monthly meetings. Most gov- erning docs already provide that the board can act without a meeting by written con- sent if unanimous, but the better thing is to have a meeting in a virtual medium to fl esh out the issues. “Th e best solution,” Shapiro stresses, “is to amend your documents to permit re- mote meetings via electronic means, elec- tronic voting, and the like. It’s the single best thing \[the board\] can do. Having said that, we know it’s sometimes a diffi cult pro- cess due to unit owner apathy, fear of the unknown, and cost.” Meeting Virtually Co-op and condominium boards must hold regular meetings to conduct and transact the annual business of the corpo- ration or association. Th e coronavirus has made that impossible to do in most build- COMMUNITY... continued from page 1 continued on page 8