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Enforcing your association's governing documents

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Governing documents that are clear, concise and drafted in accordance with applicable statutes are much easier to enforce than those that are vague, poorly drafted and/or conflict with statutes or other governing documents.  The following are some tips for enforcing your association’s governing documents.

Enforcement Policy and Procedure.

Every community association should establish its own procedures and policy for enforcing its governing documents.  This includes setting a fine schedule and other procedures that will help ensure that the board of directors is consistent in its application of the governing documents and its enforcement of rules and regulations.

Communicate.

An association cannot provide too much information to its homeowners when adopting and enforcing rules and regulations.  Homeowners that are made aware of the association’s policies, rules and regulations will be more apt to follow the policies.  Furthermore, the association will be able to more effectively enforce its rules and regulations policy when it has communicated its policy, including violation sanctions, to its homeowners.

Establish Reporting and Response Procedures.

The association’s rules and regulations policy must have an effective reporting and response procedure.  Without such a procedure, the board of directors or property manager will receive constant telephone calls from homeowners reporting rules and regulations violations.  A proper reporting and response procedure will encourage homeowners to report violations of rules and regulations through written procedures, which will document the violation reports received by the association.

Enforce Violations.

Timely and consistent enforcement of the association’s rules and regulations policy will lead to speedy enforcement of violations and should lead to fewer violations in the future.  On the other hand, the association’s failure to respond to rules and regulations violations in a timely and consistent manner will lead to apathetic homeowners, who are unwilling to report violations, and could lead to additional violations where the consequences are not perceived as real.  Additionally, associations can be deemed to have waived their right to enforce rules where they consistently fail to enforce one or more rules over a period of time.

Use Informal Notices.

Associations may avoid rules and regulations enforcement conflict by personally contacting homeowners who are violating rules and regulations.  Informal notices or contact may not work for all associations or for all homeowners.  However, in many cases a board member or property manager may be able to make an informal contact with the alleged violator and make an initial determination as to whether the violation actually exists and what remedy, if any, is required.  If the homeowner does not respond to the personal contact, or if personal contact is not possible or appropriate under the circumstances, the association must proceed to formal notice procedures.

Use Formal Notices.

The association must document its response to rules and regulations violations by providing written notice of the violation to the homeowner.  The notice should provide an explanation of the alleged violation and the amount of the fine to be levied or a statement of other action the association intends to take in response to the violation.  This notice should also provide the homeowner with notice of an opportunity to be heard before the association’s Board of Directors or its rules and regulations enforcement committee.

Give Opportunity to be Heard.

The Minnesota Common Interest Ownership Act (“MCIOA”) requires that homeowners be provided with notice an opportunity to be heard by the association’s Board of Directors or its rules and regulations enforcement committee before any fines or other penalties are imposed on the homeowner for alleged rules and regulations violation.  Many governing documents further set forth the requirements of said notice as well as procedures and timelines for requesting the hearing, providing notice of the hearing and notifying the owner of the board’s decision following the hearing.  They may further specify that, if the homeowner fails to request a hearing within the specified period of time, the right to a hearing may be waived.  The hearing is used to provide the homeowner with an opportunity to explain any mitigating circumstances that could affect the association’s decision to levy a fine or penalty in response to the alleged rules and regulations violation.  The information gathered at the hearing may also affect the association’s decision on a procedure to be used in enforcing its rules and regulations policy.

Make a Decision.

Many associations delay the decision on a rules and regulations violation because the association’s board of directors is reluctant to hurt a homeowner’s feelings and create animosity within the association.  However, the association’s reluctance to make a decision may be fostering those same feelings in the other homeowners that are complying with the association’s rules and regulations policy.  Prompt decision making on rules and regulations violations will encourage reporting and should lead to a higher percentage of compliance in the future.

Violation Consequences. 

An association may provide for various alternatives in its rules and regulations policy for violation consequences.  The overriding concern is to provide consequences to encourage compliance, but to ensure that the association does not become liable to the homeowner for excessive fines and penalties.  Regardless of the violation consequence, the association must use caution in exercising self-help to correct a rules and regulations violation.  The association may choose from the following enforcement consequences:

Fines. 

Associations should set some type of fine schedule for violations of governing documents.  Fines may be set on the basis of first offense, second offense, etc., or on a schedule that specifies the amount of fine per each kind of violation.  The latter type of schedule may also provide for increasing fines for multiple or continuing violations.  Setting a schedule helps ensure that the fines are being assessed in a consistent manner.  It is important to remember, however, that the fines should be reasonable in relation to the severity and/or frequency of the violations.

Restrictions on common property usage.

Some governing documents provide that the association may restrict an owner’s access to certain common amenities, such as a pool or party room, if the owner is either delinquent or in violation of the rules and regulations.  Associations may not restrict access to a unit or limited common elements nor deny essential services to an owner who is either delinquent or in violation of the rules.  As of August 1, 2005, associations governed under MCIOA may NOT restrict an owner’s voting rights due to the owner’s delinquency or rule violations.

Legal action.

In certain circumstances, associations may wish to commence legal action against an owner in order to enforce the governing documents and/or stop violations of the rules.  Before commencing any such action, the board should answer the following questions:  (i) Is the association aware and prepared to invest the time necessary to enforce the rules and regulations policy? (ii) Is the association aware of and prepared for the emotional toll that litigation may create?  (iii) Is the association aware of and prepared for the cost of litigation?  (iv) Is the association aware of the chances of prevailing? (v) Does the association have a choice in deciding whether or not to enforce the rules and regulations policy?

Remedies Available.

If an association decides to commence legal action to enforce its governing documents, it may choose to pursue one or more of the following types of remedies:

  • Injunctions/temporary restraining orders.  An association can ask the court to issue an order preventing the owner from committing further violations of the governing documents and/or to permit the Association to take certain actions to correct or abate a condition that violates the governing documents.
  • Damages.  An association can seek monetary damages against an owner for fines, repair costs, etc.
  • Legal fees and costs.  MCIOA specifically provides that legal fees and costs incurred in connection with the collection of unpaid assessments and/or the enforcement of the Act or the governing documents are assessable against the applicable owner and his or her unit.  This authority is very broad and encompasses any situation where an association might incur legal fees and/or costs in connection with the enforcement of ANY provision of MCIOA or the governing documents and does not require that a legal action be commenced or proof that an owner actually violated one or more of the association’s rules in order for the fees and costs to be assessable.  For associations not governed under MCIOA, you will need to look at your governing documents to determine what, if any, authority the association may have to assess legal fees and costs against an owner.

Enforcing other Provisions of the Governing Documents.

MCIOA, the Minnesota Nonprofit Corporation Act and most associations’ governing documents also contain procedures whereby members can enforce the provisions of the governing documents in cases where one or more members of the association’s Board of Directors fail to comply with the requirements of the Declaration or Bylaws.  These may include calling special meetings of the members to address certain issues, removing officers or directors, and actions against the Association and/or the Board of Directors for damages and/or injunctive relief.  MCIOA provides that the prevailing party may be awarded its legal fees and costs against the non-prevailing party in an action commenced by either the Association or by its members.

The key to effectively enforcing governing documents is to be clear, concise, and consistent.  Associations should set up policies and procedures for the enforcement of governing documents and clearly communicate these policies and expectations to all members.  Violations of governing documents should be handled in a consistent manner to avoid any allegations of discrimination or preferential treatment.  If your governing documents are unclear or do not provide clear authority for enforcement of their provisions, you may wish to consider amending one or more of your governing documents.