How are the elements of a community defined? What determines the components of the common areas versus homeowner-owned areas? Where is it written that certain elements are the responsibility of the homeowner and others are the responsibility of the association? These issues and others are established in what’s commonly called an association’s declaration and bylaws (“governing documents”). Attorney David J. Byrne, of Ansell Grimm & Aaron, PC, with offices in White Plains, New York, Newtown, Pennsylvania, and at various locations in New Jersey, spoke with us at length and explained the nuances of these governing documents, as well as many other important common interest community topics.
Several important notes – first, each state will have statutes applicable to, and governing, that particular state. In New York, associations are subject to the New York Condominium Act (the “Act”). New York’s Business Corporation Act may be relevant also. By virtue of certain court decisions, both condominiums and HOAs are subject to it. Second, while the statute is clear in some instances, it leaves a lot open to governance by a community’s declaration and bylaws. Third, an association cannot make any decisions without consideration of the relevant state’s statutes; regardless of general principles. Lastly, when it comes to New York, there is a vast difference between the legal obligations and rights of an association, condominium and/or cooperative situated in New York City and one situated everywhere else.
A declaration is generally recorded with the county clerk’s office. In some states, they are accessible via a governmental internet system, Byrne said. In others, they can be found using a conventional title search. The declaration should not be confused with rules and regulations. Rules and regulations are something entirely different. Most notably, a board of managers can generally change rules and regulations without holding a vote of the association’s members. Generally, the declaration cannot be changed in this manner. A declaration by law, generally, can be amended only via a certain percent of an association’s allocated votes, though it depends upon the subject or purpose of the amendment.
According to Byrne, a declaration is the document that governs the community from its outset. Though in New York, a sponsor’s offering plan plays a particularly key role. It is created by the sponsor. Rules and regulations, though, are created by the board, typically over the course of time. Rules and regulations are more easily created and more easily revised, Byrne said. Occasionally, however, they are not as easily enforced. Rules and regulations work in conjunction with the declaration and are allowed by law. They are used to supplement the governing documents, Byrne explained. “A decent analogy is the United States Constitution,” he said. “The Constitution lays out the powers of the branches of government, and then the branches create things within their perceived or actual powers. Rules and regulations are similar to the acts of Congress and more like the laws it enacts. The branches will inevitably seek to address issues that could not have been imagined when the Constitution was adopted and ratified in 1787. That’s how you look at rules and regulations working in conjunction with the declaration.”
As an example, the declaration may say that no commercial vehicles shall be parked within the confines of the community without board approval. That implies that the board can theoretically approve some commercial vehicles, Byrne said. The questions are, then: What commercial vehicles will be approved? How will they be approved? And, how will the restriction be enforced? “That’s what a rule or regulation is for,” he said.
Which governing document carries the most weight? According to Byrne, it’s the initial declaration. “A declaration is considered the more fundamental document, and that is the document that is typically harder to amend,” he said. Most declaration amendments are valid and/ or enforceable only if by vote or agreement of owners to which at least a super-majority of the allocated votes. Some declaration amendments, such as one concerning the reallocation of limited common elements, may require unanimity or some other special agreement. For instance, there are some amendments that are valid only if done by unanimous consent of the owners and/or in strict conformance with the particular offering plan. With respect to some subjects or portions, a declaration may require a super majority as high as 75% or 90%. An association can amend its bylaws in the manner provided in those bylaws. In the event of a conflict between the provisions of the declaration and the bylaws, the laws may provide that the declaration prevails, except to the extent the declaration
is inconsistent with the applicable parts of the law.
How detailed must the restrictions be in the governing documents? And what role does vague language play in drafting the “supreme law” of the community? Vague language can make the declaration more difficult to enforce, but it can also give the people serving on a board flexibility. According to Byrne, specificity—whether it be in the applicable statute or governing documents—is always best, but not necessarily so much specificity that the board’s flexibility is limited. For example, by law, an association may levy reasonable fines against an owner for violations of the governing documents and/or rules. A very specific way to be less vague would be to match a particular violation with a particular fine amount.
Existing law provides flexibility in terms of the amount, the way in which the fine gets levied, the way in which it gets waived, and the mechanism by which fines are noticed, he said. It gives the board the ability to function.
“If you’re looking at these things as a board member, you’ll think specific language gives more ability to enforce, but vague language gives more rights to create,” Byrne said. That’s especially important as boards are charged with the responsibility of creating and revising rules and regulations over the course of time to supplement, clarify and/or carry out rules and/or the governing documents. Conventional wisdom holds that boards are looking to enforce and control things, but that is quite often not the case, Byrne said. In fact, boards are often looking for ways to avoid controlling things and are sometimes limited in their discretion if the specificity of the language in the governing documents mandates that they do something. “They don’t want to end up in litigation,” Byrne said. “Specificity sometimes makes litigation unavoidable.”
Often, he said, a board of managers will want to be flexible and look to the governing documents for ways to prevent a lawsuit, rather than having those documents held over its heads. As Byrne explained, “It would, often, benefit the community as a whole to have governing documents that simply enumerate association powers, with the discretion as to when and how to carry them out, but not mandate various things.”
If boards follow their rules and documents, does the potential exist for them to be challenged successfully? “Yes,” said Byrne. “The board’s action or inaction can be judged on good faith.” A board that is adhering to its governing documents is either doing something it is authorized to do or refusing to do something it doesn’t have to do, he said. However, a legal component regarding “good faith” allows someone to challenge that action (or inaction) – even if it is consistent with the governing documents – by arguing it’s being done in bad faith.
As an example, Byrne used an association’s ability to restrict or prohibit the installation of energy efficient systems for aesthetic reasons. He said that there are modern-day, state-by-state regulations that have tried to limit the powers of a planned unit community to regulate those types of things. Even absent those laws, owners could successfully challenge a board’s attempts to regulate or prohibit energy-efficient systems. “The owner would argue that it’s wholly unreasonable and in ‘bad faith’ to deny energy efficient modifications for aesthetic reasons in this day and age,” Byrne said. “Solar panels on the roof look weird, but so what? An owner adds something to his home in an attempt to save energy costs and conserve energy, and some board votes to fine the poor guy; that’s the kind of thing that ends up on the news. A board would be hard-pressed to take that position and take it all the way home,” he said.
Other rules that would be tested are those that violate the United States Fair Housing Act. Byrne said that he most often sees those successfully challenged by disabled residents—successful whether because of an association’s decision to that effect, or because of court mandate. The challenges are typically in the form of requests that an association modify its practices in such a way as to accommodate the disability of the resident. He further broke it down into two areas, specifically parking and pets. “Sometimes we will see meritorious challenges concerning how close parking spaces have to be to the front of buildings and/or when an association may or may not allow pets and/or allow only certain types of animals,” he said.
Is a committee’s decision final when penalizing a resident rule-breaker, or can an owner appeal to an association’s board? “Most of this depends upon the community’s governing documents and the state in which the community is located,” said Byrne. By law, an association’s power to fine is subject to the owner’s right to “notice of an opportunity to be heard.” The appeals process might exist based on the governing documents. There may be specific language in the governing documents about an appeals process, how rules are enforced and how penalties are administered, he said. But absent that language, there’s no specific way an appeal would take place.
How does an association determine fine amounts? Byrne likened the process to starting a football team and choosing who your quarterback will be. In other words, reasonableness most always prevails. “In fact, an association is empowered to levy only ‘reasonable fines,’” he said. “If you have to stand before a judge and explain why you set the amount you did, you better be able to come up with something that makes sense.” Byrne said that fining someone $5,000 because they failed to take a Christmas wreath off the door by the deadline may be seen as inane and, like denying solar panels, is just going to get you in the newspaper. “It might be legal, but it’s not smart,” he said. “Besides that, a judge may laugh at you and remember your association the next time it needs judicial intervention, vis-à-vis a problem.”
In addition to traditional fines, an association may also seek to recover costs it has incurred because a violation has taken place. It is often easier and more reasonable (than traditional fines) for an association to focus on recovery of an owner-caused loss, Byrne said. For example, if an owner violates a parking rule and parks his car in a prohibited place during a snowstorm, the association can likely recoup the cost of having that car towed in order to get the road plowed. “Whether it chooses to fine the guy $50 on top of that is something else,” he said. “I’m not a big fine guy. I tend to think boards rely too heavily on them.” Sometimes, Byrne said, boards facing a serious, and perhaps dangerous, violation will levy fines, because the board will appear to be taking action; all the while, the dangerous condition persists.
Speeding tickets may be another way associations can levy fines, according to Byrne. For the most part, he said, associations can issue them, unless the state or local government has ownership of the road or has been assigned the right to exclusively enforce the speed restrictions via state law or some other mechanism. He advised against issuing tickets to visitors because the association would likely have difficulty enforcing them. In rare instances, associations could also have the right to pull residents over, but that would depend largely on the community’s way of living. “If you have a 3,000-home community in west Texas where everyone has four acres and the local government essentially wants the association to regulate those types of things, there may be a private security company pulling people over,” Byrne said. “It really depends on the culture and the location.”
How do associations define “reasonable”? “You know it when you see it,” said Byrne. “It’s almost impossible to define. Ultimately, something is likely reasonable if it doesn’t spark laughter or ridicule upon it being heard.” If either of those things happens, one can more easily argue unreasonableness, he explained. “You feel like a fool if you try to argue it,” he said. “But if you can stand up in front of people and defend yourself, it may very well be reasonable.” According to Byrne, it would be reasonable for associations to require that renovation work be permitted and specify that contractors be licensed and bonded.
Keeping that in mind, he suggested that associations also proceed with caution when attempting to restrict certain visual elements, such as holiday displays and political signs. In New York, those types of regulations are considered by the court in the same way any other regulations are. That being said, “When it comes to speech, assembly, religion, or expression, some states deem private communities to be quasi-governmental,” Byrne explained. “They’re subject to rigorous scrutiny, much the same way the government itself would be scrutinized if it attempted to limit the citizens’ rights.” Instead of prohibiting certain types of displays, he said that the association should attempt to regulate their size and extent, including how long they are allowed to stay visible in the community. Such regulations should have a better chance of enjoying judicial validation.
Reasonableness should also govern other exterior issues, such as lighting, Byrne said. But a board shouldn’t be overly concerned about whether or not it will be held liable for its decision. “There’s no way to tell a board ahead of time for what it will or won’t be liable,” he said. “An association can be liable in some fashion for refusing a request for lights and liable in some fashion for granting the request. Ultimately, I don’t think an association should be guided by whether it’s going to be sued or not,” he added. “Boards just have to be reasonable. They should follow normal human common sense, and if the lawsuit comes, it comes.”
The declaration establishes the components of the common areas versus the homeowner-owned and/or homeowner-controlled areas, according to Byrne. The declaration contains those delineations, which typically include boundaries, easement rights, where units and lots begin and where common and or/ limited elements begin and end. An association’s bylaws will be more focused on that association’s operations. By law, the bylaws must set the number of executive board members of officer titles and the manner by which those officers are elected. The bylaws must provide by the “qualifications, powers and duties,” Byrne noted.
How do associations deal with encroachments in the common areas? Byrne said that there’s a “lawyer” way of handling it and a more diplomatic approach that often benefits each party (the association and the owner who encroached). Using the example of an owner who planted shrubbery in the common area, Byrne explained that the “lawyer” method would simply involve forced removal of the item. If the encroachment might actually harm the common elements and/or areas, or cause drainage or other problems, removal will be the only way to remedy the situation, he said. However, absent such a threat (or other factors), he advised that associations simply render the encroachment harmless and come to an agreement with the owner. “Of course, the owner may have to pay a fee as a ‘license’ fee, and/or reimburse the association’s costs. Otherwise, a board’s decision to allow/maintain the encroachment could be more easily subject to attack,” he said. In fact, the applicable statutes empower an association to impose payments, charges and/or common charges for the “use, rental or operation of the common elements,” Byrne said.
Notably, play sets, like plant life, can sometimes encroach on common areas, but before they are forcibly removed or made the subject of an agreement between association and owner, it should first be determined if they are a temporary structure. “Some are fixed items that are set in the ground,” said Byrne. “But others can theoretically be folded up and moved away. It’s really going to depend on the magnitude of the play set in question, and as is the case in most of these situations, it will depend on the particular facts of the actual situation.”