Stick to Your Guns Without Shooting Yourself in the Foot: Enforcing Your Governing Documents and Rules By Matt Drewes, Thomsen & Nybeck, P.A., Attorneys
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nforcing your association’s covenants and rules can be one of the most troublesome issues your community association faces. You may feel stress about the violation, the potential conflict between members, and the potential conflict between the alleged violator and the board. This article will attempt to give you some tools to evaluate your specific situation. Is the homeowner violating a valid rule or covenant? The board doesn’t have unlimited power. When a violation or problematic owner or condition is reported, first consider whether the conduct or condition is actually a violation of a valid restriction. Common interest communities are formed and governed by a series of documents that should include the articles of incorporation, the bylaws, and the declaration. The Board derives its power from these governing documents and, in most cases, the Minnesota Common Interest Ownership Act (MCIOA), which is Minnesota Statutes Chapter 515B. In addition to the governing documents and MCIOA, you should also have rules and regulations. If you’re considering taking action to enforce one or more rules, consider whether the rules were properly passed. Make sure the board complied with any requirements for passing rules which may be contained in your governing documents, especially the declaration, before proceeding with enforcement. Alternatively, if you complied with the rulemaking procedures, but failed to approve the rules at a validly called and conducted board meeting, your rules might be subject to challenge. Make sure your rules are not inconsistent with your declaration. For example, if the declaration states that owners may have pets without any further limitation or a reference
to the board’s authority to regulate pets, then a rule that prohibits pets or limits their size or number is likely subject to challenge for being inconsistent with the declaration. Some restrictions will require an amendment to your declaration; don’t assume you can address all matters with rules. Know your governing documents and the rules that may apply. Make sure the board is in the right before acting or communicating with the homeowner about a possible violation. If you haven’t received or located complete copies of your governing documents, including a recorded copy of your declaration, you should start there. The articles of incorporation are rarely implicated in enforcement matters, but make sure you’ve looked at them to be sure, and make sure you have a copy of the version that is on file with the Secretary of State. The bylaws should have been signed, and often amendments to the bylaws must be recorded before they become effective. Make sure this has been done if it is required. You should be able to point to a specific provision of the governing documents, the rules, or MCIOA (if it applies to your association). If you need help identifying or articulating the basis for your concern and proposed enforcement action, check with an experienced community association attorney. The attorney might be able to point to enforcement options you haven’t considered and can help ensure you use the most effective remedy. Alternatively, your lawyer may spot problems with your position that can be corrected before you’ve gone too far. Reliance on an outside professional advisor also further insulates the board of directors from potential liability where your decision is a controversial one. If you have passed or plan to pass rules and regulations, remember the authority to pass them is derived from the declaration (and MCIOA, if applicable) and the rules may not be inconsistent with the declaration.
Matters typically subject to rules include parking, noise, signs, or procedural matters like how owners apply for permission to make exterior alterations to their units. Rules also are a useful tool for establishing procedures for enforcement, including how hearings will be conducted, where the declaration is silent on those details. MCIOA will address a lot of enforcement concerns for those associations to which it applies. For example, it requires notice and an opportunity to be heard before the association can impose fines. MCIOA also contains provisions allowing for the recovery of attorneys’ fees, and even punitive damages for willful noncompliance. The Minnesota Nonprofit Corporations Act (MNCA) also applies to nearly all community associations. It usually won’t play a role in your enforcement decisions, but it may guide Board meetings and votes, and contains requirements regarding electronic voting procedures if your association chooses to seek to use those options. Communicate with the members about what is expected of them; be consistent. Make sure that your members know the rules. Some declarations require you to distribute the rules to the members before they become effective. Even if your declaration doesn’t require you to do this, it’s a good idea to do so anyway. Send the rules to the members each time you change them. When new owners move in, send them a complete copy of your governing documents and rules. If you are not vigilant about enforcing the governing documents and rules, you open up the association to two potentially devastating arguments: selective enforcement and waiver. Selective enforcement means you’re unfairly trying to single out one owner or group of owners. Waiver means you’ve failed to enforce a particular covenant or rule in the past, and therefore you shouldn’t be perStick to Your Guns continued on page 6
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