Homeowners are supposed to comply with the governing documents for their community. But what happens when they don’t? In a cooperative, a board may terminate the lease; in a condo or homeowners’ association, the board may obtain an injunction. Most boards look for less drastic solutions.
Minkin v. Board Of Directors of the Cortlandt Ridge Homeowners Association addresses this problem. In that case, the court determined whether the board could fine the homeowner for failing to comply with governing documents. When interpreting these, the court considered the significance of the community’s offering plan.
Gregg Minkin and his wife owned a single-family home within the Cortlandt Ridge Homeowners Association (HOA) in Purchase, New York, which consists of both private homes and condominiums. Homeowners are subject to the HOA’s Declaration of Covenants, Restrictions, Easements, Charges, and Liens, although there are different rules for single-family homeowners and condo unit-owners. The HOA retained a landscaping company for the single-family homes and also arranged for snow removal, maintenance, and similar services.
The homeowners were charged for these, but Minkin refused to pay. Several years before the lawsuit, he argued that the board had no right to contract for or regulate single-family home landscaping and snow removal. He also claimed that the board had no right to pass costs on to homeowners.
Nonetheless, in 2009, when he wanted to do landscaping work, he followed procedures and submitted a proposal for board approval. It was approved, but Minkin installed additional trees without permission. In 2010, when Minkin submitted another landscaping request, he was told it would not be approved until he removed those trees. The board assessed fines against Minkin because he had not paid for landscaping, and because he performed work on his front lawn without permission.
Shortly thereafter, Minkin sued for breach of fiduciary duty and for an order declaring that the board had no authority to provide landscaping services or to levy fines for a failure to pay those costs. He argued that the board had exceeded its authority when it attempted to regulate his landscaping and imposed fines. In large part, this was based on a reading of the HOA’s declaration, and the distinction that he believed it made between single-family homes and condominiums.The lower court looked first to the HOA’s governing documents and analyzed whether the board had rights to provide services and approve landscaping to the front lawns of single-family homes. Minkin argued, in part, that the proposed budget contained within the offering plan supported his interpretation that the board was not to contract for landscaping to single-family homes. But the language in the governing documents was clear – the board had the authority.
As to the offering plan, the court noted that it was a document that was required by statute, but that it was “merely an informational tool.” The summary provisions within it are not binding on the HOA or the owners. Ultimately, the court held that the declaration and the bylaws are the documents “that control the operation and maintenance of the development and confer authority on the board.” Those documents unambiguously permitted the board to provide landscaping to single-family homes and to approve or reject proposed alterations to the lawns. The documents also permitted the board to impose fines for a failure to comply.
The appellate court reviewed the lower court’s findings and agreed, with certain exceptions. First, there appeared to be a question as to whether the board had in fact approved the trees Minkin planted in 2009. Further, the fines imposed for work on Minkin’s side lawn were improper, as only front lawns were regulated under the bylaws.
Reading the Ruling
Assessing fines may be the best way to enforce rules and policies. The declaration and bylaws were unambiguous. A court may look at the offering plan as an aid to interpretation only when governing documents are unclear or inconsistent. The declaration and bylaws are the contract between the board and owners. Finally, in the lower court decision, the court recognized that this decision would affect all unit-owners, not just the one who was a party to the suit. Although other homeowners could sue on the same theories (and could raise additional bases for their claims), for practical purposes these rulings decided the issues before the court for all homeowners.
Dale J. Degenshein is special counsel at Stroock & Stroock & Lavan.