If bad behavior in a condo is a serious ongoing situation, what can a board do to fix it? Habitat asks David Berkey, partner at Gallet Dreyer & Berkey, for his advice.
It’s inevitable that residents in a co-op or condo sometimes behave in ways that cause headaches for their neighbors. But if it’s a serious ongoing situation, what can a board do to rectify it?
Unfortunately, people do violate what you and I would consider the basic tenets of good behavior, disrupting other residents and causing all kinds of havoc within their building. For co-op boards, it’s fairly simple and straightforward to deal with, since there are provisions in proprietary leases that address objectionable conduct.
So co-ops have a clear path to follow. But what about condo boards?
It’s much more difficult for them because they can’t oust unit-owners from their homes. In co-ops, the risk of eviction is often what forces people to change their behavior. It’s like a huge club boards can wield, but condos don’t have that same tool.
What recourse do they have?
They can go to court and sue the unit-owner. If the owner is not the occupant and it’s a tenant who’s causing trouble, condo boards can get an injunction for them to stop their bad behavior. But that’s a very expensive process. An alternative strategy to grab people’s attention and make them stop is to put economic pressure on them.
How can boards do that?
Assuming their bylaws allow it, condo boards have the power to create rules and regulations that govern the conduct of unit-owners as well as lessees or occupants. Boards also have the power to levy fines. The first violation, which would essentially be a warning, would have a reasonable fine, but a subsequent violation would have a much more onerous one. That should be enough of deterrence for unit-owners, or for owners to get their tenants to stop causing trouble.
How big would the fines have to be to catch somebody’s attention?
We have buildings where the boards imposed an initial fine of $500, and then $1,000 for a second violation. If that doesn’t work, we recommend that the board impose an amount that they believe will be sufficient to get people to comply.
And what steps would you advise condo boards to take with regard to imposing “bad behavior” fines?
The first step is to review their documents to see whether they have to power to adopt rules and regulations governing behavior and the power to impose fines. Not every set of bylaws allows that. In that case, the board will need to amend the bylaws, which typically requires a supermajority unit-owner vote. They’ll usually get it, since owners want their boards to have the authority to regulate misconduct.
The next step is to adopt specific rules that include late-night parties, excessive noise, and conduct that is abusive to staff or neighbors. Then the board has to make sure everybody is notified about the rules and regulations that have been adopted. Boards have to be careful to not go overboard with the amount of the fines they impose. There is case law that essentially says fines cannot be confiscatory or excessive.
How do courts determine that?
Courts use the business judgment rule, which means they first look at the condo’s bylaws to see whether the board has the power to impose fines. Then they check whether the rules and regulations are designed to further the legitimate interest of the condominium. Finally, they’ll see whether the fine in the individual case was done in good faith and that the board isn’t unfairly singling someone out for retribution.
So the bottom line is to proceed with caution.
If the board checks the bylaws, adopts rules and regulations and doesn't act in a draconian manner, their actions are likely to be upheld. Hopefully, they’ll achieve their goal of having everybody on their best behavior.