Rules, Rules and More Rules…

Community associations (condominiums, cooperatives and planned unit developments such as homeowner associations) each has its own unique set of  governing documents. However, one tie that binds them all together are House Rules also known as Rules and Regulations. House rules provide an invaluable mechanism in which to convey specific requirements of the association to owners, tenants and guests. Generally, these rules explain the day-to-day use and governance of the association. They are also far less cumbersome to read than the towering stack of governing documents owners receive at closing. 

It is highly recommended that all associations have some form of house rules or project rules. Generally, a committee, manager, and/or the board of directors should review these rules at least annually to determine if they still meet the needs of the association. If there are no rules in existence, they usually can be created and approved by the board of directors as outlined in the governing documents. Amendments to the rules typically fall under the board of director’s scope of authority as well. Always refer to the governing documents and state statutes for direction on any rule development. All owners should receive a copy of the adopted rules and any subsequent amendments. Notice should be given to owners and residents regarding the effective date of all new rules. Typically, thirty-day notice is given before enforcement commences.

Rules should be derived from the governing documents (by-laws or covenants, conditions & restrictions also known as CC&Rs) to ensure that no house rule supercedes the association’s governing authority. House rules cannot conflict with provisions in the association’s recorded documents. House rules are meant to be a resource that will be used by owners, tenants and guests to enable them to enjoy the association and its many facets without causing harm or injury to the association, its population or physical assets. In order for the house rules to be effective, they should be clear, easy to understand, reasonable, necessary and enforceable.

Guidelines should be easily distinguished from rules that carry a fine if violated. Rules should be stated in positive terms and should support the governing documents. For example, if the governing documents allow for pets with the approval of the board, the house rules should reflect the same language and provide greater detail on the owner’s rights and responsibilities of having a pet while in the community.

Most importantly, house rules should have some form of enforcement language. The governing documents should contain language that allows the board of directors the right to assess fines, penalties and assessments. If the documents contain no such language, it would be well advised to seek a legal opinion from the association’s attorney on developing such a policy or amendment.  A reasonable process should be drafted with regards to rule violations. Typically, an initial notice is given in writing to an owner, with a copy to the renter if applicable, notifying them of the violation. The notice should contain the exact language from the house rules as a reference tool. The notice should also indicate what steps will be taken should the violation continue or recur. Additional steps may include continuous notices and/or fines. A realistic time frame should be established for each level of notice and inspections should be held by the manager or other designee to determine if the violation was corrected by the deadline.  When citing the fine policy, it is recommended that a copy of the fine process be attached to the notice. The process that is developed for violations should be followed uniformly with all violations to avoid any issues of impropriety or selective enforcement. The exception would be if the violation were potentially harmful to persons or property. A provision should be included in the house rules that describes situations that would cause imminent danger and how to proceed.

As with any regulated process, a means for appeal should be included in your house rules. Guidance on developing an appeals process can be obtained by researching state statues and governing documents. Any owner who desires to file an appeal has the right to do so provided they follow the steps that are included in your house rules. A committee should be appointed by the board to address appeals. This method allows the board of directors to convene should the ruling from the appeal committee be contested. Generally, allowing an owner to air their grievance and having an impartial third party such as an appeals committee review the matter, is a far less threatening environment and many times allows resolution that is agreeable to all parties. Listening is the key to conflict resolution as it allows all emotions that contributed to the issue to be vented and, hopefully, clearer heads to prevail.

Some associations have elected to send a thank you note to the owner or resident once the violation has been corrected. This presents the human, compassionate side of the association and board. Everyone appreciates being acknowledged for good behavior, and association homeowners are no different. If your house rules are clear and easily understandable with a fine policy in place that is enforceable, you will save time and money for the association by possibly avoiding unnecessary litigation. Education is important for a healthy and harmonious association. Helping owners understand the need for rules will go a long way towards a smooth running association.

Kathy Cooley, CMCA, AMS, PCAM
Vice President of Hawaii Operations
Certified Management, Inc.
Kona, HI