When making the choice to purchase a condo or a co-op apartment, many buyers choose a condominium so as to reduce the board’s involvement in the decisions they will make regarding their home. Condo boards’ authority over certain decisions and aspects of life in their communities is much more limited than that of co-op boards, but that doesn’t mean that some condo boards won’t try to impose rules, regulations, and requirements on residents that are clearly outside their lane. Doing so – even with the best intentions – can lead to acrimony, conflict, and sometimes even litigation.
“People buy into condos to begin with because they generally want the freedom associated with a condo,” says Deborah Koplowitz, an attorney with the New York City firm Anderson Kill. “You have more freedom to rent your condo out, to do what you want with your unit. That’s sort of a baseline. That being said, that sort of freedom can be a slippery slope, and can lead to solutions where owners think the looser rental provisions give them the right to violate [the] law by bringing in Airbnb-type tenants short term, having parties, and making noise.”
It’s also important for board members to understand and be familiar with the documents that govern the operation of condominium communities and the way the ‘bundle-of-rights’ associated with real estate are distributed between owners and the association, which is represented by the board. “Unfortunately,” says Lisa Magill, an attorney for the Florida-based firm Kaye Bender Rembaum, “many board members simply do not understand the constraints of the statutes and the governing documents.” For example, while a tenant screening process is common for prospective renters, “if this provision does not appear in the documents, the board has no right to obtain background reports or reject tenancies. Directors often rely on past practices believing ‘it’s always been that way,’ without verifying whether rules have been properly enacted.”
Ignorance, or Arrogance?
“Overstepping of a board’s authority is mostly the result of ignorance, which is then made worse by those that are arrogant,” says Sima Kirsch, an attorney in Chicago. “When owners become board members, some act ignorantly but innocently, while others maliciously cut corners around the rules and law to meet their vision of how they want the association to run. Unfortunately, ignorance is easy to cure through education – which is readily available but rarely taken advantage of – while arrogance is a state of being, and rarely changeable.”
According to attorney Ellen Shapiro of Marcus Errico Emmer & Brooks, PC, in Braintree, Massachusetts, “‘Ignorance is bliss’ is a phrase that has a well-earned place...However, condominium boards should be mindful that such incorrect actions could appear to be a sign of arrogance when responding to a situation. The board might inadvertently overstep the bounds of authority as set forth in statutes and their governing documents and get themselves into trouble. While it may sound self-serving, it is prudent to run questions by your attorney before quickly reacting based on thoughts, assumptions, and possibilities.”
ADR—Alternative Dispute Resolution
Regardless of the nature of a conflict – or of a board out of bounds – precious few people truly want to litigate. It’s expensive, acrimonious, and agonizingly slow. One possible way to avoid all that is through arbitration and mediation, often called alternative dispute resolution (ADR). Nationally, the trend toward requiring mediation or arbitration as an alternative to litigation is growing, says Eric Van Loon, a Boston-based attorney and accomplished mediator with JAMS, a national dispute resolution company. “The practicalities and expense move more people toward mediation and arbitration. Litigation comes with very high costs and a huge time frame – often it takes years just to get a court date.”
And when it comes to condominium associations going to bat in the courtroom, payment for the legal fees comes from the association’s dues, leaving less for what that money was originally intended. “It’s in an association’s best interest to try mediation first,” says Van Loon.
Sheila Van Duyne, an attorney at the Van Duyne Law Group in Reno, Nevada, says that Nevada requires disputes to submit to resolution through ADR. “The Nevada Real Estate Division (NRED) has an office for complaint resolution between association boards and owners,” she explains. Of course, if the dispute can’t be resolved through ADR, the plaintiff may seek redress in court.
Magill confirms that ADR is used in Florida as well. “We have an arbitration program,” she says. “For violations between an owner and the association, the dispute goes to mandatory but non-binding arbitration.” This program was enacted because the courts were so clogged with cases. “We also have a government agency that an owner can complain to if they feel the condo is breaking the law. First-time violators are issued a warning letter, but if it’s with regard to financial issues or is a repeat violation, they have enforcement powers that can include fines or can preclude someone from serving on a condominium board.”
While the coronavirus pandemic has had a huge impact on travel and how people handle accommodations while on the road, Airbnb (as well as other home-sharing platforms) is still very much a going concern. And even in more placid times, few things can cause as much consternation as Airbnb rentals, particularly in condominium properties. Travelers love them; neighbors hate them. Policy with respect to these short-term rentals changes from location to location. “In New York City,” says Koplowitz, “Airbnb is in violation of the law. The looser provisions of condominium living and the right to lease your unit doesn’t give owners the right to violate the law.”
Nevada presents the opposite view in many respects. “I see a lot of concerns with regards to limiting rentals and certain activities in and around the condo,” says Van Duyne. “That’s overstepping use restrictions as it relates to Airbnb and other short-term rentals. It’s more complicated than you would think. A board can’t just restrict it arbitrarily. On occasion you can find information in the articles that state the purpose of the association and in the governing documents, such as the CC&Rs [covenants, conditions & restrictions] that allow or disallow for certain types of rentals. When the CC&R specifically disallows all rentals, those who buy units there should note this property right is alienated. That being said, sometimes there are some words that can be interpreted from the CC&Rs that permit some restrictions on leasing. You could also have a set of rules that perhaps require leases to be deposited with management. There are ways to get a handle on this without saying you can’t rent at all.”
Smoking and Pets
Like short-term rentals, smoking restrictions vary from place to place. In New York City, says Koplowitz, “we have a new law that requires all boards of any type, and all landlords of rental buildings to set a smoking policy.” That does not mean they have to ban smoking, it just means they have to have a policy. “First go to the bylaws to see what the board can do,” Koplowitz adds. “It’s very difficult to restrict smoking inside a unit.”
In Nevada, Van Duyne says: “Typically, there is the ability to stop smoking in common areas, but not inside the home. You can’t control that.”
As with most issues, pets and pet ownership are governed by the rules set forth in the associations governing documents. In New York, all that may be changing. According to Koplowitz: “We have a new rule from the New York Commission on Human Rights regarding emotional support animals. It may make pet policies a thing of the past. It’s so liberal relative to emotional support animals that pretty much any diagnosis of anxiety can get an emotional support animal.”
The Graduate in the Second Bedroom
Another common problem facing many condo owners even before the upheaval and residential reshuffling triggered by COVID-19 is that of their grown children living with them or in their stead in their units. What if your recently graduated (or unemployed) daughter moves back into her room, but you and the spouse choose to move elsewhere, providing her with a place to live on her own?
Opinions are pretty consistent across the board. Unless the condominium is an over-55 community that specifically requires at least one occupant and legal owner to be over 55 years old, adult children can live there. Furthermore, unless there are specific provisions in the governing documents, minor children are free to live there as well, with or without the owner present. The association cannot prevent you from leasing your unit to someone with minor children. The only provision afforded the association if it’s unhappy with your choice of a tenant is to enact its right of first refusal, which we will return to shortly.
Renovations and Remodeling
Like most other issues, condominium boards have limited authority to control what you can do relative to remodeling and renovations in your unit. Objectively though, residents should approach this area with common sense. Owners should keep in mind that while they may be eminent in their own domain, what they do may affect their neighbors’ domain as well. It’s best to check with the managing agent and the association before undertaking major work.
“For limited visibility common areas, you can do what you want,” says Van Duyne. “Renovations may require plans, licenses, and other approvals,” both from the condominium association and other local authorities. “They can dictate it.” Another area of control which may be more common in Nevada than elsewhere is in landscaping in horizontal communities—meaning associations made up of low-rise or single-level units where the unit may have exterior entrance and exit. These communities will often dictate what the plantings and rock beds placed outside units may contain. If it’s in the governing documents, the owners must go along with the plan.
Sales, and the Right of First Refusal
The greatest benefit to condominium ownership over other forms of community ownership structures (such as co-ops, for example) is that owners can buy and sell their units without the permission of the association’s board. “That’s the reason people like condos,” says Koplowitz. The association board does have the right of first refusal, though. In the event the board is unhappy with or has objections to the buyer, the governing documents of most condominiums will provide that the association can buy the unit at the same price the prospective purchaser would have paid, making the seller whole. This rule also applies to leasing of units.
Ultimately, as Magill outlines, rules limiting the rights of owners to the benefit of the association must pass several tests. “Enabling language in the declaration of condominium is crucial. Rule enforceability is determined by analysis of various factors enshrined in case law. The board must have authority to promulgate rules and regulations regarding the use of the property, [but] the rule or restriction cannot conflict with any of the rights or privileges contained or inferable from the declaration. The rule or restriction must be rationally designed to accomplish a legitimate association objective. The process undertaken to adopt or create the restriction must comply with procedural requirements. And the rule cannot conflict with laws of higher priority such as fair housing laws, telecommunications laws, etc.”
What Can You Do About It?
There are plenty of options for owners when they fear their board has overstepped. “You’ve got the governing docs,” says one attorney, “and the master deed and bylaws, and rules and regulations and resolutions. You’ve also got state law. What’s the best way to deal with it? Obviously, you have to communicate the issue. That should always be in writing. An unhappy unit owner can also attend a meeting and address the problem there, yet always put things in writing to create a record. Sometimes though, simply bringing the matter to the attention of management will help to resolve it. An audience with the board might also be necessary to point out in the documents where what they’re doing isn’t permitted.”
Shapiro offers some evergreen, universal advice. “Board members should remember that their positions on the board are only as secure as the votes that got them there,” she says. Unit owners can always resort to their ultimate remedy and figuratively say, ‘Off with their heads!’ by voting them out of office.
A J Sidransky is a staff writer for New England Condominium and a published novelist.