“Enforcing the Rules in Your Condo or HOA: Best Practices to Litigation” – KSN attorneys Kerry Bartell and Nick Mitchell cover condo and HOA rules and regulations, the enforcement process, the stages of litigation, and more. (56 mins.)
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Nikki: You’re listening to the KSN podcast and today we’re talking about enforcing the rules in your condo or HOA, best practices for litigation. Welcome to the KSN podcast where you’ll hear from KSN attorneys as they share their experience and insight on legal issues surrounding community associations, collections, property tax appeals, and landlord tenant law. I’m Nikki and today we’re joined by two KSN attorneys, Kerry Bartell, and Nicholas Mitchell. Kerry is a highly accomplished attorney, practicing condominium, townhome and homeowner association law in Chicago and the surrounding suburbs for over 20 years now and Nick serves it as the chairperson of KSN’s litigation department and focuses his practice on general litigation and construction defect litigation as it applies to condominium, homeowner and community associations.
Kerry: My name is Kerry Bartell and I’m a principal with Kovitz Shifrin Nesbit. First and foremost, thank you everybody for taking an hour out of your evening. It’s beautiful outside. So, we appreciate it quite a lot. To hear about some sort of guiding information and tricks with respect to enforcing the rules in your condominium association or homeowners’ association we’re going to kind of go start to finish with regard to enforcing your governing documents from sort of the start of a violation all the way through to litigation. I’m going to let my partner in crime introduce himself. This is Nick Mitchell.
Nicholas: Hello everyone. Thanks for joining us. As Kerry said– Well, I run the litigation department at Kovitz Shifrin Nesbit. So, Kerry is going to walk you through sort of the pre-litigation aspect of enforcing your rules and regulations, and then once it gets to the point in the discussion where we talk about what happens when those owners are not following the rules and that they’re not doing what they’re supposed to and the board is required to do something to actually force those actions, then I’ll take over and start talking about what that looks like from the enforcement perspective.
Kerry: Awesome. Thank you, Nick. All right, so we’re going to go ahead and get started. So, getting started, what are rules and regulations? We all use this term, but they actually are a legal term of art with respect to community associations, and they are the sort of governing restrictions that a board can adapt that are not specifically detailed in the governing documents. These rules and regulations can cover such items as property appearance. So, we get questions of rules and regulations about ring doorbells and lawn maintenance requirements unit maintenance. So, it’s really about making sure that the property is properly maintained. Certainly, a favorite even more so during COVID and everybody being home, we often deal with noise and disturbances. This is like quiet hours smoking rules have become a hot topic as well. Then we usually have to include rules regarding pets, telling everybody they got to pick up their poop and whatnot as they walk their pets outside. And then also proper use for common elements, common areas, recreational facilities, if you have them and amenities. So, those are usually the big general topics that your rules and regulations will address.
So, from our perspective and the way I usually explain it is that the rules constitute the living and breathing enforcement document for the association. They are your day to day, how to be nice to your neighbor and everybody gets along restrictions. So, rules can implement provisions of the declaration or your bylaws. They supplement those documents but they cannot be inconsistent or supersede the declaration and bylaws or for that matter governing laws. So, state of Illinois laws or federal laws have to be a supplement. They cannot override your declaration or your bylaws. Oftentimes when I’m consulting with my client’s unit owners, particularly sometimes board members will confuse the declaration and bylaws with the rules and regulations. They are two separate documents and they are changed and revised and adapted in different ways. So, you really need to make sure that you understand what your rules and regulations are and if you have them and then how to properly adapt them, which we’ll talk about in just a little bit.
Your declaration and bylaws generally do not address the day to day living in an association. The declaration and bylaws provide broad restrictions and guidelines, but they don’t kind of get you down to the nitty gritty and how you’re supposed to live with your neighbors. So, how are they formalized? They are, again, a separate document from your other governing documents. They are legal in terms of they have legal import, sort of all the way from what I’m talking about into Nick’s territory with litigation. They are a legal document and they should be prepared or at least reviewed by an attorney before the board goes through the formal legal process to adapt them. These rules and regulations are a common area where we see that associations are not following the proper procedure to adapt them, or they haven’t been reviewed by an attorney. So, there’s some contradiction between rules document and the governing declaration bylaws, or even statutory requirements. And so, the rules and regulations then are either not enforceable or it becomes confusing for the owners and the board.
We always counsel our clients that the rules and regulations are very important for the association to adapt. They’re necessary to help keep your community safe in a lot of aspects and also to protect your property values. One of the things that an association is charged with doing is overseeing the safety and security of the property itself, but also the residents and to maintain or improve property values. So, the rules and regulations are an important tool in achieving those goals and the board really needs to look to them to help promote those two goals. It is also important to keep in mind that interpretation of the rules is necessary when it comes to applying old rules to present issues and some regulations often come under dispute due to differing interpretations among community members. I always say rules and regulations are one of the ways that we stay employed as attorneys because they are often not clear cut or they’re out of date, or they may not address a current issue. We’ll talk about it in a little bit, but you know, a good example is drones. All of a sudden drones hit the general marketplace and they were showing up in associations and our boards were going, what the heck do we do with these things? What can’t we do? What can’t we do? And the rules and regulations just had not caught up yet.
So, we had to start revising everybody’s rules and regulations to address all of the issues that can come with what many people bought as a toy. When residents do not follow the rules and regulations set out by the board, the board needs to be prepared to enforce them. One of the things that I always hammer home with my clients is that do not adopt a rule that you do not intend to enforce. If you don’t want to enforce it, take it out of the rules, or if you’re not enforcing it anymore, take it out. Again, it just becomes confusing and there’s some other liability issues that can come into play that we’ll talk about in a little bit. Actually, we’ll talk about it right now. So, rules and regulations need to be updated. It is a movable and revisable document on purpose and I’ll get into that in just a minute, but associations should plan to review their rules every three to five years or more frequently if necessary. Again, we’re in a constantly changing environment with respect to associations, the laws, the ordinances, and other regulations are constantly changing. There’s new technology and trends that can affect the rules. Again, drones, doorbell cameras, nobody talked about those five years ago. Well, five years ago, everybody’s talking about what do we do with satellite dishes. Now, it’s doorbell cameras, drones, those types of issues smoking, what can a board do with regard to smoking complaints? Marijuana is now a big issue.
So, there’s constantly changing exterior factors that an association needs to address through the rules and regulations. The best way to do that is to update them. You also can have outdated rules that just no longer apply. Either the association thought they were important 10 years ago and they no longer are, or the makeup of the residents in your association has changed. So, the rules need to reflect that but there’s usually some revision that happens when we do rules review every three to five years. So, I strongly recommend it and maybe you review it and everything’s fine, but at least you’re going through that process. So, what is our role as the Association’s council with respect to the rules and regulations? Obviously in my opinion, the most important thing that we can do with rules and regulations is to review them to make sure that they comply with the declaration and governing law. I think there have been instances where I get a call from a client and they say, oh, Joe is doing X, Y, Z, it’s a violation of our rules and regulations and when I start to look at the declaration it’s actually permitted in the declaration.
The best example I can give and the most common example is with respect to leasing restrictions. Associations will try to limit how and when unit owners can lease their units, but the declaration doesn’t have any such restrictions and the declaration controls. So, the rules and regulations are invalid or at least with respect to leasing. So, you really need to make sure that the attorney is reviewing your rules in conjunction with your governing documents and then of course, governing law. One of the sorts of unintended issues that can result with improper rules and regulations are discrimination complaints or maybe there’s an impact or an exposure to liability with respect to the fair housing act requirements, which again is basically a discrimination issue. And so, you want to make sure that the attorney is reviewing those rules to make sure that there are not discriminatory practices or regulations within your rules and regulations, it could be completely innocent, but we are looking out for those things to make sure that the association is not exposed to discrimination complaints, just based on the language of the rules themselves.
We also, when we’re reviewing rules and regulations, will offer suggestions on other rules that we think the association or the board might want to consider and also better rules or maybe even new rules with respect to enforcement and how those should be structured to ensure that the enforcement process is correct should and if there be a litigation issue. So, how does enforcement work? Nick and I are both going to kind of touch on this from different points of view, but this is really where you’re putting those rules and regulations into practice. So, when you’re enforcing rules and regulations, it is important to follow standard procedures for this process. Enforcement should be consistent with regard to any rule infraction and the more consistent it is, the less issue we will have with complaints about selective enforcement or discrimination. So, you really need to make sure that you’re following whatever the procedures are that are legally required and then also any specific procedures that are found in your governing documents like the bylaws or the declaration.
Although standard procedures for rule enforcement vary by community, there are some common procedures that you may find. They can include the fact that a board must take a vote prior to acting on violation enforcement. This can often surprise people. Boards think, oh, well, it’s a private issue between the Association’s board and the particular owner who’s in violation, but the courts are very clear and the law is very clear that if you are going to impose a fine, or if you are going to authorize your attorney to proceed with litigation, that that decision has to be done in an open meeting and there has to be a motion authorizing that action. Now, the discussion regarding a violation, whether it’s just a fine or some other penalty or the decision to proceed with litigation, the discussion by the board can occur in a closed session or executive session, but the decision to move forward on any particular action has to be done in the open meeting and your attorney can help you craft a motion that can be adopted by the board so that you can kind of walk that balance between authorizing litigation or a fine or whatever the action is versus protecting the privacy of the owner.
Sometimes we use code. Sometimes we just refer to an address, but there’s different ways that we can craft the motion so that it’s not as blatant as putting the person’s name in there and all of the other identifying information. A resident should also be notified through the correct form of communication, whether it’s a notice, a letter or an email if you have electronic communication rules in place, advising them of the alleged violation. The owner has to be put on notice that they are in violation. So, that all has to be documented. Again, everything I’m saying sort of leads into litigation and what Nick is going to talk about. If it is a violation that can be cured. So best example is like an architectural control violation they put up a pink roof and they have to have a brown roof, whatever it is, if it is the type of violation that can be cured, you should provide that owner with a reasonable amount of time to correct it before you would proceed on the next step towards enforcement and the timeframe can vary. If it’s a minor issue that they can correct in 48 hours or 72 hours, that’s fine. If they have to replace the roof, we need to be able to give them a longer period of time to make that correction.
So, it’s going to depend on the nature of the violation and what the remediation is and I will note that I’m sure many of you are seeing this, but with respect to particularly architectural control violations, we are seeing that owners are needing more and more time, and this is just due to issues, getting contractors issues, getting materials. Just as your association projects may be delayed or drawn out, the same is going to be true for individual residents. In fact, it’s probably harder for them to get a contractor on board because it’s a smaller job. So, we need to be reasonable with the timing of demanding remediation of a violation. Just keep that in mind. So, this kind of speaks to the selective enforcement and the discrimination issues; when you are pursuing rule enforcement you need to enforce it uniformly and consistently. So, if you’re going to seek enforcement of a particular rule where there’s a particular violation against one person, we need to make sure we’re doing it against all other people who are engaging in the same behavior or have done the same violation. This is a little bit mitigated by the fact that most of the time we are getting violation reports or complaints from other owners.
So, if other owners don’t see that five people are doing the same thing, we’re only going to have the report of the one. But my recommendation is that if you send out a violation letter and the owner say, hey, wait a second, yeah, I have a commercial vehicle in my driveway, but five other people have commercial vehicles in their driveways as well. You have a duty to go investigate those other five people and if those other five people have a commercial vehicle, they better be getting violation letters as well. If you don’t apply your enforcement procedures consistently and uniformly, then we can have a problem with an owner counter suing or saying that the association is discriminating against them or unequally applying the rules. So, the attorney’s role in enforcement. So again, we are here to help an association and the board makes sure that they are following the proper procedural steps for enforcement of the rules and again, both generally and whatever rules and regulations that you may have adopted with respect to enforcement. We also can help our associations, and we do quite often draft the necessary notices of violation or even the notice of determination after you’ve had a hearing.
So, we kind of can help you and the association make sure that the documentation is accurate and adequate, according to all of the governing laws that put requirements on those issues. We also, when we get a violation matter, I review the file to confirm that the rules are being applied uniformly and consistently, and that the rule itself that you are seeking to enforce is enforceable. If you go back to what we said earlier if the rule is in contravention to the declaration of the bylaws or other governing law, I’m going to tell you that right up front. Typically, what happens when there’s a rule violation is that the manager or the board will send out the first notice of violation. If the owner doesn’t comply at that point, then it will be elevated to our office. So, we review that whole file and make sure that it all makes sense and that the board can proceed as they want to with respect to enforcement. We also do take a look at the facts to ensure that it is actually a violation of the Association’s governing rules. I will tell you that I often am asked to intervene or send a violation letter, or even just a general question, if the association should do anything when it’s an owner-to-owner dispute. Somebody was mean to somebody else and they complain or file a violation to the board or the manager and I review those and say, hey, hang on a second this is not a violation of the Association’s declaration or the rules and regulations, the association has no role to take and no authority to take action. So, keep in mind that every complaint that you get from an owner does not require board or association response.
All right, here’s some examples of rule enforcement and some tips, or at least recommendations that you can give to your boards or other board members. Any owner witnessing a violation should fill out a violation form and submit it to the board or management, depending on what your process is. The board should have a specific form that owners can use to submit a violation complaint. Again, this leads to the uniformity of how these are handled but ultimately, we want that complaint in writing. If and when it gets to litigation, which by the way, we have to prepare for at the very start we need to know who our witnesses are. So, we need to have the person sign that form and then also it’s imperative that they include when it happened the date, the time, if that’s applicable, and then if they can picture, video, all of that helps. Now, this is not CSI and not every violation you’ll be able to do all that, but as much information as possible is going to be helpful. If it’s an ongoing violation, like a noise violation, or somebody keeps letting their dog out without a leash, it should be a listing of every time that happened.
Once you receive a notice of violation, we then send that form to the accused owner and if a fine is at issue, in other words, if the board will consider the imposition of a fine for that violation, then you have to offer the owner an opportunity for a hearing before the board. If there is no fine involved, if the remedy is not a fine, you are not obligated to offer that owner a hearing under the statutes. Having said that, I never think that offering a hearing is a bad idea. It is an opportunity for that owner to present their side of the case to the board and give whatever information they think is important for the board to consider before they make their final determination. If somebody asks for a hearing and as long as they’re not abusing that process, my advice is always going to be to give it to them and let the person have their 10 or 15 minutes before the board so that you can hear both sides of the story. The board should also listen to the complaining witness and the accused.
Once that hearing is conducted and done the board should end the hearing and go into executive session. Under no circumstances should the board debate or make a decision about what penalty you’re going to impose that should not be done in the hearing. That is done afterwards in an executive session and then if you’re going to take any action, you vote on it in the open board meeting. What I always tell owners when I conduct a hearing is that the board will notify you of its determination at some other time in writing. All right, having gone through my part of it, hopefully everybody’s still awake I’m going to turn it over to Nick.
Nicholas: Thank you Kerry, and actually, could you go back to the last page? I wanted to comment on a couple of those points I think are important for everyone to understand. With respect to that first bullet point there about violation form, and somebody submitting a complaint form, some associations have a specific process in their rules that says, this is how we’re going to go about any complaints we receive and sometimes there is a specific form that owners are to submit and sometimes the rules even say, if a complaint form is submitted, then this is the violation process. Now, sometimes that can be read to mean that if somebody doesn’t go through the process of actually submitting a complaint form, then the board can’t really do anything to remedy the situation. So, it’s important to keep in mind how specific and how rigid you want your rules to be in terms of enforcement actions and if you want to require a complaint to be submitted. Sometimes owners don’t really like to attach their name to something, but you might have several different owners from different parts of the building complaining about the same owner for doing the same thing, but they don’t want to get involved and they don’t want their name associated with it and sometimes it’s just something to consider whether the board wants to specifically require that level of detail before it is enabled to actually take any sort of action.
And to Kerry’s comment about having those detailed notes on who’s submitting the complaints, who’s actually submitting the complaint forms, if it does get to litigation, there is going to be a time when we may need to present some witnesses to explain why the board did what they did and by having those complaint forms, by having some records of why the board is taking those actions it can certainly help defend the actions that they took, or at least justify why they were taking that next step to litigation. That’s what I wanted to comment on. You can go back to the next step. So, the enforcement process, a lot of this is going to be more detail on what Kerry just kind of walked you through. And so, I won’t spend too much time belaboring some of these points but I will highlight some of what I think are the most important aspects and then we’ll start talking more about the meat and potatoes of what a lawsuit might look like in terms of enforcing some of your rules.
But with respect to this first step, everyone buys into a condo or a homeowner’s association, everyone does so with the understanding or expectation that there are going to be certain rules that they have to follow and there are certain requirements when you live in a shared community like that. Mistakes will happen, sometimes through no fault of the owner, sometimes they know exactly what they’re doing and they’re just flaunting the rules but at the first step is always to let the owners know what is going on and it’s one thing to make a mistake, it’s another thing to let them know that there’s a mistake happening or that this violation is taking place and they continue to violate it and when they do that, the board’s going to need to start actually considering whether they need to start the rule enforcement process, or if they want to continue trying to work with the owner. It’s important to have– In echoing what Kerry said a couple times already, consistency is really key when you’re enforcing these rules. It’s important because one if you do have to file a lawsuit, one of the defenses that would be available to a unit owner is to say that this is a rule that’s just arbitrary, it’s selectively enforced, it’s not really something that the board is worried about, they’re just picking on me.
So, one, it could create a defense for our ability to enforce this rule against them and then two, it could actually create some sort of claim against the board. These owners might say, well, look, you’re singling me out. Kind of like Kerry mentioned, some of these discrimination claims that the owners might file with the fair housing authority or the human rights commission. They could also just file a breach of fiduciary duty claim against the board members saying, look, you’re only enforcing this against me because you don’t like the way my hair is colored or they’re actually trying to get back at me for doing something else, they’re not doing this against anyone else. So, consistency is really key. So, it’s okay when mistakes happen but if the board’s going to take the next step and actually try to enforce the rules against somebody, you really do have to be consistent and do that against everybody else and the governing documents that determine how you go about enforcing those rules will vary slightly from association to association. There’s always going to be a bare minimum that’s established by the relevant statute. If you’re a condo, then obviously it’s the condo act. If you’re a townhome or a homeowner association, it might be the common interest community act, but regardless, there’s going to be a set of standards that the law will impose that you follow to enforce your rules, but your own governing documents may actually be even more stringent.
For instance, there might be a requirement that you give an owner 30 days to cure whatever the violation might be before you can actually take any sort of action to enforce it. There might be an obligation to conduct a meeting or at least do your best to try to resolve the issue before you formally put a violation hearing into action. So, this is why it’s really good to call us or whomever your attorney might be early on in the proceeding, early on in your process of looking into a violation, so that way the attorney can walk you through this process, review all your documents and let you know exactly step by step what you need to do if you’re going to enforce the violation.
So, as I mentioned, the first thing to do is to notify the resident that there is actually a violation. Now, it probably seems like it goes without saying. The first thing you do is to inform the owner, but all too often, we receive litigation files in our department and when we actually reach out to the client and start talking about this background, we find out that nobody’s actually taking the step of trying to notify the owner that there is a violation. Sometimes these are innocuous mistakes and they don’t realize that they’re even violating the rules and we’ve had cases where we file a lawsuit and the first thing that they say when they come to court is I didn’t even know that this was against the rules, I didn’t know there’s anything wrong. And so, it’s really important that when you are going to go through the hassle and the expense and the time and energy of enforcing your rules and regulations, see if there’s a way to enforce it or see if it’s even necessary to go to that step. You are all serving in voluntary positions. I’m sure you have much better things that you’d rather be doing with your time than trying to bring people into the board meeting and tell them that they’re violating the rules. It might be that they just didn’t even know this was going on.
So, to the extent possible, make sure that you’re doing everything you can to reach them. Obviously, we should send a letter clearly identifying the provisions of the governing documents that are being violated, what’s happened, why we believe this is a violation, but I think it’s also good to follow up with a phone call. I mean, if we have the contact information for the owner, there’s nothing wrong with just calling your neighbor and saying, “Hey, we sent this letter out a little while ago, I don’t believe we received a response. Did you get it? Do you understand the problem? Do you dispute it?” And maybe that can resolve it as well. Enforcement and litigation can get expensive and to the extent that you can resolve these issues short of that, you should always look for a way to do so. If the violation can be fixed, using the example that Kerry gave earlier, such as an architectural problem, if somebody built something that is not supposed to have been built, then you can give them the opportunity to remove or alter that structure to make sure that gives them every opportunity to resolve it before we go any further.
Sometimes, however, the violation is something you can’t really cure. Maybe they took, as the example said, sometimes there might be a complaint about an owner who was walking their dog in an unapproved area. Maybe they’re walking their dog through a, or taking them down the regular elevator when the rules say they’re supposed to go through the storage elevator. Those are things that it’s already happened, there’s nothing you can do to fix it or address it. And so, you just give them a warning and say, “Hey, we’re aware this happened but let’s just not let it happen again.” You’re at least setting the standard and reminding them, these are the rules, we need everyone to follow them. And then if they don’t, then we have to go to the next step. Kerry keyed on a very important differentiation between fines and other violations. Now, if we are talking about fines where we’re seeking to impose a penalty in a monetary amount or perhaps the removal of certain privileges that they would otherwise have, which we’ll chat about in a second, if we’re talking about some sort of fine like that, you have to give them an opportunity to be heard. You have to tell them here’s the violation, here’s what the board has received in terms of a complaint or a concern, we are considering this violation. If you want an opportunity to be heard, then please let us know and we can schedule it.
Now, a lot of times the owners will just ignore it. They won’t ask for a hearing, they’ll just go about their business and then if you’ve at least given them the opportunity for a hearing, we don’t have to formally have the hearing with them. If they don’t want to participate, they don’t want to participate. But that’s a key component of actually collecting that fine later is that you have to give them an opportunity to be heard. Now, that’s very different from other violations that don’t include the imposition of a fine, if it’s an injunction type injunctive type action, let’s say that they’ve– going back to the same architectural problem, they’ve started doing some work in their unit, and we’re concerned that it’s going to impact the stability of the building or other units in the building. We don’t need to give them an opportunity for a hearing before we can issue a violation and then go to court to try to rectify it. If it’s a matter of impacting the wellbeing of other units, the wellbeing of the property itself, or anything that doesn’t involve imposition of a fine. There’s nothing stopping the board from authorizing immediate action to rectify that situation. It would be kind of silly to go through the hassle of scheduling a hearing if there’s some sort of emergency action that has to be taken to make sure that the building stays uncompromised.
So that’s a key difference between fines and other violations. Ideally, the governing documents will identify a schedule of fine amounts for different offenses. The reasonableness of a fine often comes into question when unit owners are trying to dispute the board’s imposition of let’s say a $50 fine, and the courts have some discretion in determining what’s a reasonable fine under the circumstances if it’s not spelled out in your governing documents but if it’s spelled out in the governing documents, there’s really not much dispute. Everyone agreed to live in this community with these governing rules. Here is the declaration that binds everybody. Here are the bylaws that bind everybody. We all agree to follow these rules. A court usually is not going to insert its own discretion or insert its own judgment for what all the parties agreed would be a reasonable fine. In the absence of those scheduled fines, then it does come down to reasonableness and the courts will consider whether the circumstances and the background and the history of that particular owner or that particular violation, they’ll weigh all those factors to determine whether the fine amount that the board came up with is a reasonable number.
For instance, if somebody’s dropping cigarette buds on a balcony below, and that’s clearly against the rules and you’ve given them several violations, the court might say that a $50 fine is reasonable. If you give them a $1,500 fine, the court’s probably going to say, well, that’s a little bit crazy, I’m not going to enforce that but using those same numbers, let’s say somebody’s violating a leasing restriction and they keep leasing their unit through Airbnb or through just a regular monthly rental and the monthly rent is $1,500. Let’s say that you’ve given them numerous, numerous notices that you can’t do this, you have to stop, you’re not allowed to lease your unit. Then in that instance, a $1,500 fine might be reasonable cause otherwise what’s to stop the owner from just keep doing it over and over again. If you were to impose just a $50 fine, the owner’s going to be okay, well, I’m making 1450 every month, but I’ll take the fine and that’s fine. So, it really does depend on the facts and circumstances and the specific rule that’s being violated.
So, this is sort of a rehashing of some of the things we’ve talked about, you’re going to send out the actual violation notice with the fine, let them know that they have an opportunity to dispute the fine, or at least present their side of their story. If they don’t come in, if they don’t participate and if they don’t curb the behavior that we’re seeking, then the next step is obviously to go to court. Sometimes before you go to court, it’s nice to have a separate what I usually call a litigation committee. You can also call it just, I mean, come up with a name, whatever you want to call it, just a subcommittee that deals with these violations from the onset. It could be that you set up a separate committee. The board sets up a committee once we get into litigation and the reason you would do that is– there’s a few reasons. One as board members, you want to try to insulate yourself as much as possible for the decisions that you’re making and you want to make sure that there’s a clear record that you’re relying on input, not just from yourself, but then from surrounding sources and lots of other people and lots of other data.
Going back to the earlier conversation about selective enforcement and how that could lead to some sort of counterclaim or a lawsuit against you saying that you’re only doing this to come after me. If a board is relying on the advice and the facts and the investigation of a subcommittee, then I think that gives the board member at least a little bit more comfort and a little bit more legitimacy to the decision that they’re making and it makes it more and more difficult for a unit owner to suggest that these board members are selectively enforcing their rules and regulations but the same committee could be used both for litigation and for the actual violation process. I think anytime that the board can show that they’re collaborative and that they’re using all the resources to get as much information as possible from everyone as possible, I think that just reinforces the validity of the board’s action. Once you send out the notice and you conduct the hearing, the committee can then deliberate in private, this is sort of like the executive session that Kerry was talking about earlier.
Ultimately, the committee’s going to report back to the board what their suggestion is and what their recommendation is that should be done with respect to that violation. At that point, the board can make their formal decision, send the notification to the owner who has been accused of the violation and let them know that the ruling, and then also whether there is going to be a fine imposed. And as a side note, when the board and the committees are deliberating in private if you are taking notes and if you are maintaining some sort of record of those proceedings, you really should maintain the record going forward because if litigation ever ensues, and there is a request by the accused owner to produce whatever records you have, we’re going to have to produce those records. So, I’m not saying that you have to maintain records, but if you do, you do need to preserve those. So, as I mentioned earlier, one of the forms of a fine might be removing privileges that they would otherwise have at the association, such as a pool pass or having access to a clubhouse, or having access to a private room on the property for hosting parties and whatnot. That’s another form of a fine that you could impose on other parties. It often just goes back to what your governing documents say and again, I think it’s really important that the rules identify a schedule of the fines. That way everyone’s clear on what the potential penalties are if they’re violating the rules.
So, let’s now go to the unfortunate step of litigation, which means that you as board members have done everything you can to curb the behavior, get them to come into compliance and they still aren’t doing so. Legal action can take one of two forms. One, it could just be to collect the fine that was imposed upon them. That’s a pretty straightforward lawsuit. You’re basically explained to the court, here’s the violation and hearing process we undertook, here’s the fine that was imposed. They refused to pay it, and you’re seeking a judgment to recover that amount. The more difficult lawsuit is of the injunctive type. This is where using the architectural issue, where they’re building something in their unit or on their property that has not been approved by the board and is in violation of the governing document. This is where we’re going to ask the court to actually mandate and require that party to alter their action, or take some sort of remedial step to cure whatever violation that we’ve identified and there’s a note on here about arbitration.
This is really important to have. I mean, obviously at this point, you’re going to have a lawyer involved because boards can’t represent themselves in these types of litigation action, but your lawyer’s going to review your governing documents to see if there’s an arbitration provision in there. Often when developers are developing these properties and creating these declarations, they want to make them as developer friendly as possible, and to make it as difficult as possible for the association to ever sue them to recover any amounts for defective construction or low reserves, whatever the issues might be when a property is turned over. They’ll stick these arbitration provisions in there. And it’s important to know that they exist because that sort of removes your ability to even go to state court and it creates a whole bunch of new steps to take, to even enforce your rules and enforce your violations and that’s something that your attorney’s going to find early on, but just be aware that’s something that could exist that could kind of sidetrack or derail the next several steps I’m about to talk about in terms of what the state court process looks like.
So, the first thing that we do when we file a lawsuit is to prepare a complaint and the complaint is really nothing more than a series of numbered allegations, all factual allegations, explaining to parties, how they all relate to one another, what the governing rules might be and how those rules have been violated. The pleading stage, once we file that complaint, if it’s in Cook County, then the rules require that we allow the Cook County sheriff to serve that complaint first, or at least attempt to serve that complaint. Not coincidentally there’s also a fee associated with that that we have to pay the cook county sheriff to serve that complaint. At the end of the 30 days, because they have 30 days to do so, more likely than not, they won’t get around to serving it until near the end of that 30 days, if they are unable to serve the individual, then we will get a notification that they were unsuccessful in their service attempts. At that point, we’ll have the opportunity to hire our own process server, to go out there and independently serve the defendants. But we can’t do anything in the lawsuit until after those complaints actually have been served on the defendant.
Once the defendant has been served with the complaint, they have 30 days to file a response to the complaint. Their response could be any number of things. They could file, ideally in our scenario, they don’t file anything at all. They just sort of either don’t dispute the allegations, they understand that they’re guilty. They don’t want to deal with it and they just do nothing and at that point, the association can file something called the motion for default judgment, which is effectively just going to the judge and saying, look, they don’t dispute any of this, we should just be entitled to judgment now. And so, that’s the quickest way to get a formal court order enforcing your board’s determination that whatever the owner was doing is violating the governing document. More often than not though, what they will do is they’ll either file an answer to the complaint where they go through all of our numbered allegations and either admit or deny each of those allegations, or they could file a motion to dismiss and argue that you’re suing me in the wrong venue, or you did not get bored authority to even file this lawsuit to start, or you’re selectively enforcing your governing documents, therefore the rules aren’t even enforceable. And if they file that motion, then the association has no choice, but to respond to it and the court’s going to set a schedule by which those briefs are going to be filed.
So, the judge typically will say, all right, you have 28 days to respond, the association. The unit owner’s going to have 14 days after that to file their reply to whatever we put in our response, then the court will hear arguments based on his schedule and then once you conduct the arguments, the judge might say, okay, I’m going to take this under advisement. I’ll get back to you in 30 days. So, in the big scheme of things– So, if you think about filing your complaint on January 1st it doesn’t get served by January 30th, so we have a special process server serving it by February 15th. They take their full 30 days to respond, which takes us to March 15th and then they file a motion to dismiss, which we get time to respond to, they reply, hearing all that stuff. We’re now 45 days later, that puts us into mid-May, maybe June. So, once litigation starts, it’s largely beyond your control as the association board members and beyond the control of your attorneys to control the pace and the flow of that lawsuit. Once we filed the complaint, everything else beyond that, we’re reacting largely to what the defendants are doing, what the court’s doing.
So, this kind of reinforces, I said earlier that if there’s any way to find a resolution or to make sure that the owners understand that they’re violating these rules, if there’s any way to get them comply before actually filing a lawsuit, that’s always a better course of action because you’re going to spend a lot of attorney’s fees. You’re going to spend a lot of time, a lot of aggravation going through this litigation process and there’s no guarantee in terms of the expediency of that or what the defendants might do to throw up roadblocks, to force us to kind of zigzag, just to force them into compliance. Once you get through that initial stage where they’ve either answered the complaint or they filed their motion, then we go into the discovery phase and this is kind of harkens back to my comment that if you are going to take notes of anything during your meeting or during your hearings, it’s important to preserve all that evidence because we are going to need it at some point to substantiate our allegations. Those complaints that you received from owners who complained about these different people who are violating the rules, that’s all-relevant information, relevant documents and information that we are going to need, evidence that we’re going to need to support our claim once it does get in front of a judge.
The other side is going to have an opportunity to ask for all that information. We will have an opportunity to ask the other side for all the information they have and this is all what’s called discovery. We’re all having an opportunity to discover what evidence the other side has to either support their claim, or maybe they have information that can support our defense or our claim on our side and each side is entitled to that. So, we’ll issue what’s called interrogatories and request to produce interrogatories are really just a legal term for written questions, asking them to identify information that we need for our case, request to produce or request for them to produce actual documents that we think are relevant. Once you get through that what’s called written discovery phase, these questions and these documents, then you would move on to oral discovery, which is deposition. And usually, any individuals who are identified in the interrogatories are often going to be deposed by the defendant’s lawyer. This is another reason why going into litigation, it’s not so simple as just turning it over to your lawyers and saying, okay, let me know how we do. Unfortunately, we’re going to rely on you a lot throughout this process to make sure that our communications are getting through the entire board members and that we have enough information and testimony to support whatever evidence we need, whatever allegations we need to prove our case.
And so, some board members may have to be deposed in this process. We’ll certainly sit down with you and prepare you before that happens and we will obviously sit with you during the deposition and make sure that it’s going as smoothly and as the least intrusive way possible. But once again, once the lawsuit filed, there’s going to be lots of other involvement by the board, unfortunately more than you’d probably like. Once the discovery’s completed we’re kind of at the point where it’s either we go to trial or we file what’s called motion for summary judgment. A motion for summary judgment is effectively telling the judge, here are all the facts, the parties can’t reasonably dispute that these are the facts of the case and based on these facts alone we’re entitled to judgment just as a matter of law. Trials are an opportunity for the judge or a jury to hear testimony, to weigh the evidence and to weigh the credibility of the witnesses, to determine what the true facts are. What actually happened out there, you tell me the light was green, this person tells me the light was red, there’s a dispute. And so, trial is an opportunity for the judge or the jury to weigh the evidence and hear the testimony to determine was the light red, or was the light green.
In a motion for summary judgment, you’re basically telling the court, we don’t need to waste time with a trial. Everyone knows that the light was red. There’s no dispute that the light was red and because the light was red, you just apply the law to this fact and therefore we’re entitled to judgment as a matter of law. Let’s not waste everyone’s time with the trial. To the extent that the motion for summary judgment is denied or the court decides that no, there’s still a question as to whether the light was read or green, we are going to go to trial and that would be the final step in the litigation process. And as I said, the trial itself is going to be– it could be anywhere from a one day to a several week trial, depending on the issues. This is where all the work that’s gone into the case over the last several months, if not years, would finally open your cards, put them down the table and see what everyone has in terms of proving your case in front of a trial or in front of a judge. There would be in person testimony, although in person now kind of has different connotations to it because sometimes judges are allowing these trials to take place via zoom. It would largely depend on your jurisdiction, whether the court would have you in person or on zoom, but there’s no guarantee in terms of the time it takes for trial and there’s no guarantee in terms of the outcome of trial.
Just as some kind of parting note, I want to reiterate that as difficult as litigation is, and as costly as it can be, sometimes you really have no choice. Boards have a fiduciary obligation to enforce their governing documents and if a unit owner is very clearly violating their rules and very clearly breaching the terms of the covenant or the declaration boards sometimes don’t have a choice. It might be costly, it might be time intensive and it might be frustrating, but everyone agreed to live by these rules and for every owner who’s violating it, there’s probably many, many other owners who are not, and are looking to you as sort of the stewards of the association to make sure that they’re governing documents are being protected. So, as much as it could be a difficult and expensive adventure, oftentimes your hands are kind of tied and you don’t have much choice but to make sure that your rules are being enforced. As Kerry said, if you don’t want to enforce a rule, you shouldn’t have the rule, but if you have the rules and if you have these provisions in your declaration, they have to be enforced and they have to be enforced uniformly.
Kerry: So, on behalf of Nick and myself, thank you so much for taking some time this evening to talk with us. Our contact information is posted if you have questions. Nick, thank you for joining me tonight and thank you to everybody for coming.
Nikki: That was KSN attorneys, Kerry Bartell, and Nick Mitchell. Kerry practices condominium, townhome and homeowner association law, while Nick is a chairperson of our litigation department, where he focuses his practice on general litigation and construction defect litigation. KSN is an experienced legal resource, ready to provide you with quality advice and exceptional service. We look forward to demonstrating how we’ve earned the trust of thousands of clients over the past 35 years. If you like to reach Kerry, Nick, or anyone of Cain’s experienced attorneys, please call 855-537-0500. You can also visit ksnlaw.com and complete the contact form to send us a message. Thanks for listening.
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Please note the material contained on the KSN Podcast is for informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained on the KSN Podcast. You should not act on the information discussed on the KSN Podcast without first obtaining legal advice from an attorney duly licensed to practice law in your State. While KSN has made every effort to include up-to-date information on The KSN podcast, the law can change quickly. Accordingly, please understand that information discussed on the podcast may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed on the podcast at any time, without notice, and disclaims any liability for your use of information or statements of law discussed on the podcast, or the performance of the podcast generally. The KSN Podcast may be considered advertising in some jurisdictions under applicable law/s and/or ethical rules/regulations. © 2023 Kovitz Shifrin Nesbit, A Professional Corporation.