The following article first appeared in the Fall 2015 issue of Common Interest magazine (published by CAI - Illinois). The theme of the issue was "Association Living - Creating Your Own Family Classic."In the 19th Century Fyodor Dostoevsky novel Crime and Punishment, the protagonist Raskolnikov struggles with the moral consequences of his criminal acts. While most community association rule enforcement issues are not so dramatic, associations must both fulfill technical requirements and act reasonably when adopting and enforcing rules and regulations. The following is a summary of some of the legal and practical considerations associated with association rulemaking and rule enforcement.Rulemaking ProceduresSubsection 18.4(h) of the Illinois Condominium Property Act ("Condominium Act") provides that a condominium board has the authority to adopt and amend rules and regulations covering the details of the operation and use of the property, subject to certain procedural requirements. A condominium association must call a meeting of the unit owners for the specific purpose of discussing the proposed rules. Notice of the unit owners' meeting must contain the full text of the proposed rules and be given to the unit owners not less than 10 and not more than 30 days prior to the meeting date. Unless the condominium instruments provide otherwise, no quorum of unit owners is required at the unit owners' meeting. At a board meeting held sometime after the meeting of the unit owners, a board would then vote to adopt the rules. As a practical matter, the unit owners' meeting and the board meeting typically are scheduled consecutively on the same day. Non-condominium common interest community associations and master associations must follow the rulemaking procedures prescribed by their governing documents.Rule Development ConsiderationsFirst, the scope of the association's rulemaking authority must be considered. For condominiums, the purpose of rules is to cover the details of the operation and use of the property. While the general function of rules for all types of community associations is similar, non-condominium common interest community associations and master associations must be especially attuned to the scope of rulemaking authority conferred by their governing documents. Some governing documents for non-condominium associations expressly empower boards to adopt rules regulating the use and operation of individually-owned lots, while other governing documents only discuss the adoption of rules relating to the common areas. In the 2013 decision in the case Ripsch v. Goose Lake Association, the Illinois Appellate Court (Third District) held that a common interest community association had the implied, inherent authority to adopt rules regulating the use of common areas, even when the covenants did not expressly grant such rulemaking authority.Second, rules and regulations must be consistent with applicable legal authority. Examples of such legal authority include the Condominium Act, the Illinois General Not For Profit Corporation Act of 1986, the Illinois Common Interest Community Association Act ("CICAA"), federal, state and local fair housing laws and ordinances and applicable case law. Such legal authority also includes the association's declaration, bylaws and articles of incorporation. Rules which are inconsistent with applicable laws or other governing documents generally will be unenforceable.Third, rules must be reasonable. A well-established body of case law in Illinois and other states establishes a distinction as to how recorded covenants and rules are to be interpreted by courts. Covenants are to be presumed valid unless they are arbitrary, against public policy or violate fundamental rights, while rules are subject to judicial scrutiny as to their reasonableness. In other words, courts generally are not supposed to delve into the reasonableness of a restriction contained in the covenants, but a restriction established by rule can be invalidated if a court deems the restriction to be unreasonable.Fourth, a board should keep in mind certain practical rulemaking considerations. The overall purpose of rules is to address operational details - not to restate restrictions already contained in the covenants. Furthermore, there is no such thing as a "standard" set of association rules. Rules must be customized to suit the type of association and the individualized features and issues present at a particular property. Associations that "borrow" rules drafted for other properties in most cases ultimately find that such a shortcut was an irresponsible choice. In addition, the overall breadth of the rules should be considered. A board should only adopt those rules it intends to enforce, and an unnecessarily extensive set of rules overregulating resident behavior can promote homeowner non-compliance or create a negative perception of the association within the community. In preparing rules, a primary objective should be to draft language which is specific and precise enough to be legally enforceable but at the same time not overly wordy or punitive in tone. An experienced community association attorney should be well equipped to assist in the drafting of rules which achieve this objective.Rule Enforcement ProceduresSubsection 18.4(l) of the Condominium Act authorizes a condominium board to impose reasonable fines against a unit owner for violation of the declaration, bylaws or rules and regulations, so long as the association first provides the unit owner with notice and an opportunity for a violation hearing. Subsection 18.5(c)(7) of the Condominium Act states that the same procedure is required of master associations, and Subsection 1-30(g) of CICAA provides that this procedure applies to associations subject to that statute. Regardless of the type of association, care must be taken to check the governing documents to determine whether there are additional violation procedures which must be followed. For example, enforcement provisions in association rules often prescribe certain time frames and forms to be used in connection with violation hearings and a schedule of fines for violations. While violation hearings may (and typically should) be conducted at portions of board meetings held in closed session, final decisions regarding violations must be voted upon at open portions of board meetings. It is a good practice to notify unit owners regarding the disposition of violation hearings via a ruling on violation report or similar form.The Importance of ReasonablenessAlthough perhaps an obvious point to community association industry professionals, it is indisputably essential that a community association board act reasonably. Adherence to this principle can be pivotal in the context of rulemaking and rule enforcement. Simply put, if a homeowner challenges an unreasonable rule, there will not be a strong likelihood of a successful outcome for the association in court. Similarly, excessive fines are disfavored by judges. Fines should be consistent with any fine schedule which has been adopted by the association and should be commensurate with the nature, scope and frequency of the violations. If a violation relates to actions which constitute a legitimate threat to the safety of residents, the physical integrity of the building or the quality of life within the community, swift, decisive enforcement action usually is appropriate and in most cases will be upheld if challenged. Conversely, inordinate fines for single, minor infractions will be difficult to collect if challenged, even when the association has obtained skilled, vigorous legal representation. Of course, rules should be applied in a uniform, consistent and non-discriminatory manner. If widespread sentiment within the community disfavors a particular restriction that is non-essential to day-to-day operations or legal compliance, the board should consider amending the governing documents to modify or delete the restriction. Decisions regarding these issues require that boards evaluate existing rules from time to time and at all times employ reasonable business judgment, as well as simple common sense.ConclusionLike the character Raskolnikov, association homeowners can and should be held responsible for their transgressions. However, community associations also must uphold their obligation to comply with rulemaking and enforcement procedures established in governing documents and applicable law. Ultimately, those boards which adopt reasonable restrictions through rules and apply the rules in a reasonable manner will have the greatest likelihood of achieving smooth association operations and minimizing avoidable disputes with homeowners.
