How to Handle Rule Breakers in Your Association

1. How to Handle Rule Breakers in Your Association Julie Balestreri, CMCA, CAMP BPM Gregory B. Coxey Vial Fotheringham LLP

2. 1 IN 6 AMERICANS LIVE IN A HOMEOWNERS ASSOCIATION

3. Overview • Understanding the Governing Documents and Laws that Regulate Conduct in your Association: • Hierarchy of Governing Documents • Interplay with State and Federal Law • Adopting Effective Rules and Regulations: • What does it take to adopt a rule? • Common Rules • Enforcement: What do we do when members of our Association break the rules? • Fines • Termination of Utility Services • Litigation and Dispute Resolution

5. Interplay Between Governing Documents, State and Federal Laws • Condominiums – ORS Chapter 100 • Planned Communities – ORS Chapter 94 • Nonprofit Corporation – ORS Chapter 65 • Owners MUST comply with Governing Documents: ORS 100.545, ORS 94.777 • Other State Laws: • Adult Foster Care Facilities • Towing Vehicles • Federal Law: • Fair Housing Act, Americans With Disabilities Act, OTARD, FLAG Act • Municipal/County Law

6. Adopting Rules • Process: It takes a majority of the Board voting in favor of the rule in an open meeting, if the meeting was properly noticed. • ORS 100.405(4)(a), ORS 94.630(1)(a) • Rules can never conflict with other governing documents in the hierarchy; to the extent they do, they are null and void. • Purpose: adopt new policies and procedures, interpret ambiguities in existing documents, and formalize existing policies. • A rule becomes effective after it has been delivered or mailed to every member of the Association at their address in the records of the Association.

7. What Sorts of Rules Should My Association Adopt? • Collection Resolution • Enforcement Resolution • Financial Penalties Resolution/Fines Resolution • House Rules (usually condominiums) • Architectural Review Resolution • Architectural Manual/Guidelines • Towing Resolutions • Pet Resolutions • Insurance Deductible Resolutions • Many, many more…

8. What Sorts of Rules Should My Association Adopt? • Guiding Principles for Rules Adoption and Enforcement: • Fairness • Uniformity • Consistency • Notice • Greg’s friendly suggestions: • Never adopt a rule that you cannot enforce • Never adopt a rule that doesn’t pass the “smell test” • Never try to enforce a rule retroactively

9. Are your community rules working? • Owners are following the rules voluntarily • Penalties fit the “crime” • Rules deemed reasonable by all • All Rules are timely and equally enforced • Rules are reviewed yearly

10. Two types of rule breakers • Inadvertent Rule Breaker • Persistent Rule Breaker

11. Enforcement Tools: What do we do when members violate the rules? • Neighborly Resolutions • Levying Fines • Termination of Utility, Recreational and Facility Services • Self Help • Legal Action: • Injunctive Relief • Specific Performance • Damages

12. Fining is the most common recourse for enforcing the rules, but its the most problematic

13. Enforcement Tools: Fines • Statute • ORS 94.630(1)(n) • ORS 100.405(4)(k) • “Reasonable” • Must be pursuant to a “fine schedule” and must be delivered to each owner • Must give written notice to the offending owner • Opportunity to Cure

14. Play Mr. Nice Guy

15. First Violation Letter • Neighborly and Friendly • Inform them of issue • Site the governing documents • Give reasonable time to correct • Provide them with contact information I

16. 2nd Violation Letter • Keep same tone as in first letter • Clear and Concise explain compliance has not been achieved • Ensure them that you know they want to be in keeping with the rules • Continued non-compliance could result in fine • Provide final date compliance must be achieved

17. 3rd Violation Letter • Fine letter-failure to comply with rules • Send certified • Right to be heard prior to applying fine • Hearing should not be just a procedure for weighing testimony and evidence but provides owner with time to present legitimate grievances or reasonable requests

18. Hearing • Hearing should be “open” like a board meeting: • Quorum of directors present • Organized in a professional manner • Board should explain the purpose of the hearing • Any interested owner, including the offending owner, should have the opportunity to speak and present evidence (witnesses, documents, etc.) • Secretary should keep detailed minutes • Remember, “Notice and an Opportunity to be Heard”

19. Consider waiving the fine

20. Termination of Utility, Recreational and Facility Services • Statutes: • ORS 94.630(1)(m) • ORS 100.405(4)(L) • Most commonly used against owners who fail to pay assessments • Must first adopt rules regarding termination (similar to schedule of fines) • Consult and Attorney

21. Self-Help • Governing documents: “Right of entry” to “abate violations”: • Broken Water Pipes • Leaky Washing Machine Hose • “Fire, Blood or Flood” • Unless it is a true emergency situation, the Association should seek a court order granting it authority to take protective action.

22. Legal Action • Board has a duty to ensure compliance with CCRs, Bylaws, Rules and Regulations. • Remedy of last resort after attempts at informal remedies, written notice, fines, etc. • Injunctive Relief, money damages or some combination • Prevailing Party Attorney Fees: • ORS 94.630(1)(n); ORS 97.719 • ORS 100.405(4)(k); ORS 100.470

23. Mandatory Dispute Resolution • Mandatory means Mandatory: • ORS 94.630(4) • ORS 100.405(11) • Before an owner or association may initiate a lawsuit, the initiating party must offer to use a dispute resolution program available within the county. • Exception: Irreparable Harm • Non-initiating party (defendant)10 days to accept the offer. • If dispute resolution is not completed within 30 days, the initiating party (plaintiff) may commence litigation.

24. Communicate, Communicate, Communicate

25. Proper enforcement creates fairness and equity in the community!

26. Questions?