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Employing Enforcement Strategies with CC&Rs
BY LAURIE S. POOLE, ESQ.
Itis not unusual for board members to ask whether they can adopt a certain rule or CC&R provision. However, one of the questions that needs to be asked is whether the association will be able to enforce that new rule or provision. The ability to enforce an association’s governing documents is as important as having rules to enforce.
When thinking about enforcement, boards and managers need to remember what the goal is – gaining the member’s compliance. In furtherance of that goal, employing an enforcement strategy is key.
The first place to start is understanding the association’s scope of enforcement. Review the language in the CC&Rs to be sure the association can adopt rules covering conduct in the common area, as well as actions within the member’s separate interests. Many violations, such as noise, originate in an owner’s home. Ideally, the language in the CC&Rs should give broad authority for the board to adopt rules concerning the entire development, as well as the ability to enforce those rules.
Essential to developing an enforcement strategy is having an enforcement policy. The policy can either be part of the association’s rules and regulations, or a stand-alone document. It should not be part of the CC&Rs since the policy will contain specific information that may need to be changed from time-to-time. Being able to make changes through the rule amendment procedure without a membership vote is more efficient and cost-effective than amending the CC&Rs. Adopting or amending the enforcement policy needs to be done in conformance with Civil Code §4360, requiring that members be provided with general notice of a proposed rule change.
What should be included in the enforcement policy? Important concepts include:
HOW VIOLATIONS WILL BE REPORTED TO THE ASSOCIATION.
Typically, owners and residents report violations directly to the association. The policy should state that reported violations need to be in writing and anonymous reports will not be considered. Other methods of reporting violations can include noting violations during “walkthroughs.”
ENFORCEMENT PROCEDURES.
The procedures should include having the board or management investigate the alleged violation, sending notification to the responsible owner(s), imposing discipline, and initiating legal action. Generally, enforcement starts mildly such as sending a “courtesy notice” and increases in consequences if the member doesn’t comply. The policy should give the board flexibility to take different steps, depending on the severity of the violation. For instance, a courtesy notice may be too “tame” for violations that are more urgent in nature. Rather, a cease and desist letter from legal counsel may be a starting point for more egregious violations.
IMPOSING DISCIPLINE.
Crucial to any enforcement strategy is imposing discipline on violating members. Disciplinary measures may include monetary fines, suspending use of common facilities, or even disabling non-essential services such as cable TV. If monetary fines are going to be imposed, Civil Code §5850 requires that a schedule of the monetary penalties be provided to each member. The schedule must also be included in the annual policy statement distributed pursuant to Civil Code §5310. Monetary fines need to be effective, yet reasonable. Generally, a range of amounts for each violation (first, second, third) is a good approach, with each fine increment increasing. How about continuous or daily fines? Boards need to understand imposing fines is not a source of revenue. Rather, the objective is to gain member compliance. If a member does not change their behavior after one or two fines have been imposed, rather than continuing to apply fines, associations should consider alternate enforcement approaches, such as sending a letter from legal counsel, inviting the member to internal dispute resolution (IDR), or initiating alternative dispute resolution (ADR).
DUE PROCESS – PRIOR NOTIFICATION AND HEARING.
Civil Code §5855 requires that before disciplinary action can be imposed, including monetary charges, the member must be provided notification and an opportunity to be heard by the board. The statute states that such notice needs to be given at least 10 days before the hearing. However, if the association’s governing documents require a longer time frame, consult with legal counsel as to which time period to use.
HEARING PROCEDURES.
The enforcement policy should include the procedures for how the hearing will be held. Common questions are whether the member is entitled to see the complaint or other evidence that has been compiled against them and whether they can bring witnesses. There are differing legal opinions regarding those issues, so boards should consult with legal counsel. Addressing those matters in the enforcement policy will set expectations whatever decision is made. The board will need to notify the member of the decisions made within 15 days after the hearing.
INITIATING LEGAL PROCEDURES.
Key to an enforcement policy is knowing when to initiate legal proceedings. Once a board has exhausted fining, suspension of member privileges and other non-legal remedies, it is time to consider sending a letter from legal counsel, offering IDR and/ or ADR. Often, compliance is achieved once the member realizes legal counsel is involved. Also, since a hearing is viewed as an adversarial proceeding, sitting down with the member in an IDR meeting to express views and work in good faith to resolve a dispute can have effective results.
Effective enforcement requires governing document support and employing a strategy to reach the goal – member compliance.
Laurie S. Poole, Esq. is a managing partner of Adams|Stirling, PLC with offices in San Diego, the Inland Empire and the Desert. The majority of her practice involves interpreting and amending governing documents, advising boards on compliance matters, addressing governance and insurance issues, and enforcement of governing documents. She’s worked in the industry for 27 years.
