Securing Co-owner Compliance:  The Remedies Available to a Condominium Association

Article ©1998 by Steve Sowell


NOTE:  the state of the law has changed since this article was written; DO NOT RELY ON THE STATEMENTS OF LAW MADE IN THIS ARTICLE.

The Michigan Court of Appeals has noted that, by purchasing a unit in a condominium project, "each unit owner must give up a certain degree of freedom of choice which he might otherwise enjoy in separate, privately owned property." The limits on that freedom are contained in both the condominium documents and the Michigan Condominium Act. Eventually even the best-run condominium association will encounter a co-owner who fails or refuses to comply with the condominium documents, to the detriment of his or her neighbors or the condominium project. The well-prepared condominium association has a broad range of tools at its disposal to secure co-owner compliance. This article discusses those tools and their use.


THE LETTER

The mildest form of coercion is the violation letter. For instance, if a co-owner has a cat in violation of a "no pets" provision in the condominium bylaws, the association can send a letter advising the co-owner of the violation and requesting that the co-owner remove the cat. The old saw about honey catching more flies than vinegar applies here: except in the most extreme of circumstances, the association's initial letter, for any violation, should have a friendly tone. It should assume that the co-owner has overlooked the provision, point out its terms, suggest one or more remedies, and request co-owner compliance. The association should avoid including any threats should the co-owner fail to comply with this initial letter.Assuming that the co-owner does not comply, a second, more forceful, letter should be sent. This letter should note that the co-owner did not comply as a result of the initial letter, reiterate the provision of the documents violated, clearly state the expected response, provide a definite date by which the action must be taken, and (at this point) advise the co-owner of what action the association will take if the co-owner does not comply. While less cordial than the first letter, this letter should still maintain an even, businesslike tone.I am frequently asked whether I recommend sending third or subsequent letters. For most violations, I do not, as a co-owner who has ignored two requests is likely to ignore additional letters. One exception is delinquency in assessments; the association should send out one delinquency letter each month, until the delinquency reaches three months of assessments, at which time it should be turned over to the attorney.I am also asked whether I recommend sending either or both letters by certified mail. Again I do not, as it easy to refuse (or simply fail to pick up) a certified letter. Under the law, a letter properly addressed and with sufficient postage is presumed to have been received, so the association does not need proof that the co-owner received the letters. I do recommend typing "Address Services Requested" on the outside of the envelope below the return address. If the co-owner has filed a forwarding address, the post office will provide the association with that new address for a nominal fee and will still forward the letter to the co-owner.If letters do not obtain compliance, the association needs to take enforcement to another level.


FINES

Assuming that the association has an enabling provision in its bylaws, the association may levy fines for violations of the bylaws. Newer associations usually have a fines procedure in their condominium bylaws drafted by the developer; associations with older condominium bylaws may need to amend their documents to provide a fines procedure.While some associations have adopted a fines procedure as a regulation of the association as opposed to a bylaw amendment, a fine levied by regulation may not be enforceable. The Michigan Court of Appeals has suggested that an association may by regulation affect only relatively minor and procedural matters regarding administration of the condominium project, and it is doubtful that levying a fine would be considered "minor." On the other hand, the bylaws are recorded into the co-owner's chain of title when he purchases the unit, or he has had the capability to enter into the debate when the fines procedure is adopted.The fines procedure should provide the co-owner with some minimal "due process." Due process is a constitutional concept (the 14th amendment to the U.S. Constitution provides that "...[no] state shall deprive any person of life, liberty, or property without due process of law....") which means that a person must be given notice of the action proposed to be taken against him and an opportunity to be heard. While only governments are required to provide due process, a fines procedure which provides due process is more palatable to the affected co-owner and is much more likely to stand up in court if the co-owner decides to challenge the fine.While setting forth a complete fines procedure is really beyond the scope of this article, there are certain concepts which should be a part of a useful, effective fines procedure. The fines procedure should:

  1. define the types of violations which will be covered ("...all violations of the pool regulations...")state who has authority to levy the fine ("...the decision of the board shall be final.")state the type and/or method of notice which will be given and who will give it ("...the managing agent shall send notice by first class mail...")provide the co-owner an opportunity to dispute the charges ("...the co-owner may appear at the next scheduled board meeting to contest the charge.")
  2. state the amount of fine which will be levied ("...$25 for the first offense, $50 for the second offense...")

It is not necessary that the association provide an appeals process.The board of directors should be aware that the levying of fines is an enforcement tool, not a source of revenue for the association. While levying fines gives some teeth to the association's bylaws and rules and regulations, the association should be willing to waive the fines in appropriate, though limited, circumstances. Also, although there are no reported Michigan cases discussing the issue, courts in other states have held that fines are not collectible by the lien process.  A model fines procedure can be found here.


TERMINATION OF PRIVILEGES

A fines procedure can be adapted to apply to the suspension or termination of privileges at a condominium project. The association may wish to modify the process somewhat to eliminate a hearing for minor infractions, and/or provide that some individual has authority to impose the suspension. For instance, a lifeguard should have the right to send misbehaving children home from the pool for the day without the need for a hearing.Some associations use the termination of privileges as a collection tool for nonpayment of assessments, such as by revoking tennis court privileges to a co-owner in default. Such measures are generally acceptable, as long as they do not deprive the co-owner of the use and enjoyment of his unit. It probably is not a good idea to change the gate code to keep out delinquent co-owners. If federally backed (FHLMC) mortgage financing is important to the association, it should be aware that FHLMC guidelines will require it to reject any mortgage on a unit in a project which allows the association to deny ingress or egress to a unit upon delinquency in payment of assessments.I have been asked from time to time if the association may post the names of delinquent co-owners in a public area at the project, such as on the clubhouse bulletin board. I strongly discourage such actions, as it can lead to defamation claims ( if the posting is incorrect or is not changed promptly as assessments are paid) as well as invasion of privacy claims. The Federal Fair Debt Collection Practices Act prohibits a debt collector from posting such a list of delinquencies. Although the Association itself probably is not a debt collector under the act, a couple of courts have held that condominium assessments are debts subject to the act, and the association's attorney and managing agent are clearly debt collectors and should not be involved in such actions.


ADOPTING STANDARDS

While not necessarily a remedy, adopting standards in advance can both avoid a lot of administration and make pursuing remedies easier. For instance, the association can determine, in advance, that a co-owner wishing to install or replace the screen door at the front of his unit can install a "Model 2100 Guardsman Elite" screen door without requesting permission in advance from the board of directors. Adopting standards for such items as doors or windows and providing them to the co-owners (for example, in the newsletter) has the dual purpose of eliminating paperwork (the board does not have to review and approve each request) and setting clearly definable standards which make it obvious when the standard has been breached.


SELF-HELP

In certain circumstances, self-help may be a remedy for the association to pursue. For instance, if the co-owner has placed a "for sale by owner" sign in front of his unit in violation of a provision of the bylaws prohibiting such signs, the association may remove the sign. The association should send violation letters before using this remedy, and the final letter should clearly indicate that the self-help remedy will be used if compliance does not occur by the specified date.The association may not exercise self-help remedies if to do so will "breach the peace." If exercising the remedy will result in a public shouting match or a fist fight, or if it requires the use of any physical force against another human being, then the association should back off and pursue another remedy. Continuing in the face of determined opposition can result in the board member or agent attempting to exercise the remedy being arrested for disturbing the peace or disorderly conduct, which does not help the association's chances of securing compliance. The association should never enter inside a unit to correct violations unless it has the co-owner's permission or a court order.Self-help includes inspection of units to verify that a violation has been corrected. If, for instance, the co-owner claims to have removed an object installed in violation of the documents, most condominium documents give the association the right to inspect the unit, including the interior of the unit, to verify that the offending object has been removed. The Michigan Court of Appeals has held that such an inspection does not require a search warrant. However, if the co-owner denies access and the inspection would require the use of force, the association should back off and seek a court order.


LEGAL ACTION

If none of the remedies discussed thus far have resulted in compliance, it is time to call in the association's attorney. Once the attorney has been called in, the association should let the attorney handle the matter and stop communicating directly with the co-owner. This will avoid a lot of "he said, she said" arguments, as well as a co-owner's attempt to make an "end run" around the attorney to try to avoid payment of attorney fees. Board members and the managing agent should simply inform the co-owner that the matter is now in the hands of the attorney and the co-owner will have to contact the attorney.The association should ask its attorney to send a demand letter to the co-owner requesting compliance with the terms of the condominium documents. Since the association has presumably already sent its own letters to the co-owner, the attorney's letter will have a much more forceful tone than the association's letters. The association should not ask the attorney to send a letter to the co-owner unless the association intends to follow through with the matter. In the case of unpaid assessments and/or fines, for the attorney (or the managing agent) to send a letter demanding payment without intending to follow through with collection is another violation of the Federal Fair Debt Collection Practices Act. In other cases, requesting that the attorney send a demand letter and not following through sets a bad precedent and makes the association look weak.


FORECLOSURE

If the co-owner fails to respond to the attorney's letter and the matter concerns unpaid assessments, the attorney can file a lien against the unit and foreclose the lien if necessary. I recommend that the lien accompany the attorney's initial letter in the case of unpaid assessments, as the co-owner has made it clear that he will not be paying voluntarily. The association's last letter should make it clear that the association will request the attorney to record a lien if payment is not made by a certain deadline.The purpose of any collection action is to obtain the payment of money, preferably voluntarily, at minimum expense to the association. The collection action should be tailored for that purpose only and the association should not attempt to "make an example" of any individual co-owner in the hopes that it will scare the others into paying. By the same token, the association should consider reasonable settlement proposals and payment plans, as long as they are made in writing and are closely monitored.


INJUNCTIVE RELIEF

What about those situations where the co-owner's behavior is causing problems to the other co-owners or is causing deterioration or destruction to association property? In those cases, the association may seek an injunction from the circuit court either prohibiting or compelling certain actions.The Michigan Condominium Act specifically authorizes injunctive relief as one of the association's remedies for violation of the condominium documents. Violations of the condominium documents will usually require the court to compel the co-owner to take action (remove a car or dog, paint a door) rather than prohibit the co-owner from taking action. Where the condominium documents are sufficiently clear as to the co-owner's duties, I have not found the courts hesitant to enter an injunction requiring compliance with the condominium documents.Except for the fines procedure and termination of privileges, all of the remedies discussed in this article are available to any condominium association without the necessity of amending any documents. Knowing the options is half the battle for the association. By adopting standards and procedures in advance, by communicating those standards to the co-owners, and by using its remedies in a uniformly applied fashion at the first hint of trouble, the association can secure the benefits of condominium living for the majority of the members at minimum expense.

© Steve Sowell 2017