Rule Making and Enforcement Getting It Right

1. Rule Making and Enforcement Getting It Right • This course is approved by the National Board of Certification for Community Association Managers (NBC-CAM) to fulfill continuing education requirements for the CMCA® certification. www.nbccam.org.

2. Each problem that I solved became a rule which served afterwards to solve other problems. Rene Descartes

3. Why Make Rules? Preserve or enhance property values Promote harmony within the community Protect member freedom and safety

4. Rule-Making Authority Governing documents Statutes

5. Rule-Making AuthorityVirginia Property Owners’ Association Act Section 55-513 provides that the board of directors has the power to establish, adopt, and enforce rules and regulations with respect to the common areas and such other areas of responsibility assigned to the association in the declaration, except where expressly reserved to the members.

6. Rule-Making AuthorityVirginia Condominium Act The Virginia Condominium Act does not address the authority of the executive organ (board of directors) to adopt rules.

7. Rule-Making AuthorityVirginia Condominium Act (con’t.) But, Section 55-79.73B of the Virginia Condominium Act requires the bylaws to specify the powers and responsibilities of the board. So, a review of the bylaws is critical to confirm board authority.

8. Association Rules are Subject to Law • Federal laws and regulations – i.e.: • Fair Housing Act • Telecommunications Act of 1996 • Freedom to Display the American Flag • Act of 2005 • State statutes • Local ordinances

9. Developing RulesChecklist of Things to Consider • Does the Board have authority to adopt rule? • Resolution or amendment needed? • Is the rule needed? • Does the rule address a current problem? • Does the rule create new problems? • Does the rule make sense?

10. Developing RulesChecklist of Things to Consider (cont’d) • Is compliance relatively easy? • Is compliance possible? • Is the rule acceptable to residents? • Is the rule enforceable? • Is the rule the least restrictive alternative? • Does the rule achieve the desired results?

11. Putting Rules Into Practice What Does It Mean to be Reasonable? Is the Rule Really Necessary? Rule Drafting Adopting New Rules Enforcement

12. Call them rules or call them limits, good ones, I believe have this in common: They serve reasonable purposes … Fred Rogers (Mister Rogers)

13. What Does It Mean to Be Reasonable? • A reasonable rule rationally and directly relates to an identified problem or concern. • The rule should be drafted to address that problem or concern. • The rule should be logical and specific enough to cover what is necessary, but not too broad.

14. Standards of Reasonable Rules • Logical • Fair • Relevant • Enforceable • Rational • Sensible

15. Is a Rule Really Necessary? How many residents have complained about the problem? • 0 = Rule may not be necessary. • 1 = Talk with residents; is it an isolated issue or one that requires Board attention? • 2-5 = Is issue reoccurring or ongoing? Calendar issue for review in 3-6 months. • 5-10 = Appoint committee to investigate and develop recommendation. • 10+ = Intervene immediately; move forward to enact rule.

16. Is a Rule Really Necessary? We need a rule, but do we? • Is there an existing rule not being enforced? • Are the governing document restrictions sufficient? • Is this issue regulated by someone else (county, city, state)?

17. Civilization had too many rules for me, so I did my best to re-write them. Bill Cosby

18. Drafting RulesThe Process • Identify the problem • Recognize the need for the rule • Research enabling laws, association governing documents, and previous association actions • Prepare proposed rule

19. Drafting RulesThe Players • Board • Committee • Management • Legal Counsel

20. Drafting RulesComponents of a Good Rule Transparency Less is more Easy to comply with Efficient Enforceable Flexible

21. Drafting RulesTips on How to Draft a Good Rules • State the rule in plain language • State the rule positively (eliminate the culture of “no”) • Include the reason for the rule • Explain the consequences for non-compliance • Do not be too specific or too broad

22. What causes [people] to rebel is not the assertion of authority, but the arbitrary use of power, with little explanation of the rules and no involvement in decision-making Laurence Steinberg

23. Adopting New Rules The rule adoption process may be as important as the rule itself.

24. Adopting New RulesSummary of the Process • Draft proposed rule • Propose rule to community • Obtain public comment • Listen to the community • Finalize rule • Adopt officially • Keep a record of the steps taken to adopt or enact the rule • Publish the rule • Periodically review

25. Adopting New RulesGetting the Word Out – Prior to Adoption • Newsletter • Web site • Bulletin board • Special distribution • Town-hall style meeting • Interactive web chat

26. Educating Residents About Adopted Rules • Resale packages • Association handbooks • New resident orientations • Web site • Bulletin boards • Signs • Newsletter The best rules in the world won’t do the association any good if the residents don’t know about them!

27. Adopting New Rules Flowchart By committee Issue presented by board By homeowners By management Board determines a rule is needed Input from management and legal counsel Issue referred to committee to develop rule Board develops rule Newsletter Town meeting Website Public hearing on proposed rule Proposed rule published for comment Interactive web chat Community bulletin board Member forum at board meeting Special distribution Rule finalized Rule adopted by board at meeting Final, adopted and published

28. Seeing that all residents comply with the rules is vital to the integrity of an association and has a direct impact on preserving restrictions. Facilitating compliance requires common sense, creativity, patience, flexibility, and consistency. Lucia Anna “Pia” Trigiani

29. Common-Sense Approaches to Voluntary Compliance • Educate and notify • Gain consensus • Review rules periodically • Act promptly • Be reasonable with rules and consequences • Give time to comply • Provide clear information and guidelines • Be consistent and uniform • Be flexible

30. Who Enforces the Rules? Varying roles : • Board • Committee • Manager • Legal counsel • Local government • Neighbor-to-neighbor disputes

31. The Seven Deadly Sins of Enforcement • Regulating the personal lives of residents • Giving into political pressure • Going to extremes • Imposing harsh consequences for small infractions • Failing to make exceptions in exceptional circumstances • Acting on anonymous, unverified, or unsubstantiated complaints • Failing to be flexible, creative, and reasonable

32. Identifying and Verifying Rule Violations • Before following up on a problem with the rules, make sure there really is a problem. • Gather the facts • Conduct periodic physical inspections • Resident input • Verify complaints

33. Due Process Procedure Written Complaint Preliminary Investigation (Managing Agent or Covenants Committee Member) Possible Violation No Violation Covenants Committee determines Disposition Letter to Owner Letter should include Complaint, Notice of Hearing and Notice of Defense and be hand-delivered or mailed by certified mail, return receipt requested. Letter to Complainant Violation Continues Cease and Desist Request – Can be included with letter to owner 14 Days (Minimum) Discovery (upon request) Hearing Monetary Change Suspend Services Refer for Legal Action No Violation Hearing result mailed or hand-delivered within 7 days of hearing Informal Request

34. Do’s and Don’ts of Conducting a Hearing The Do’s: • Keep it simple and informal • State the case against the resident • Let the resident respond in his or her own words • Listen carefully to the resident’s explanation • Require complainants to attend the hearing • Obtain compliance

35. Do’s and Don’ts of Conducting a Hearing The Don’ts: • Use a court-like setting • Confront or cross-examine the resident • Engage in an argument • Ask questions unless you need clarification • Act on anonymous complaints that place the association in the role of the accuser • Inflict punishment

36. Consequences • Monetary • Suspending privileges • Suspending the right to vote • Self-help • Unacceptable consequences

37. Using Legal Means to Achieve Compliance • Alternative Dispute Resolution • Mediation • Arbitration • Judicial System • As a last resort, the association may have to take legal action against residents to get them to comply with rules.

38. Rule Making and Enforcement Getting It Right