House Rules Rule

Consider this scenario: a police officer lives in your co-op. He is on the bomb squad and has a bomb-sniffing dog that accompanies him on the job and lives with him at the co-op. The problem? Your house rules say “no pets allowed.” Do you evict the cop if he doesn’t get rid of the dog? What if he takes you to court? Your building’s market value will certainly not benefit by media coverage (“Hero Cop Must Part with his Best Friend, says Co-op”).

Or take another scenario: you want to ban smoking in your co-op, but don’t think you have enough support to get the residents to agree. So you avoid turning to the shareholders and pass the ban as a house rule, which only needs the approval of a majority of the board. Simple, right? Sure, simply transitory: the banning board is voted out at the next election and the ban is overturned.

Or take this final scenario: you don’t want to evict a shareholder for breaking a house rule. So, as you have many times in the past with other rule-breakers, you fine him. But here’s an unexpected development: the shareholder takes you to court and the judge agrees that the fine was invalid because fines have to be authorized by the governing documents – and yours weren’t. After the ruling, the true nightmare begins as you have to return all the illegally collected fines you’ve imposed over the last few years.

We’re talking about house rules, where the validity of fines is just one of the issues that can rear its ugly head. Pet policy, smoking rules, move-in/move-out procedures, enforcement techniques – your building runs well (or not-so-well) because of its house rules. But do you know what a “house rule” is? Here are the answers to the seven most frequently asked questions about this topic:

In general terms, the governing documents (the proprietary lease, bylaws, and certificate of incorporation in cooperatives; the declaration and bylaws in condominiums) tell you what the board can do and how far it can go in the actions it takes. The house rules are directives from the board regulating the residents’ use of apartments and common areas. This includes quality of life and safety issues; policies for sublets and rentals, apartment alterations, and pets; and move-in/move-out procedures.

“The proprietary lease contains all the substantive rights of a shareholder. It sets the rules by which he lives,” says attorney James Samson, a partner in Samson, Fink & Dubow. “For example, if the proprietary lease says no pets without the board’s consent, the board can pass a house rule that spells out what that means, when they’ll consent, and when no consent is required.”

Understandably, because they set up the specifics of day-to-day living that might change very quickly, house rules can be amended by a simple board majority. Since the governing documents deal with broader, big-picture issues, they are harder to change, usually requiring a super-majority vote from the shareholders.

One co-op shareholder reports that her board had trouble with a house rule that was very polite. “Whenever possible,” the rule said, “residents should try to use the freight elevator for pets” (emphasis added). This sort of tentative phrasing is calling out for crime and no punishment. A rule-breaker can say, “It was just not possible in this instance to use the freight elevator.” The phrases “whenever possible” and “should try” are namby-pamby.

“If you use the phrase ‘should try’ instead of ‘shall not,’ someone can slip under the house rule because it almost turns into an advisory kind of a rule as opposed to a mandated rule,” explains attorney Peter Livingston, partner in Rosen, Livingston & Cholst.

Generally speaking, if you want a controversial policy (like banning smoking) to stay in place and withstand a legal challenge, you’re better off amending the governing documents. Because such a change requires that you get the support of a solid (usually two-thirds) majority of the shareholders/unit-owners – which is harder to do and usually requires some intense persuading – it gives more validity and permanence to the change. A house rule is more easily challenged in court or changed by a new board that has a simple majority of its members opposed to the rule.

Let’s answer that question with a question. Imagine you have a shareholder who owns seventeen cats. Your board thinks that’s too many and passes a house rule limiting cat ownership to two per unit. What should the cat lady do? The answer: not a thing. That house rule was not bonafide because it runs afoul of the New York City “Pet Law,” which allows pet owners in pet-prohibited building to keep their pets – provided they can show the board (or staff) knew the animals were there and did nothing about it for 90 days. The rule of thumb: when a house rule runs counter to city, state, or federal law, the house rule always loses.

In addition, a house rule must be consistent with what’s laid out in the proprietary lease. Livingston cites a case involving pets in a Queens condominium that had language in the lease that dogs “shall not be a nuisance.” The board wanted to get rid of pets, so it passed a house rule that said, “Going forward, there shall not be any pets.” A court challenge followed and the house rule was invalidated because it ran contrary to the lease, which did not preclude pets. It simply said shareholders could not have pets that are a nuisance.

“In that particular case, they weren’t alleging that the pets were a nuisance,” Livingston explains. “They just wanted to get rid of the pets. If you’ve got something in your [condo] declaration or you’ve got something in your proprietary lease that clearly states the circumstances under which you can ban pets, you can’t contravene that as a board by simply passing a house rule.”

Boards should be reasonable, says Livingston, and take circumstances into account. “There are times when you want to overlook a certain situation,” says Livingston. “When you’ve got young kids, for example, you may have some type of policy where you can’t decorate the hall, but the kid has a birthday party. For that day or that week, there’s a cardboard construction on the door or a painting with a birthday cake and the words ‘Happy birthday’ on it, or something like that. That’s part of the joy of living in New York, and you don’t want to take that away from people, either. If somebody comes home from the war, and they have that yellow ribbon on the door, you just overlook it.”

You threaten the offender with eviction because he or she has disobeyed the rules in his or her proprietary lease. “A breach of the house rules constitutes a default under the proprietary lease,” says attorney Ron Sher, a partner in Himmelfarb & Sher. “Therefore, a violation of the house rules generally can be treated as any other breach.” In short, the co-op board can threaten to break the lease and evict the shareholder.

This may seem extreme, like using a bazooka to kill a fly, so the co-op may want to try a handful of other options. Says Livingston: “There are different levels. A friendly visit very often can be the way to go. Secondarily, it could be a letter from the management company. If that doesn’t work, you should send a letter from the attorneys citing those provisions of the governing documents which cover the type of behavior the person is engaged in.”

The board can also deny the shareholder use of amenities, such as a pool, health club, or community room; insist on mediation; or – possibly – charge fines.

This is a tricky question. Some attorneys report that boards will often set up fines that have no grounding in the governing documents. “Co-op boards think they have the right to fine,” Samson says. “They don’t, unless it’s in the proprietary lease. If the board says, ‘We’re giving ourselves the right to fine,’ they can’t do that. You have to amend the proprietary lease, and that requires a shareholder vote.”

Others agree that, if possible, co-ops should obtain the right to fine. “I do not discourage boards from imposing fines,” says attorney Abbey Goldstein, a partner in Goldstein & Greenlaw. “It is a practical way to deter violations and to enforce the rules in a manner which is less aggressive and radical than bringing an eviction proceeding.”

But be careful. Livingston notes that fines cannot be confiscatory, punitive, or arbitrary, and must be the same for every offender. Above all else, they must be reasonable. “Sometimes boards will run amok and they’ll say, ‘You left your carriage in the hall, we’ll impose a $2,500 fine,’?” says Goldstein. “Some boards are nuts, and they’ll get challenged in court.”