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Our co-op, located in Nassau County, recently revised the House Rules providing a categorically aligned table of contents and indicating fines for each violation. The board relied on house rules from other co-ops located in Nassau County along with input from the managing agent and co-op attorney to ensure compliance with the proprietary lease and any other regulations effecting the co-op. We have recently learned that courts have ruled in favor of shareholders when fines for house rule violations have been assessed. Can you discuss this issue?
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Thanks so much JG. That's what we have heard making enforcement of noise and other issues challenging.
@HabitatMag it would be great to hear from the experts!
We have had no issues with fines. No one has ever challenged them in court, but we have been consistent with their application.
For us, renovations are the biggest reasons for penalties because illegal renovations (done without submitting proper NYC issued licenses, insurance policies, and written details about the renovations) can jeopardize the safety of all residents.
We've told every shareholder about our rules so there's no miscommunication. It's worked out fine for us (no pun intended)
My original comments were addressing the original question regarding how courts respond to fines. We also have house rules and we do fine mostly for pet rule violations, failure to recycle, and we charge late fees as a % for maintenance and other charges not paid by the due dates. We require any planned alterations to be identified in writing in advance, contractors are required to obtain necessary permits, we verify contractor licenses and insurance as well and obtain a security deposit for cleaning and possible building damage.
I am also not an attorney. I've not heard anything about courts throwing out fines. I would think that the courts would be guided by the Business Judgment Rule unless the fine (or any other board action) violated any of the Co-op's governing documents or governmental regulation or law.
Best to check with your board's attorney for a more definitive answer.
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I'm NOT an attorney, so I'm not completely fluent in the law and court decisions.
However, as a board member for many years, what I have heard from other board members, managing agents, etc. is that you can charge fines but that most courts will throw them out if it gets that far. Unless there is a financial harm to the coop, such as receiving tickets for failure to recycle, building dept. violations for improperly installed a/c's or items blocking exits or on fire escapes, etc. you're not likely to collect any fines levied. Will a shareholder take you to court? Depends on the person and how much $$ is involved. And then you wind up with your own legal fees, which you can also try to pass on to them....
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