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Authority for fines must come from LeaseJul 07, 2009


Our lawyer has told us that the authority to impose a fine for violating the House Rules must come from the Proprietary Lease. A monetary fine is a material term of the Lease, and such terms can only be changed by a supermajority vote of the shareholders, not by the Board acting unilaterally. So you can put a monetary fine in the House Rules, but unless the Board has expressly been given the authority to impose such a fine in the Proprietary Lease, it won't hold up in court.

Also see this Habitat article:
http://www.habitatmag.com/publication_content/habitat_s_purchasing_primer_news_for_new_buyers/house_rules

"The rule of thumb is that boards cannot impose financial obligations on shareholders in house rules. If they want to do so, the financial obligation must be in the lease."

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