This is a very interesting topic. Our coop board asked the shareholders if they wanted to allow for fines -- guess what they replied. But without fines there seems to be no teeth in the rules which, as you said, is needed when they are neglected over & over again. My guess is that the fines would be either added in the monthly maintenance bill (such as a late fee is), or a separate billing. They are allowed by law. Thank you for asking this question.

Fines are revenue and teeth for compliance. We imposed a fine for not having insurance coverage (and we were very careful to state that it was a fine and not insurance on their behalf). It brought in $3k last year at $250 each. Just make sure you have Prop. Lease coverage.

Can this really be done? Any issues with New York State Insurance Laws?

Hi Helen,

No issues that I have heard of: we state clearly that we are not buying insurance for them but that this is a fine for non-compliance of Co-op House Rules (and/or Proprietary Lease provisions). More importantly than the income is the compliance we do get from those who might need a potential fine as a reminder to renew their insurance.

If fines are written into House Rules, they should be adhered to. Our House Rules have fines for various issues, this is acceptable. No one wants to be hit in the pocket, this is a way to control issues and/or rules from being broken. Most of us are in multi-dwellings therefore what one does can affect all S/H's. There should be some control.

In response, there have been no additions, changes to House Rules and we were not made aware. Only notices sent out that there would be a fine for this and a fine for that. Nothing saying that the House Rules or Prop Leases were changed. Is this the same thing? Thanks.

Fines don't need to be amended to the property lease or included in the house rules.
Proper and timely notification of all tenants is enough.
But before a fine is issued, there has to be letters of warning that this or that is a violation and urging the tenant to correct the problem.

Fines are only effective if you apply to same rules to all. I know of a building that sent out memos informing/reminding shareholders that when taking your dog outside to use the service elevator and exit through the service entrance otherwise they would be fined. The biggest violators were the board members with their pets. To add insult to injury they asked the staff to report violators and remind them of the rules.
The policy as you can tell was a complete failure

Again, despite what you may hear on this board or elsewhere, it doesn't matter whether the House Rules were changed. The fine is unenforceable unless the Proprietary Lease was amended by a shareholder vote. Check out this article from Habitat:

http://www.habitatmag.com/publication_content/habitat_s_purchasing_primer_news_for_new_buyers/house_rules

"Every now and then, however, a cooperative board tries to sneak in a requirement [in the House Rules] that doesn't belong there. The most notorious is one concerning fines for each violation. ... 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."

In practice, boards impose fines without proper authority all the time and they are rarely challenged. Who's going to take a coop to court over a $50 fine?

Thank you very much. I feel so much better. Now I know what to do. You have been very helpful & I cannot thank you enough :)

Assuming that your House Rules may be changed by the board without a shareholder vote -- which is the typical case -- then any fines you add to the House Rules will be unenforceable. A fine is a material change to the Proprietary Lease, and must be approved by a shareholder vote, not merely a board vote. (Ask Stuart Saft if you don't believe me.)

Fines are enforceable, it is not a "material" change or amendment to the Proprietary Lease that would require S/H approval. Often, the only way of insuring adherence to reasonable Rules and Regulations, is a reasonable fine.

We voted in a fine for breach/violation of any house rules. This was added to the house rules as a new rule. Our attorney told us we had to do it this way. SHs were notified of it by letter with a revised/new house rules page on which it was incorporated.

If someone violates a rule, we advise him of it in writing and suggest he read the house rules if he hasn't lately. If he violates the same rule a 3rd time, we add the fine to his monthly billing statement.

Our fine is $200. We haven't had to charge it often but when we have, SHs paid it. If they didn't, what we'd do is leave it on their account and add the late fee (once) we charge for any unpaid account balance if it wasn't paid the month after it was charged. It would sit there as a lien and have to be paid eventually when the SH sells.

As I said, our SHs have paid the fine in all cases so far so it hasn't been an issue for us. Since our fine is rather steep, we've also had a lot fewer violations of rules.

Just have the co-op’s attorney send a letter to the effect:

“Based on (event) you are in breach of the fiduciary lease. This is not the first such occurrence. If there is another such incident within “nn” month we will take steps to terminate your proprietary lease and notify your mortgage holder.”

Or something similar.