RULES AND REGULATIONS:
HOW ARE THEY CREATED? HOW ARE THEY ENFORCED?

I. What are they?

While the adoption of rules and regulations is not required of any community association in Illinois, most find it advantageous to do so. As compared to the declaration, which creates/establishes the condominium or common interest community, and the bylaws, which deal primarily with the obligations and duties of the board and governance of the community, the rules and regulations provide an opportunity to govern the details, operation and day-to-day living at the entire property.

II. How do rules and regulations differ from the declaration and bylaws?

A. Declaration

With respect to condominium associations, Section 4 of the Illinois Condominium Property Act (the “ICPA”) requires that certain provisions be included in each condominium declaration. Some of these provisions are:

a. the legal description of the property;
b. legal description of each unit;
c. the name of the condominium association;
d. the name of the city and county in which the condominium is located;
e. the percentage of ownership in the common elements assigned to each unit, and;
f. a description of the common and limited common elements. (765 ILCS 605/4)

The declaration for each an association must also be recorded in the county in which the community is located. The recording of the declaration informs the public that the common interest community has been created and that all property within the community is subject to its provisions, covenants and restrictions.

B. Bylaws.

The Illinois Condominium Property Act sets forth certain provisions that must be included in each set of bylaws for condominium associations. Some of these provisions are:

a. the procedures for the election of a board of managers;
b. the powers and duties of the board;
c. the mechanism for removal of board members;
d. notice requirements to the owners regarding adoption of the association’s annual budget;
e. the mechanism for filling vacancies on the board;
f. maintenance, repair and replacement of the common elements and the method of payment therefore, and;
g. the mechanism for calling special meetings

The bylaws for an association prescribe the operations and dealings of the board, which is the governing authority for the community. The bylaws also play an important role by establishing the rules for payments made in conjunction with the maintenance, repair and replacement of the common elements.

C. Rules and Regulations.

Unlike the declaration and bylaws, an association’s rules and regulations are not required to include any particular provisions. As stated in the introduction, there is no requirement that an association, be it condominium, townhome or other, adopt rules and regulations at all. But there are a number of day-to-day concerns of individual owners, and the community as a whole, that are not typically included in declarations and/or bylaws and must therefore be addressed and codified in a separate document. That document is a set of rules and regulations.

III. What types of provisions are appropriate for inclusion in a set of rules and regulations?

The specific needs and concerns of a community truly dictate what provisions would be appropriately included in a set of rules and regulations. For illustrative purposes, the following areas of concern are routinely addressed by way of rule:

A. parking;
B. storage of personal items;
C. exterior appearance of units/homes (architectural controls);
D. disposal of refuse;
E. use and enjoyment of common areas;
F. appearance and use of limited common areas;
G. landscaping on individual lots;
H. use and storage of play equipment;
I. pets, and;
J. satellite dishes/over-the-air reception devices.

IV. Procedures and considerations for creating, adopting and enforcing rules and regulations.

A. Creation.

One of the first questions a community should ask, and answer, prior to adopting certain rules is whether or not the proposed rule is necessary. If the item of concern is already addressed in either the association’s declaration or bylaws, the additional rule may be superfluous. Further, if the declaration and/or bylaws specifically address the issue at hand, the association may not change the language contained in the declaration and/or bylaws by adopting a rule. Any rule that is contrary or in conflict with a similar provision in the declaration and/or bylaws will be invalid and unenforceable. The only way to modify, alter or overturn a provision in the declaration and/or bylaws is to amend that specific document. The declaration and/or bylaws may not be amended, modified or rescinded by passage of a rule. If, however, the declaration and/or bylaws contain no provisions addressing the association’s specific concern, adopting a rule to govern the desired conduct is appropriate. Lastly, the rule adopted by the community may not conflict with statutory law.

Other than determining whether a proposed rule conflicts with the law or the association’s declaration and/or bylaws, the most important consideration when drafting a rule is to avoid vagueness. If an owner does not know what he or she is permitted or prohibited from doing, the association will have a difficult time enforcing the rule. Therefore, all rules should be drafted as narrowly as possible to avoid any “gray areas” or confusion.

B. Adoption.

For common interest communities, there are no specific statutory procedures to be followed for adopting rules and regulations. For those communities, the declaration and bylaws must be consulted to determine the appropriate process. Should the governing documents be silent, the discussion below with respect to condominium associations and the procedures to be employed would be appropriate for all such communities. The procedures for adoption are significant as if an owner challenges a rule, a court will be called upon to determine: 1) whether the rule is enforceable and 2) whether the owner violated the rule. The association must follow its own procedures established by its governing documents or, for condominium associations, those procedures established by the ICPA. Should those procedures not be followed, then the rule is not likely to be enforceable. Attention to procedure is of critical importance to assure the enforceability of an association’s rules.

For a condominium association, section 18.4 of the ICPA governs the procedures condominium associations must employ when seeking to adopt or amend rules and regulations. First, once the board has developed the rule or rules it seeks to adopt, the same should be prepared in written form, suitable for distribution to the owners. Section 18.4(h) of the ICPA requires that all owners be given the full text of the proposed rules along with the notice of the meeting at which discussion of the rules will take place. Notice of such a meeting, which must include a copy of the full text of the proposed rule or rules, is to be delivered to the owners not more than 30 and not less than 10 days prior to its scheduled date. Voting on whether to adopt or amend rules and regulations is within the specific purview of the board. Once the meeting to discuss the rules has been held, the board, by majority vote, will determine whether the rules are adopted.

C. Enforcement.

The two concepts that all communities seeking to enforce its rules and regulations must be cognizant of are uniformity and reasonableness. It is imperative that an association, when enforcing a specific rule, does so equally and without prejudice as to all owners. This is true whether an owner is delinquent in his or her assessment payments, is a chronic violator of the rules, or is one of your friends. All owners must be viewed and treated the same when evaluating a violation of the rules and regulations.

As for reasonableness, this is a difficult concept to define. How can a board make a determination as to whether a rule or regulation is reasonable? Obviously, there can be a myriad of opinions as to what rules an association should enact. Since a true and complete consensus on most rules is most likely unattainable, finding some common ground is the goal. If the association can develop a rule or set of rules that a majority of the owners can live with, while perhaps not agreeing with the specifics of each rule, that association is probably acting “reasonably.” When an association’s rules and regulations reflect that certain compromises and concessions concerning personal tastes and preferences must be made when living in a common interest community, reasonableness has probably been achieved.

a. Notices of violation.

It may seem obvious, but it is important to remember that an owner cannot be determined to have violated a rule without first being notified of the violation. While no specific form of notice is required, the owner should be informed of the rule he or she has allegedly violated, along with the time, date and location of the violation. The notice should also set forth whether the alleged violation is the first, second, etc. occurrence and the fine that could be levied in the event the board determines that the violation did in fact occur. The notice should also afford the owner an opportunity to request a hearing with the board. The association can handle this in a couple of different ways. First, the notice can set forth a specific date and time at which the owner is welcome to appear before the board and present facts supporting her contention that the violation did not occur or why any fine to be levied in conjunction with the violation is inappropriate. Alternatively, the association can merely inform the owner that he or she has the right to request a hearing before the board by notifying the association in writing of the request. As my discussion below will establish, the failure to provide an owner the opportunity for a hearing (i.e. some form of due process) prior to levying a fine could invalidate any such fine levied by the association. Section 18.4 (l) of the ICPA and Section 1-30 (g) of the CICAA require an association provide the owner with an opportunity to be heard. This means the hearing (or at least the opportunity) must come before the fine.

b. Hearing.

Once again, there is no set method for conducting hearings on violations of the rules and regulations. Minimally, the owner should be afforded an opportunity to tell his or her side of the story to the board. The owner should also be allowed to present witnesses on his or her behalf. There is no requirement that the person who reported the violation be present at the hearing or that the owner be provided an opportunity to question the reporting witness. Once the owner has presented his or her side of the story, no further process is required prior to the board making its ruling. Please note that Section 18.5(c)(4) of the ICPA and Section 1-40(b)(5) of the CICAA allow the board to conduct hearings on violations of the rules and regulations in closed, executive session. If the board conducts the hearing in executive session, the board must re-convene to the open portion of the meeting for voting on the alleged violation and fine.

Following the board’s determination, a letter should be sent to the owner setting forth the ruling, what fine (if any) has been levied against the owner’s account and if a fine has been levied, the amount of time the owner has to pay the fine before it is considered late.

c. Fines.

As indicated by the discussion above, the ICPA and the CICAA provide associations with the ability to levy fines against owners who fail to abide by the rules and regulations. Any fines so levied will be added to and become part of the owner’s common expense account with the association. In order for fines to be considered valid and levied properly, the consequences for failing to abide by the rules and regulations must be specifically spelled out. Failure to put the owners on notice that a violation of the rules and regulations may result in a monetary fine could result in the association’s inability to collect the fine.

Courts are generally reluctant to award substantial amounts to associations as a result of owner violations of the rules or other governing documents. Therefore, while a board may think that a $500.00 fine will compel owners to clean up after their pets, in all likelihood, if the owner does not pay and the association takes the owner to court, the fine will not be upheld. Simply put, fines are acceptable, but the amount of the fine cannot be greatly disproportionate to the offense and damage to the association/owners resulting therefrom. Acceptable fine structures usually start with either a written warning or a small fine (i.e. $25.00) upon the finding of a first violation. From the first fine forward, the association may adopt a graduated scale of fines for subsequent violations (i.e. $50.00 for the second violation, $100.00 for the third violation and $100.00 for each such subsequent violation of the same rule). Should an owner fail to pay any fines properly levied, the association may pursue the unpaid fines as it would unpaid assessments. Most governing documents also allow an association to recover the attorney’s fees and court costs it incurs in pursuing such an action.