Rule Enforcement: Is Some Discretion Allowed?

A homeowner installs a fence that has not been approved by the Board as is required in the governing documents. The fence height complies with the standard in the community, however, the materials, or style are not. Does this sound familiar? Most likely it does, or you can think of a similar common rule violation that affects your association. When these violations occur, many Board wonder if they must strictly enforce every rule, in every instance, every time there is a violation.

The key is to use a firm, yet flexible and reasoned approach. I can hear you thinking that’s just lawyer double speak, how can a policy be firm yet flexible. The answer is by very carefully weighing the association’s options and making an informed decision.

Boards do need to be careful because in some instances a failure to enforce can spur claims of selective enforcement, favortism, or discrimination. A Board must be very careful to fully document good cause that is given by a homeowner that results in non-enforcement by the Board.

It is important for the Board to discuss the violation at an open board meeting, and examine the reasons why the Board wants to refrain from enforcing a rule in a particular situation. Doing so can protect the Board from claims by homeowners for failure to enforce the documents. The Board is protected by the business judgment rule. As long as the directors act in the honest belief that the decision will be in the best interests of the Association, or that the decision was reasonable, and it has made every effort to make an informed decision, the Board will protect itself.

There is no doubt that there are certain situations in which the Board’s discretion is greatly limited, especially in situations where an issue or a problem has been created by an owner that can potentially affect the health and safety of the other owners.

However, there are many factors that must be considered and weighed by a Board prior to mandating strict enforcement in every case. One of the largest is money. Many lawsuits that are filed cost associations a lot of money when they could potentially be avoided. Increased litigation can cast the association in a poor light with potential buyers. Some associations create reputations for being harsh and for ‘over-policing” the community. All of these can cause disharmony in the association.

It is very important that the Board communicate its policy with the owners with regard to enforcement. Generally there are two approaches, the complaint approach and the actively seek violations approach. With a complaint based approach, the Board will receive a complaint from an owner. The other approach is where the Board actively looks for violations.

With either approach the Board should discuss the issue at an open Board meeting, and once the decision is made, announce the decision at the next Board meeting with the reasons for the non-enforcement.

There is no clear line on what violations should be enforced and which shouldn’t. It’s a careful decision that the Board must diligently make and communicate to avoid any potential conflicts and to continually act in the best interests of the association.

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