He Said, She Said – The Board as Judge and Jury | Lerch, Early & Brewer

This article originally appeared in the November 2023 edition of Quorum.

THE SCENE

You wake up on Monday morning to find 53 unread e-mails in your inbox. Pasha from unit 101 has written extensively to complain about his neighbor in unit 102 incessantly smoking this past weekend. Pasha says that the smell is unbearable and has permeated through his closet and made his clothes smell of cigarette and marijuana smoke. He absolutely hates the smell and is worried about inhaling second-hand smoke. In other e-mails, Jordan from unit 1005 has given you a detailed timeline of every sound she has heard from the unit above hers in the past 24 hours- at 1:02 a.m., music was being blasted; at 5:40 a.m., dumbbells were being dropped on the floor; at 2:27 p.m. there was loud stomping; at 6:54 p.m. there was a screaming match. Jordan says that she hasn’t been able to sleep for weeks. She has tried to talk to her upstairs neighbors about the loud noise, but the neighbors say they own their unit and can do whatever they want in the privacy of their home. Pasha and Jordan want to know what the board of directors is going to do about their complaints and concerns. Let’s dive into the scenarios.

THE BACKDROP

Living in a common ownership community often means that you live in close proximity to neighbors and share certain areas. Sometimes, people have valid complaints about others; other times, it is a simple neighbor-to-neighbor dispute or dislike of one another. So, when and how should the board get involved?

In limited situations, board involvement is necessary and required to end discriminatory conduct under the federal Fair Housing Act. In most situations, though, the decision to take action or not to take action falls within the board’s discretion and business judgment. In other words, as long as the board acts in good faith, its decision will not be second-guessed by a court.

THE PLOT

Generally, when receiving a complaint, the board should:

  1. Determine if the alleged actions and behavior violate the governing documents. The board of directors has an obligation to enforce the association’s governing documents. Preliminarily, when the board receives a complaint, it should consider whether the alleged actions and behavior rise to the level of violating any of the association’s governing documents (think: the declaration, bylaws, occupancy agreement, rules).
  2. If the reported actions and behavior do violate a provision of the governing documents, then the board may decide to initiate the due process procedure prescribed in its governing documents and/or by statute, which typically includes sending the alleged violator a notice of violation and providing an opportunity for a hearing.
  3. If the reported actions and behavior do not violate a provision of the governing documents, then the board may decide there is no basis to take enforcement action and encourage the residents to reach an amicable resolution among themselves.
  4. If there is insufficient information to determine whether the alleged actions and behavior violate the governing documents, then the board may decide to withhold taking action until it obtains additional information or evidence.
  5. Always make a decision. Ultimately, and most importantly, when the board receives a complaint (or many complaints in the case of Pasha and Jordan), it needs to make a decision: a decision to take action, not to take action, or to seek additional information. The board also needs to include its decision (whatever it may be) in its meeting minutes so that there is written record of the board’s consideration of the complaint, and communicate with the complaining party about its decision and course of action.
  6. The board shouldn’t simply ignore the complaint of informally handle it. Why? The board’s decisions are protected under the business judgement rule, which gives deference to the board’s actions. However, the board’s inaction is not protected under the business judgment rule and may, in fact, subject the board to challenges down the line. The board should, therefore, ensure that it formally makes a decision on each complaint it receives and communicates its decisions to those involved.
  7. Apply the rules consistently and communicate frequently. The board is ultimately responsible for enforcing the governing documents and should be familiar and well versed in its provisions and standards. The board should make sure it treats all residents equitably and enforces the documents consistently and without preferential treatment. The board’s decision – whether to take action, put the complaint on hold, seek more information, or do nothing – should also be reflected in the meeting minutes and communicated to all parties.

THE RESOLUTION

In Pasha and Jordan’s cases, the board should first and foremost review the governing documents to determine if the alleged emanation of smoke and odor and the reported noise violate any provision of the governing documents. For example, has the community adopted a smoking restriction in its declaration, bylaws, or occupancy agreement? Is there a restriction in the governing documents on nuisances and activities that constitute an annoyance? Do the reported actions and behavior rise to the level of violating these standards? Next, the board should determine whether to take action, not to take action, or seek additional information based on Pasha and Jordan’s complaints and any other available facts. The board should ensure that it communicates its decision and course of action to Pasha and Jordan, individually, so they know that the board has received their complaints and is evaluating its options and obligations. Given that each community has its own set of governing documents and that complaints are highly fact-specific, there is rarely, if ever, a one-size-fits-all solution. Boards and management are encouraged to consult with their legal counsel to ensure that they properly handle complaints and comply with applicable due process standards and procedures.

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