15 Sep Enforcing Condo Use Restrictions: A Potential Legal Minefield for Board Members

Condominium communities offer unique benefits to their residents that may not be otherwise available to those opting for “traditional” homeownership. However, in exchange for these benefits, unit owners must give up a certain degree of freedom of choice that they might otherwise enjoy in separate, privately owned homes. Although it is a tradeoff that many willingly accept when they purchase a unit, abusive condominium associations can cause owners to regret their decisions.

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Limitations on unit owners’ freedoms typically take the form of use restrictions, which, according to one state court, are necessary because “condominium owners live in close proximity and use facilities in common.” These restrictions can range from making the clubhouse a “shoes only” facility to requiring that the board approve the sale of a unit.

According to the Supreme Court of California, use restrictions are an inherent part of any common interest development and are crucial to the stable, planned environment of any shared ownership arrangement. However, despite the need for use restrictions, condominiums have nevertheless become famous, or perhaps infamous, for the manner in which they enact and enforce these restrictions.

Headlines and punch lines have earned abusive condominium association members the unflattering moniker “condo commandos.” Increasingly, however, these individuals are gaining yet another title – that of a defendant. Condominium residents fed up with the abusive tactics employed by some unit owners are routinely seeking recourse in the courts. And since infighting can be as damaging to the community as it is to an association’s balance sheet, condominium boards must be familiar with their powers, as well as the limitations on those powers, to enact and enforce use restrictions.

A condominium association’s authority to enact and enforce use restrictions may come from the condominium’s declaration (or some other document of condominium creation), the condominium’s bylaws, a state’s condominium statutes, and judicial pronouncements. Regardless of the source of an association’s powers, however, an association’s authority is not absolute.

Notwithstanding jurisdictional variations, a condominium’s governing board is generally free to enact use restrictions as long as the restrictions represent good-faith efforts to further the purposes of the condominium, are consistent with the condominium’s governing documents, and comply with public policy. Broadly stated, a condominium’s governing body cannot enact rules bearing no relationship to the health, happiness, and enjoyment of life of the various unit owners.

It follows, then, that the power of a condominium’s governing body to enact use restrictions can be limited when the action is unreasonable, arbitrary, capricious, or discriminatory. Accordingly, in addition to having the requisite authority to enact a specific use restriction, a condominium’s governing body must make sure that any such restriction is not only reasonable but also has been enacted in good faith.

The power of a condominium’s governing body to enforce its use restrictions may also be governed by the “arbitrary and capricious” standard. One court has stated that in order for a governing body to declare that a unit owner has violated a use restriction, it must do so uniformly, in good faith, and not in an arbitrary or capricious manner. In one case, a Florida court held that a use restriction is unenforceable if it has been unreasonably or arbitrarily applied.

An Illinois court adopted a reasonableness test that requires a determination of whether enforcement of a use restriction:

• Is arbitrary or capricious, considering whether it promotes the safety and enjoyment of the condominium;
• Is non-discriminatory and even-handed;
• Is enforced in good faith for the common welfare of unit owners;
• Creates potential hardship on unit owners; and
• Has been reasonably implemented.

These limitations make clear that the authority of a condominium’s governing body to enact and enforce use restrictions is not absolute.

Condominium unit owners make up a democratic sub-society of necessity that has been described as a quasi-government. They elect their representatives with the expectation of being treated fairly and reasonably. However, even though they consent to having restrictions placed upon the use of their property for the benefit of the condominium as a whole, they have in no way consented to arbitrary or capricious restrictions that achieve no positive benefit. Those who participate in the government of their condominium must keep this in mind when they are called upon to enact or enforce a use restriction. Otherwise, they may discover how quickly they can go from being power-wielding “condo commandos” to defendants arguing their case before a judge.