Ruling the Roost The Bottom Line on House Rules

Ruling the Roost

The dream of homeownership often brings with it the independence of owning your own space, decorating it as you wish and living by your own rules. Yet when you reside in a co-op or condominium with possibly hundreds of other residents, your behavior and lifestyle must conform to a reasonable standard. With that in mind, all buildings establish house rules - guidelines outlining policies for proper behavior and rules for keeping your property safe and well-maintained. Incorporated as part of the governing documents, house rules help residents live together in peace and harmony - well, most of the time, anyway.

Standard house rules control such things as subletting, pets, noise, or cell phone usage, decorations in common areas and hallways, ensure the proper disposal and storage of garbage and debris, say where children may or may not play or spell out the building's playground or pool hours, and other quality of life issues.

The Letter of the Law

"House rules are common-sense etiquette for living in a multiple dwelling," according to Robert Braverman, a managing partner of Braverman and Associates, PC in Manhattan. "The rules are the day-to-day conduct which owners and shareholders are supposed to follow."

However, it's important to understand that house rules are not the same as a building's bylaws. "In general, a cooperative board of directors act on behalf of the corporation, and their authority to act and adopt rules [that] are written in the bylaws," says Daniel T. Altman, a partner at the Manhattan law firm of Belkin, Burden, Wenig & Goldman. "As a byproduct of the bylaws and the proprietary lease, the sponsor (the person who built or converted the building to a cooperative or condominium) [then] drafts house rules that govern the use and occupancy of the building and the manner in which the shareholders can conduct themselves in the building."

The bylaws, according to Altman, generally outline board procedures, such as shareholder meetings, board size, and board member roles and responsibilities. "In contrast, the house rules are pretty much the problems that relate to property management on a day-to-day basis," says Altman. "For example, where residents can put an air conditioner, where children can play, noise problems, animals, and what to do with garbage."

House rules may also include moving procedures, mail and food delivery policies, loss of property, plants, terrace and roof rights, service and repairs, recycling, visitors, entertaining, children supervision, decorating and remodeling requirements and more. There may be some overlap between the house rules and the bylaws, but not much. "Typically the house rules will end by saying that the rules can only be amended or appealed by the board as mentioned in the bylaws," Altman says. "The bylaws will then refer to the house rules."

House rules are drafted by the sponsor when a new building is built or an existing building converted to a cooperative or condominium. Buyers are given a copy of the house rules for review prior to closing. "As a buyer's attorney, I read the house rules and bylaws and go over them with a prospective purchaser prior to entering into a contract or sale," continues Altman. "You want to know what you're getting into before you sign. I advise my clients to look at the documents thoroughly and examine them for peculiar situations that could red flag any potential purchase. For example, the buyer should review the owner and sublet fees or restrictions on subletting. Depending on your station in life that may or may not be important to you."

Read the Fine Print

Altman admits that it's uncommon for buyers to back out of a purchase because of the house rules. "It's usually the inability to sublet or concerns about a flip tax in the bylaws that stop someone from buying, but not usually the house rules," says Altman.

Although Altman and other legal representatives are diligent in having their clients read the house rules, bylaws and other pertinent documents, Braverman notes that not all buyers read, or even care about, the house rules. "Probably more often than not nobody gives the house rules much thought," says Braverman. "Those who (already) live in the New York area know that there are going to be a set of rules that don't really vary much from building to building."

Although most house rules are comparable from building to building, certain rules may vary based on the residents' demographic makeup. For example: a Tribeca community mostly consisting of young families will address different issues in their house rules than, say, an Upper East side co-op with mostly retirees. House rules for young families may consist of regulations on strollers, roller skating or playground responsibilities, but house rules for mostly retirees might include a section on something like home care issues.

Rules can also differ between a cooperative and a condominium. "I represent a sweat equity [co-op] on the Lower East Side with 30 or 40 shareholders," adds Altman. "Their house rules go as far as indicating how often their meetings will be held and the requirement of the shareholders to attend, otherwise a monetary fine will be issued. The building was converted on its own with no sponsor, so there is truly a cooperative spirit to self-manage the building."

While house rules are there to protect the property and residents, there are some items that cannot be included. "You can tell residents that if they are going to have a party they must give an attendee list to the doorman so he knows who is coming into the building," says Martha Goupit, managing director of Caran Properties Inc., in Manhattan. "However, you cannot tell the residents whom they can and cannot invite."

The duty of house rules belongs solely to the board of directors - the only authorities who can change, amend or add a rule. "It's common with bylaws to need two-thirds of the shareholder votes, but only the board can change a house rule," she explains.

If the board does modify or enact a rule, Braverman urges the board to document the notification to the shareholders or unit owners. "Choose a method of notifying the building residents and get proof of that mailing or other notification in case there is a problem with a tenant at a later time," Braverman says. "All you have to do is send a notification document with the change, amendment or enactment of the rule or rules. You can also post it on your property's Web site, in a resident newsletter or on a bulletin board in a prominent place - anything you can do to get the word out, to show the effort you did to notify the tenants. You can't guarantee that it will be read, but if you ever have to go to court, you can prove that you did all you could to notify the tenants."

Can a board overstep its authority in the house rules? Yes, according to Braverman, but it's not a common occurrence. "A board of directors can overstep their authority, but not if they want to be voted in again," says Braverman. "The general rule of thumb is the board shouldn't alter the basic structure of either the corporation or association. You have your skeleton of the building - the bylaws, proprietary lease and the declaration - that sets forth the structure of how the entity is going to run. The house rules put the meat on those bones and you can't redo or restructure the framework through the house rules."

Enforcing the Rules

Unfortunately, there are going to be incidents when somebody has broken the house rules. For example, if music must be lowered by 10 p.m., there may be a neighbor who keeps cranking the tunes well past midnight, or a resident who decides to renovate without required board approval.

Penalties can range from a firm warning or monetary fine to legal recourse depending on the rule. "But there must be specific provisions in the bylaws and house rules in order for the board to impose fines or penalties," says Braverman.

"If a shareholder breaches the house rules in a co-op, the board can seek to commence a lawsuit to terminate the lease for violating the house rule," says Altman. "With a condominium, it's more common to impose a monetary fee. You can't seek to have condo ownership terminated." Based on the Reasonable Business Rules decision, however, that option may in fact be available in condos as well, though the case law is not clear in this area.

Part of the board's responsibilities should include a frequent review of the house rules. "The board should be proactive by checking and revisiting their rules on an ongoing basis, at least annually," says Goupit.

Goupit also suggests that the board periodically review the building's infrastructure: has anything changed in the building? Is there a new amenity that requires a house rule? Have the building's demographics changed over time?

"House rules are created for the benefit of those living in the building - it is a tool they can use and consult if they are in doubt or have questions before calling management," claims Goupit. "It's become more of a manual to the building, so it's important to keep them updated."

Lisa Iannucci is a freelance writer living in Poughkeepsie, N.Y.

Related Articles

Architectural blueprint with safety helmet and tools on blur dollar money background.

New Law Affects Contractor Retainage for Co-ops & Condos

Add Another Item to Boards' List of Things to Worry About

Art collage with a screaming man. Aggressive pressure or intimidation of an opponent.

Toxic Board Members

Dealing With the Disruptive & Disrespectful

Swimmer exercising in a condo's indoor pool

Using Your Amenities to Generate Cash Flow

Attractive Option...or More Hassle Than it's Worth?