Q: Can a management company change rules without homeowner approval?

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Q: Can a management company change rules without homeowner approval?

Q: Can a management company change rules without homeowner approval?

Can the management company make major changes to the rules and regulations without the approval of the homeowners?

Luxury house at night in Vancouver, Canada. Chicago, Illinois

answer-icon-masterThat depends what you mean by “homeowners.”

If you mean can they make major changes to rules and regulations without the approval of the homeowners as a whole – as they are represented by the homeowners’ association – the answer is absolutely not. The management company works for the homeowners, and they have no authority to do anything whatsoever except what is duly and lawfully delegated to them in the contract that your homeowners’ association board of directors approves.

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Management companies cannot act unilaterally to change or alter the lawfully drafted and approved rules and regulations, bylaws and covenants and any other policies drafted by your board of directors one iota. Everything they do, they must do within the limits of their authority as delegated to them by the board of directors.

Furthermore, your board of directors cannot delegate to them any authority they do not already have themselves. If your board can’t do it on their own authority, neither can your management company.

Different Interpretations

Now, there is another way of reading your question. Suppose I interpreted it this way:

“Can the management company enforce changes to the rules and regulations approved by the majority of board members, in accordance with the HOA bylaws, against individual homeowners?”

In this case, the answer is frequently yes. The Board of Directors can, in many instances (but not all) enforce a new rule, bylaw or policy even on an individual homeowner who didn’t vote on the issue, and who voted against those board members who were likely to approve the measure they don’t like.

Courts have generally upheld the rights of homeowners associations to govern their properties and developments in much the same way as a quasi-government. And indeed, when a government passes a new law, and 75 percent of the people approve of the law and 25 percent don’t like it, the law does not simply allow that 25 percent to ‘opt out’ of the new law. It becomes binding upon all.

Don’t take my word for it. You can read the court precedents,

Chantiles v. Lake Forest II Master Homeowners Assn. (1995) 37 Cal.App.4th 914, 922.) and Cohen v. Kite Hill Community Association (1983) 142 Cal.App.3d 642, 651, which established that a homeowners association is a “quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government.”

This doesn’t give the HOA a free reign. Neither the HOA board president nor the property manager get to rule dictator-style.  Just as the Constitution restricts the authority of government to exceed those powers Constitutionally assigned to it, and protects certain rights of dissenters, the HOA bylaws, state and local laws and in some cases federal law limits their authority.

For example, even if your management company or HOA board wanted to make you tear down your American Flag, their authority to do so is restricted by the Freedom to Display the Flag Act of 2005. You can read specifics on that issue here.

Now, if you are planning to contest an instance where a property manager is enforcing a rule against you, or another individual homeowner, and that rule is the result of a change that was passed by the HOA board – at an advertised, public meeting, with a full-quorum of members present, and there’s no local, state or federal law that says they can’t have that new rule – you’re probably out of luck.

If the rule is legal, but they didn’t pass it properly – it wasn’t at a public board meeting, or the meeting at which they passed the measure was not publicly announced or advertised as required in the bylaws, or the measure is not listed in the minutes for the meeting, or there was no quorum present – you could potentially have grounds to contest the rule.

A rule or policy must meet two hurdles to be enforceable: First, it must be legal in and of itself – that is, it must not violate any local, state or federal law. Second, it must have been passed using the correct processes laid out in the bylaws and in the relevant state laws.

In your state, the new rule should have been passed by the board in accordance with the Illinois Condominium Property Act, among other laws. If the provision they are trying to enforce doesn’t meet both criteria, you may well have legal grounds to contest it and render it unenforceable.

Author Bio
Writing about personal finance and investments since 1999, started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.
Jason Van Steenwy, published in Annuity Selling Guide and Bankrate.com

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