How to update association rules
Q: A couple of board members have been tasked with updating the association's rules. Can you describe some "best practices" we should employ in this undertaking?
A: Here are some "best practices" in connection with revising the association's rules when the board, or this group of board members, is reviewing the existing rules.
The board should consider what rules have not been relevant and remove them from the rules. Similarly, the board should consider what issues the association has faced that are not addressed in the rules. Appropriate rules should be considered to address those issues.
Many associations use another association's rules as a guide for preparing their own rules. If another association's rules address an issue facing the association, then by all means the board should consider including the rule. However, the board should avoid simply adopting rules from another association's rules merely because they are "interesting."
The association's declaration should be reviewed to make sure the rules are not at odds with the declaration. Keep in mind that the rules cannot impose further restrictions on matters addressed in the declaration, or contradict restrictions in the declaration. That would require an amendment to the declaration.
Avoid rules that simply repeat, or paraphrase, existing language in the declaration. That isn't necessary, and just creates another lengthy document. It would be a good idea to include a general statement in the rules that incorporates all of the restrictions in the declaration by reference.
The rules are supposed to be "self-enforcing." If the rules are too lengthy, residents won't take the time to become familiar with them. Also, many associations intersperse "informational items" in the rules. That can create confusion. Housekeeping items should be separate from the rules; although they can all be included in what many refer to as an "owner's handbook."
Q: Trusting the COVID situation will be better this spring, the board of our association is considering hosting an outdoor party for our residents on our ample green space. Won't this expose the association to liability if someone is injured at this event?
A: If a person is injured at this event, and the injury is the result of the association's negligence, the association can have exposure to liability. But being exposed to liability is true of many things associations do. The risk of such liability can be managed through appropriate insurance. The association should speak with its insurance agent to confirm it has appropriate types and amount of insurance for such an event.
Q: The board of our condominium association signed a contract with a vendor for certain services. The signed contract was delivered to the contractor. Before the contractor's services were to start under the contract, the board found another contractor who would perform the identical services for substantially less money. Since the first contractor's services have not yet started under its contract, can the board cancel that contract, and enter a contract with this new contractor?
A: The board can cancel the existing signed contract. However, there will likely be adverse financial consequences to such a decision. Unless the contract includes very liberal termination language, the association would presumably be in breach of the signed contract by an abrupt termination of this nature. Breach of the contract would expose the association to liability for damages to the contractor resulting from the breach of contract. These damages could include the contractor's lost profits and some sort of contribution to the contractor's overhead. The fact that the contractor's services have not yet started under the contract is not relevant to whether or not it can be terminated without consequences.
• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.