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35. Will a court uphold the new rule?
A condominium building located in the bustling downtown area of a major city has a large rooftop pool and deck, which provides a picturesque view of the city's skyline late at night. Many of the residents and owners in the building are young professionals who work in the surrounding downtown area. The residents often gather in large groups on the deck late at night. Recently, some residents have begun to complain that these gatherings have become disruptive and unruly, leading the condominium association's board to take action. The board passed a new rule, by a vote of its members, to impose a strict curfew for the rooftop deck, weekday, and weekend nights. Several residents in the building banded together to challenge the new rule.
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There are some limits to the power of CIDs. There is a distinction between (1) association-imposed rules that are contained in the deeds or declaration of the CIDs and (2) rules subsequently adopted by property owner associations for community government.
As to the latter category, regulations adopted by an association and not contained in governing documents, courts apply a «reasonableness» standard. Determining reasonableness requires balancing the utility of the purpose served by the restraint against the harm that is likely to flow from its enforcement. For rules not contained in governing documents, they will typically be considered reasonable if their purpose is to protect common property. See Restatement (Third) of Property: Servitudes 6.7(1)(b), stating that an association board has an «implied power to adopt reasonable rules to. .. govern the use of individually owned property to protect the common property.»
There is a distinction between direct restraints on alienation of property and indirect restraints. Direct restraints are valid if «reasonable.»
By contrast, indirect restraints are invalid only if lacking in a rational justification, a less demanding requirement than reasonableness.
To ensure compliance with proper restraints, a board may:
(i) impose fines, penalties, and late fees;
(ii) withdraw privileges to use common recreational or social facilities;
(iii) require prior submission of plans for projects to ensure compliance with existing restrictions;
(iv) conduct reasonable inspections of property for violations, with a reasonable belief that such violation exists; AND/OR
(v) deny voting privileges or board positions.
B is correct. Unless limited by statute or the governing documents, the community has the implied power to adopt reasonable rules to govern the use of the common property and the use of an individually owned property to protect the common property. In determining the validity of a rule, the primary test is whether the rule is reasonably related to furthering a legitimate purpose of the association.
A is incorrect. This is the correct conclusion, but incorrect legal reasoning. This choice states the standard for restrictions imposed by the declaration (i.e., the recorded document that imposes the covenants and easements creating a common-interest ownership community). The restrictions in the declaration are not subject to the same reasonableness requirement that the rules adopted by the board are. Restrictions in the declaration are valid unless illegal, unconstitutional, or against public policy.
Here, however, the proper standard is simply whether the rule is reasonable in governing the use of common property.
C is incorrect. This standard is inapplicable, and it is stricter than the mere reasonableness standard, which applies to this type of rule passed by the board.
D is incorrect. There is no requirement that a statute or governing document specifically authorize this type of rule. A board of a common-interest ownership community has an implied power to adopt reasonable rules to govern the use of the common property. Additionally, the declaration usually grants a general power to the community to pass rules as it sees fit, as long as they are reasonable.